Daily Market Update

Senate Approves Aid Package, Buck Dwindles

March 26, 2020

The U.S. Dollar has lost ground overnight and this morning after two major developments: 1) The Senate’s approval of the largest emergency stimulus package in American history, and 2) The release of U.S. Jobless Claims which registered an astronomic 3.28 million last week.

Overview

Finally, relief will come to the American people as the inactivity and physical distancing taking place is revealing how damaging it can be to the economy. About $250.0 billion are scheduled for direct payments to individuals, $350.0 billion in small loans, $250.0 billion in unemployment insurance benefits, and $500.0 billion for loans for distressed companies. The buck has lost value and the stock market opened with positivity as the media is helping digest the details of how this spending will be implemented.

We are seeing a slowdown as most people are now home and unable to participate much. Online retail companies are doing well as deliveries of everything from toilet paper to gym equipment are in high demand. Meanwhile, the World Health Organization issued a strong, and extremely rare, public rebuke saying countries are not acting swiftly enough and are wasting “precious time.” The crazy data is making all traders and investors focus on the bill and how it can alleviate the economic anxiety over the next three months that will be crucial to fighting the virus as well as forging a path towards normalization.

 

What to Watch Today…

  • No major events scheduled for today.

Complete Economic Calendar can be found here.

 

EUR

The Euro has jumped and looks to be breaking away from multi-month lows as the situation in the U.S. gives breathing room now that a package has been set out. The European Central Bank has also acted and are expanding quantitative easing purchases as well as revisit the OMT – Outright Monetary Transactions. For now, negative and contractionary data must be ignored as it is clear all central banks and governments are hands on in trying to make up for the COVID-19 quarantine.

 

GBP

The Pound also rose as the global risk assessment is starting to price-in fiscal expenditures to combat the virus. The Bank of England met and chose not to cut interest rates any further and committed to further QE injections as needed. Prime Minister Boris Johnson and his cabinet are also coordinating to make sure people have “parity of support” with measures aimed at keeping businesses afloat.

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