Daily Market Update

Volatility High as Doubt Reigns, New Dollar Highs

March 18, 2020

The U.S. Dollar continues its dominance, markets rebounded some after the announcement of major fiscal stimulus, and oil prices are at their lowest level since 2003 as we remain concerned over the effects of the coronavirus.

Overview

Fears over just how deep a recession can result from all this chaos maintains investors jittery and some have suggested shutting down markets temporarily similar to other times of uncertainty and crisis such as the 9-11 attacks.  All economic forecasts suggest that government response has left businesses and institutions wondering thus the need to revise them downward significantly. Direct cash payments to individuals seems like a good solution for relief, but the pessimism over how long this virus will cut off activity is once more weighing on global markets.

We can take things only day by day now. The Canadian Dollar and Australian Dollar are now at the weakest level in 17 years, coinciding with the slide in oil prices. MXN is at a fresh all-time low. Per the Bloomberg Dollar Spot Index, the buck is very close to the strongest point it has been since the measure of this basket of currencies was created in 2005. We see more swings as we untangle confusion and try envisioning when all will be back to work

 

What to Watch Today…

  • No major events scheduled for today.

Complete Economic Calendar can be found here.

 

EUR

The Euro is down, as most things are, with news that the EU will try to give a stimulus to alleviate consumer pain. The €500.0 billion European Stability Mechanism has been proposed as a source of funding, but this would be low to the announced $1.0 trillion in direct cash by the U.S. Treasury.

Each member nation is quarantining in their own terms with France announcing shelter-in-place measures and working on furloughing rent and other expenses for its citizenry. In February, the region’s inflationary growth advanced as expected, but we expect a downfall across all data that starts registering the inactivity of the last three weeks.

 

GBP

The Pound fell to its weakest point since 1985 as the country prepares for a likely spike in infections and damage from quarantine measures. New Bank of England Governor Andrew Bailey spoke to reporters stating the committee’s willingness to throw whatever necessary at this coronavirus economic threat. At the time of writing, domestic U.S. markets began to decline rapidly with growing negativity over the period of inactivity that will be forced upon people to prevent a health crisis.

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