USD surged last week to its highest level since January 2017. Demand for the greenback remains high despite the recent increase of liquidity by central banks. The dollar index also increased to the highest level in three years; meanwhile, treasury yields dropped as markets look to minimize risk during the pandemic. Meanwhile, China reported no new Covid-19 cases for the second day in a row. GDP Growth rate for Q4 available on Thursday. All eyes remain on the daily coronavirus cases reported.
Canadian dollar highlights:
CAD rallied from a four-year low versus the greenback as oil prices rebounded, but is still defensive. Crude oil prices recovered from its lowest level in almost two decades after a three-day selloff (due to the coronavirus) and a market share battle between Russia and Saudi Arabia. The economy is slowing and headed for a recession as factories, businesses and all major events are cancelled or closed. All eyes remain on the oil price war and hopes that the United States will intervene.
EUR plunged to its lowest level in three years, despite more stimulus from the European Central Bank. Global central banks have injected billions in emergency liquidity; however, safe haven demand still dominates. Meanwhile, Italy remains on lockdown as Covid-19 cases increase (the highest outside of China). Italian Prime Minister Conte may extend the quarantine until May (from April 3). All eyes remain on if/when more Eurozone countries also lockdown to stop the spread of Covid-19.
British pound highlights:
GBP recovering from a three-decade low after the Bank of England announced they will increase liquidity in USD last week. Sterling is defensive to the world’s reserve currency when safe haven demand increases during a crisis. The government is taking a firm approach to contain the outbreak, but GBP is still vulnerable. Consumer prices for February available on Thursday and the central bank will meet again to discuss monetary policy and quantitative easing.