U.S. dollar highlights:
USD stronger as investors continued panic selling amid treasury yields and stocks plummeting. Gold also strengthened more as the coronavirus causes more fear in Europe. Many other countries are now on alert to avoid or control the outbreak (especially North America). Meanwhile, the World Health Organization is close to calling this a global pandemic. This may also cause the Federal Reserve to cut interest rates in March. Due to increased uncertainty, markets are in panic mode and this may cause an over-reaction. Mass quarantines in China and Italy will keep safe havens in demand. New Home Sales for January increased 7.9% to 0.764 million and Q4 GDP expecting 2.1% growth quarterly today. USD will continue following Covid-19 headlines.
Canadian dollar highlights:
CAD softer after crude oil prices dropped below $49.00 per barrel. A revised forecast in the demand for oil from the virus will keep prices low and CAD under pressure. Meanwhile, rail blockades continued after judicial orders and the RCMP dismantled several barricades. Bank of Canada Deputy Governor Timothy Lane did not mention any monetary policy and said there was “not a compelling case” for a digital currency. Producer Prices for January and GDP for December available tomorrow.
EUR stable, but still under pressure due to increased fears of a recession due to the spread of the coronavirus. Greece reported their first case and Italy is preparing for more (due to how easy it is to travel through Europe). European Central Bank President Christine Lagarde praised Germany’s plan to increase government spending while keeping investors updated to maintain trust. Chief Economist Philip Lane speaks today.
British pound highlights:
GBP defensive and under pressure as trade negotiations with the European Union begin on Monday. Geopolitical concerns and market sentiment will continue weighing on GBP. Support for GBP the past month has been due to signs the economy is recovering and expectations that a new finance minister will increase public spending next month. Bank of England Chief Economist Andy Haldane speaks today in Oxford.