U.S. dollar highlights:
USD firm and continues trending higher as measures taken to contain the coronavirus are keeping markets concerned. A volatile week started with Saudi Arabia and Russia in an all-out oil price war, then ended with President Trump declaring a national emergency. This declaration will allow more federal aid to combat the pandemic (after injecting $1.5 trillion of liquidity into the repo market). World stocks rebounded while oil prices remain under pressure. Retail sales for February available tomorrow and all eyes on the Fed interest rate decision on Wednesday; however, flight to safety will continue supporting USD.
Canadian dollar highlights:
CAD remains under pressure and reached a four-year low versus the greenback. The Bank of Canada surprised markets with another 50-basis points interest rate cut last week, causing oil prices to rebound. Saudi Arabia and its allies increased efforts to oversupply the market with cheaper oil and this continues weighing on CAD. Crude oil prices are close to the worst level since the 2008 global financial crisis. Markets are concerned the economy will face a recession due to the outbreak and rail blockades disrupting imports and exports. All eyes on the February inflation rate (available Wednesday).
EUR defensive after the European Central Bank disappointed markets with their stimulus package. European assets were sold off after loans were provided to banks with rates as low as -0.75% and increased bond purchases. However, no monetary easing was announced (unlike the Fed, BoC, and BoE). Markets expected a 10bps rate cut (already priced in) to counter the virus impact. Consumer prices for February available on Wednesday.
British pound highlights:
GBP weaker after the government announced a 30 billion pounds stimulus plan and the central bank slashed interest rates by 50 basis points. GBP rebounded after the rate cut; however, lower stocks and risk appetite are weighing on GBP. Sterling is also under pressure after President Trump’s travel restrictions from Europe. Unemployment rate for January available tomorrow.