FX Update – March 24 2020


Currencies moved in a risk-on formation, with the Dollar, Yen and Swiss franc weakening against most other currencies, with the commodity and many developing-world currencies outperforming. This came with S&P 500 futures rallying strongly, more than reversing the 2.9% closing loss the cash version of the index saw yesterday on Wall Street. Oil, most base metals and other commodity prices also rose. Asian stock markets also rallied. The massive $2 tln coronavirus stimulus bill in the US looks near to being passed in the Senate. The Fed’s ultra-aggressive pledge of unlimited dollar funding also appears to be having some success. The US 2-year note yield dropped yesterday to a near seven-year low of 0.79%, which, although higher today, concomitantly put a lid on the Dollar. The narrow trade-weighted USDIndex dropped by about 1% in printing a four-day low at 101.45, extending the correction from the 38-month high that was seen last Friday at 102.99. EURUSD and Cable concurrently lifted just over 1%, to respective five-day and intraday highs at 1.0866 and 1.1695. The biggest mover out of the main dollar pairings and associated crosses has been AUDUSD, which lifted by over 2%, making a four-day peak at 0.5975. The Aussie dollar has now rebounded by over 8% from the 18-year low it saw last week, at 0.5507. With oil prices posting a near 5% rally, USDCAD turned lower, back below 1.4400, though the pair remained above yesterday’s low at 1.4335.

As for the coronavirus, more countries have been going lock-down, the latest of note being the UK, and the major question about how long it will be before something approaching normal economic activity resumes. Incoming preliminary March PMI survey data have and will continue to paint a grim picture of the economic consequences to date.



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Stuart Cowell

Head Market Analyst

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