Greenback Down, Markets Testing Buoyancy

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Greenback Down, Markets Testing Buoyancy

MARCH 27, 2020

The U.S. Dollar is trading in weak ranges as it experienced a 3.5% drop in value throughout the week, according to the Bloomberg Dollar Spot Index.

Overview

A recovery across the board against major and commodity-based peers has been positively correlating with the return to risk-appetite following major commitments around the world to combat the economic effects of COVID-19 and the inactivity it has forced upon us all.

Nevertheless, European equity markets have not returned to optimistic action as it has dropped in comparison to gains in Asian and American exchanges. The growing deadly toll in Italy and Spain has played a major part in the bloc having countries in full lockdown, exacerbating all types of anxiety.

February data scheduled for this morning showed that both Personal Income and Spending advanced and even better than expected. A timelier piece of data to asses the current situation will come out at 10AM in the form of the University of Michigan Consumer Sentiment Survey. At the moment, all eyes are on briefings from the Federal and state governments as they explain how they will implement the emergency aid bill. Checks to individuals are hoped to be sent submitted within weeks. For now, buck weakening is the trend, but that can always change.

What to Watch Today…

  • University of Michigan Wolverines Consumer Sentiment 10AM

Complete Economic Calendar can be found here.

EUR

The Euro recovered 3.0% of its value this week and is hoping the fortunes of the currency rub off on stocks. A lack of ability to put together a comprehensive plan to help nations by European Union leadership is seen as frustrating in light of the awful damage caused to Spain and Italy already.

France joined the two countries in demanding stronger measures other than just utilizing the European Stability Mechanism’s credit line for lending and keeping businesses afloat. We shall see in the next few weeks how monetary policy helps and each government works its own way out the crisis.

GBP

The Pound has climbed by almost 7.0% since March 20th, jumping with optimism that the government’s plan to bailout the economy is the right one. The Bank of England discussed the possibility of adding further quantitative easing purchases and expanding the instruments as well if necessary.

This statement came yesterday following a week of unprecedented monetary policy aid from both the Fed and the BOE who are acting in similar aggressive fashion. Additionally, the U.K.’s Chancellor of the Exchequer Rishi Sunak announced that the government will pay up to GBP 2,500.00 monthly to self-employed persons.

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