Market Review - 25/03/2020  23:51GMT  

Dollar ends lower as coronavirus spreads across U.S.

The greenback went through a hectic session and ended the day lower against majority of its peers on Wednesday after U.S. Senators and Trump administration officials reached an agreement on the $2 trillion stimulus package as spreading of the coronavirus accelerated across the United States.  
Reuters reported U.S. senators and Trump administration officials have reached an agreement on a massive economic stimulus bill to alleviate the economic impact of the coronavirus outbreak, White House official Eric Ueland said early on Wednesday.     "We have a deal," Ueland told reporters after days of negotiations on a stimulus package expected to be worth 2 trillion usd.     They reported the strain of the fast-spreading coronavirus outbreak accelerated across the United States on Wednesday beyond the hot spots of New York, California and Washington state as Louisiana and Iowa were declared federal disaster areas.  
Trump issued the disaster declarations late Tuesday night, freeing up federal funds to help combat the potentially lethal disease as it strains state and local resources nationwide.     Louisiana, where large crowds recently celebrated Mardi Gras in New Orleans and other parishes, has reported a spike in cases with 1,388 total confirmed cases and 46 deaths as of midday Tuesday, according to the Louisiana Department of Health.    Iowa, where officials announced the state's first death from the coronavirus Tuesday night, has reported 124 confirmed cases.  
Versus the Japanese yen, although dollar initially retreated to 110.76 in Asian morning on profit-taking after Tuesday's rally, price erased its losses and rose to 111.56 in European morning on recovery in U.S. Treasury yields and rising U.S. stock futures before weakening to 111.07. However, the pair then gained to session highs of 111.67 in New York morning due to strong gains in U.S. equities before retreating.  
Although the single currency briefly dropped to 1.0761 at Asian open due partly to selling in eur/jpy cross, price found renewed buying and rose to 1.0850 in Europe before retreating in tandem with sterling to 1.0786 in New York. However, the pair then rallied to session highs at 1.0893 on renewed usd's weakness.  
The British pound went through a volatile session. Cable remained on the front foot in Asia and gained to 1.1857 and intra-day rally accelerated in European morning and price hit a 6-day high at 1.1973 on usd's weakness. However, the pair erased its gains and tumbled to an intra-day low of 1.1640 in New York on concerns over the coronavirus pandemic in UK. The pound then staged a strong rebound to 1.1918 in New York afternoon on short-covering before stabilising.  
Reuters reported British inflation fell in February, before the coronavirus crisis hit the country, and economists predict a further sharp fall in the next couple of months due to the collapse in global oil prices caused by the pandemic.    Consumer price inflation fell to 1.7% in February from a six-month high of 1.8% in January, the Office for National Statistics said, in line with forecasts in a Reuters poll.     The decline reflected falls in the cost of fuel and often-volatile video game prices.  
On the data front, Reuters reported new orders for key U.S.-made capital goods fell sharply in February as demand for machinery and other products slumped, suggesting a deepening contraction in business investment that analysts said signaled the economy was already in recession.      Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, dropped 0.8% in February after rising by a slightly downwardly revised 1.0% in January, the Commerce Department said on Wednesday.     These so-called core capital goods orders were previously reported to have increased 1.1% in January.    
Economists polled by Reuters had forecast core capital goods orders would drop 0.4% in February. There were decreases in orders for machinery, primary metals and computers and electronics products last month. But demand for electrical equipment, appliances and components increased 1.3% last month.  
Data to be released on Thursday :  

German GfK consumer sentiment, UK retail sales, retail sales ex-fuel, France business climate, Italy trade balance, U.S. GDP, core PCE prices, PCE prices, trade balance, whoesales inventories, wholesale sales, initial jobless claims, KC Fed manufacturing index.  

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