ECB's Lagarde warns of 2008-style shock in Europe due to coronavirus, calls for urgent action

Yohay Elam FXStreet

Christine Lagarde, President of the European Central Bank, has warned that Europe risks a 2008-like economic crisis, calling for urgent action from policymakers according to Bloomberg.

Her stark words come after a teleconference between EU leaders on Tuesday which ended in announcing a €25 billion fund to mitigate the economic fallout. ahead of the ECB's rate decision on Thursday. Economists expect a 10 basis point cut to the bank's deposit rate.

Italy is the epicenter of Europe's coronavirus crisis with severe restrictions imposed on all the country. The death toll in the eurozone's third-largest economy has topped 600 with over 10,000 infections confirmed. The number of cases in Germany, Spain, and France has topped 1,000.

EUR/USD trades around 1.1330, advancing as the dollar weakens alongside falling US bond yields.

-- more to come

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

AUD/USD picks up bids above 0.7100 after RBA-speak

AUD/USD picks up bids above 0.7100 in the Asian session on Tuesday, following hawkish comments from RBA Assistant Governor Sarah Hunter and Governor Michele Bullock. However, escalating tensions in the Middle East and the Fed's hawkish outlook remain supportive of the bullish US Dollar undertone, which could limit the pair. The crucial Trump-Xi summit is later this week and remains in focus.

USD/JPY holds small gains near 157.50 as JPY intervention risks loom

USD/JPY posts modest gains while trading near 157.50 in the Asian session on Tuesday as intervention fears help limit losses for the Japanese Yen. However, the BoJ's dovish rate hike to a 31-year high keeps JPY bulls on the back foot. Meanwhile, the US Dollar retains a bullish undertone amid the Fed's hawkish outlook and escalating Middle East tensions, providing tailwinds for the pair.

Gold recedes a tad; still above $4,300

Gold extends its decline for a second straight session, slipping below the $4,300 mark per troy ounce, just to regain some composure afterwards. The precious metal remains under pressure as expectations that the Fed will keep interest rates higher for longer continue to support US Treasury yields and the US Dollar.

Bitcoin pauses rally as profit-taking reaches yearly high

Bitcoin takes a breather, facing a pullback, trading below $85,500 on Tuesday after surging 6.7% the previous day. Strong institutional demand supports the bullish price action, with spot Bitcoin Exchange Traded Funds recording nearly $1 billion in inflows on Monday and Strategy adding 950 BTC to its treasury.

Energy and risk markets remain in the driver’s seat

US stock markets rallied up 2.26% (Nasdaq) yesterday with AI/tech names leading the advance. The Nasdaq even tested the all-time high reached early June. The likes of the S&P 500 and EuroStoxx50 recovered up to 1.5%. Positive risk vibes and lower energy prices supported consolidation on bond markets following the past month’s heavy losses. European yield curves bull steepened.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.