Forex Today: Australia’s coronavirus relief measures powers Aussie; risk reset as USD corrects


Forex today in Asia was a calmer affair on the final trading day of this wild week, as signs of risk recovery were reflective of the rebound in the Asian equities and US stocks futures. A slowdown in the number of new infections in China and South Korea offered some relief to the regional investors alongside a sharp recovery in oil prices. Oil bulls were rescued by US President Trump’s hints that he may intervene in an oil price war between Saudi and Russia.   

On the fx front, most majors licked their wounds while attempting a solid comeback, as the US dollar corrected sharply from three-year peaks across its main rivals. The rush for safety in the greenback faded this session that saved the day for the GBP bulls, as GBP/USD recovered over 200-pips from a new three-decade low of 1.1414. EUR/USD also bounced-off fresh 2020 lows and regained 1.1700.

The Aussie emerged as the top beneficiary of the broad dollar pullback and held onto gains above 0.5800 while traders cheered the Australian authorities; massive stimulus measures rolled out to battle the virus impact on the economy. AUD/USD dipped 1% in early trades to 0.5655 only to stage a 250-pips comeback and regain 0.5900. The Kiwi also tracked the rally in its OZ neighbor and tested the 0.58 handle. On the other hand, USD/JPY lost nearly 150-pips and fell back below 110.00 from a three-week high of 111.36. Gold prices jumped 1% in a bid to regain $1500 mark, courtesy the dollar retreat.

Main topics in Asia

US Senate GOP releases coronavirus relief plan with up to $1,200 cash payments to individuals – CNBC

UK Chancellor Sunak to unveil wage bailout to help millions through coronavirus crisis – The Telegraph

Fed’s Daly: Our tools are starting to work in markets

President Trump to convene videoconference with G7 leaders in April and May – Reuters

US Treasury Secretary Mnuchin: Goal is to get bill passed and signed by Trump on Monday

Mainland China's total number of confirmed coronavirus cases hits 80,967 as of end-March 19 – Reuters News

RBA offers to buy up to A$5 bln of government bonds in first round of QE

Fed's balance sheet hits record $4.7 trillion

China sets 5-year loan prime rate at 4.75% vs 4.75% a month earlier

RBA says swap arrangements designed to help lessen strains in global US dollar funding markets – Reuters News

Coronavirus update: California issues state-wide stay at home order, Italy’s death toll outstrips China’s

S. Korea confirms 87 new coronavirus cases, USD/KRW corrective downside intact

Australian PM Morrison: Budget will be delayed to October

Australian banks announce $57 billion loan relief package for businesses

Key focus ahead        

With a data-light EUR calendar this Friday, the coronavirus updates and further global stimulus measures will continue to steal the show and drive the markets alongside the risk sentiment.   

The immediate focus is on the German Producer Price Index (PPI) and Eurozone Current Account data due later today at 0700 GMT and 0900 GMT respectively. From the UK docket, the Consumer Inflation Expectations data, due at 0930 GMT, will be eyed for some trading incentives.

In contrast, the NA session offers some relevant macro news, with the Canadian Retail Sales report dropping in at 1230 GMT, followed by the US Existing Home Sales data at 1400 GMT. Later in the American afternoon, Baker Hughes US Oil Rig Count data will be released at 1700 GMT and will offer fresh impulse to oil traders.

EUR/USD risk reversals drop to three-year low, point to more pain

The options market is the most bearish on EUR/USD in three years. The currency pair fell to 1.0653 on Thursday, the lowest level since April 2017. Potential risk reset could weaken demand for the American dollar, helping EUR/USD to regain some poise.

GBP/USD regains 1.1650 amid hopes of further stimulus, USD retreat

GBP/USD bounces off multi-year low to trade above 1.1600 amid broad US dollar pullback. Expectations of aggressive measures form the UK Chancellor offer additional help. The Cable slumped to the weakest since 1985 at 1.1414 in early Asia.

Is the US already in recession?

US economy will slow from the virus impact, how much is unknown. Very little March data has been released. China's return to production offers the best clues to recovery.

GMT
Event
Vol.
Actual
Consensus
Previous
Monday, Mar 16
24h
 
 
Tuesday, Mar 17
24h
 
 
Thursday, Mar 19
24h
 
 
Friday, Mar 20
07:00
 
-0.1%
0.8%
07:00
 
0.2%
0.2%
09:00
 
€20.5B
€51.2B
09:00
 
€35.5B
€32.6B
09:30
 
 
3.1%
09:30
 
£0.850B
£-10.538B
12:30
 
0.2%
0.5%
12:30
 
0.3%
0.0%
14:00
 
5.50M
5.46M
14:00
 
0.7%
-1.3%
17:00
 
 
683
20:30
 
 
387.4K
20:30
 
 
$299.5K
20:30
 
 
$-1.6K
20:30
 
 
£26.3K
20:30
 
 
¥8.2K
20:30
 
 
€-12.7K
20:30
 
 
$-54K
Monday, Mar 23
n/a
 
 
12:30
 
 
-0.25
12:30
 
0.5%
0.9%
15:00
 
-6.5
-6.6
15:30
 
 
0.29%
15:30
 
 
0.3%
22:00
 
 
49

 

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