Forex Today: Coronavirus pandemic continues to back risk-off

FXStreet Team FXStreet

Here is what you need to know on Monday, March 23rd:

The coronavirus crisis continues to dominate the headlines. The latest figures show that Italy Spain and the US have the most cases outside China, while the total death toll reached 13,664 worldwide. Europe remains the epicentre of the outbreak, but the number of cases in the US is also rapidly increasing.
The State of Emergency in Spain has been extended to April 11, and it seems likely that other countries will take similar measures, steepening the economic crisis and probably fueling demand for liquid dollar.
The US Federal Reserve has enhanced its swap lines with some other central banks. Germany, the UK and Australia all announced different stimulus measures to back business through the crisis. Further measures are likely to be announced in the upcoming days.
The greenback is the most demanded currency, and would likely retain its strength. EUR/USD fell to an almost 2-year low of 1.0637, and trades nearby, while the GBP/USD pair plummeted to a multi-decade low of 1.1409.
The USD/JPY pair surged to 111.50, its highest since February, settling below 111.00, maintaining its bullish potential as demand for the greenback overshadows yen’s safe-haven conditions.
Crude oil prices plummeted Friday, settling near weekly lows. Equities also suffered, with Wall Street ending near weekly lows.
Oil prices bounced on Friday, with spot finishing the week just below $1,500.00 a troy ounce.
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FXStreet Team

FXStreet

Composed of a group of economic journalists and FX experts, the FXStreet content team produces and oversees all content published on FXStreet. It provides a purely journalistic approach to the Forex market.

GBP/USD weakens to two-week lows near 1.3520

GBP/USD trades on the back foot, returning to the low 1.3500s, or two-week troughs, on Tuesday. Cable’s bearish price action follows decent gains in the Greenback at the time when investors assess latest US data releases and the persistent uncertainty in the US-Iran crisis.

EUR/USD remains offered; breaks below 1.1600

EUR/USD now accelerates its daily correction, breaching below the key 1.1600 support level on Tuesday. The pair’s daily correction comes on the back of a decent bounce in the US Dollar despite disappointing US data releases and amid persistent geopolitical concerns.

Gold flirts with multi-week lows near $4,300

Gold accelerates its correction and recedes toward the key $4,300 mark per troy ounce on Tuesday. The yellow metal’s persistent decline comes in response to the solid performance of the US Dollar and a sharp move higher in US Treasury yields across the curve.

RBNZ set to raise interest rate to 2.75%

The Reserve Bank of New Zealand (RBNZ) is on track to deliver a follow-through interest rate hike, raising the Official Cash Rate (OCR) by another 25 basis points (bps) from 2.50% to 2.75% on Wednesday. Experts expect a consensus decision this week, unlike a deeply divided outcome predicted during the July monetary policy meeting.

Global bond market sell off haunts markets

Global sovereign bonds are selling off as we start a new month. The UK is, unsurprisingly, taking the biggest hit. Two and 10-year yields rose by 10 basis points at one point on Tuesday, and are currently higher by 7 and 8bps respectively.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.