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Forex Today: EUR, JPY in the lead after Senate's stamp, ahead of horrible US jobless claims, BOE

Here is what you need to know on Thursday, March 26:

The US Senate finally passed the $2 trillion stimulus bill to mitigate the impact of coronavirus, and the House will soon take it. However, the market's enthusiasm has faded away. The move is partly a "buy the rumor, sell the fact" reaction but also the details of the package, which include a significant chunk of loans rather than grants.

The euro and yen are – whose economies have current account surpluses  – are gaining ground against the greenback while the dollar is beating the pound and commodity currencies. The present action in money is a break from the "dollar vs. everything" trade that has been seen earlier as there seems to be no distress.

Coronavirus has taken the lives of over 21,000 and has infected around 470,000. Spain suffered its grimmest day with 738 deaths, while the signs of "flattening the curve" are seen in Italy, where the number of new infections has stabilized. US cases near 70,000, yet New York City is somewhat optimistic. The Japanese government is considering adding restrictions amid an increase in cases. 

The focus today is US weekly Unemployment Claims, which may soar to 1.5 million and perhaps higher. Lockdowns have triggered massive layoffs. Some estimate the figure could be north of three million. 

See: Jobless Claims Preview: Recessionary timelines

The US also releases final Gross Domestic Product figures for the fourth quarter of 2019 – pre-crisis levels. See preview. Economists foresee a deep recession due to Covid-19. Jerome Powell, Chairman of the Federal Reserve, is scheduled to give an interview ahead of the data. The Fed stunned markets on Monday by announcing an open-ended Quantitative Easing (QE) program. 

GBP/USD trading has been extremely volatile, and the Bank of England's third rate decision in as many weeks may trigger additional ups and downs. The BOE may introduce more QE or loans but is unlikely to cut its rates. 

See BOE Preview: Does Bailey have a big bazooka? Only open-ended QE can stun sterling

The European Central Bank is considering dusting off its old Outright Monetary Transactions (OMT) program that allows it to buy unlimited government bonds from specific countries, providing another boost to their economies.

On the other hand, Germany and the Netherlands are reportedly opposed to issuing common European bonds, dubbed "corona-bonds." EU leaders will hold a videoconference later in the day. The news follows a letter by nine countries, including France, Italy, and Spain, demanding to share the debt burden.

Gold is consolidating around $1,600, looking for a new direction. Oil is on the back foot, with WTI hovering around $24.

Cryptocurrencies have been edging lower, with Bitcoin trading around $6,600.

More Coronavirus: How Trump's shortcuts could lengthen and exacerbate stocks' suffering

Author

Yohay Elam

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.

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