Here is what you need to know on Monday, March 23:
The constant increase in coronavirus cases and deaths, alongside the failure of US politicians to strike a deal on fiscal stimulus is weighing heavily on markets. US stock futures hit limit down alongside Asian stocks, and bonds are in demand. The drop in US yields is weighing on the dollar vs. majors, with EUR/USD recovering above 1.07 and USD/JPY dropped under 110. The greenback is gaining ground against commodity currencies, oil is falling, and gold remains pressured under $1,500.
More: Coronavirus market turmoil explained: Dollar, stocks, gold, oil, and more
Coronavirus has taken the lives of over 14,000 people and infected more than 330,000. The death tolls in Italy is especially devasting, nearing 6,000. The eurozone's third-largest economy announced tighter restrictions, closing non-essential factories. Spain's death toll also extends its rapid increase, with the government announcing that the state of emergency will last through at least April 11.
German Chancellor Angela Merkel is in self-isolation after a doctor she was in contact with tested positive for Covid-19. She announced more rigid limits on movement. Eurozone Consumer Confidence is set to show a significant drop later in the day. Members of the European Central Bank say more can be done after last week's €750 billion in new bond-buying.
In the UK, Prime Minister Boris Johnson hinted of tougher measures to enforce social distancing after the public seemed to flout the guidance over a sunny weekend. London announced vast support to employees losing their jobs.
US coronavirus cases reached 35,000, the third-highest in the world as testing has been ramped up. James Bullard, PResident of the Saint Louis branch of the Federal Reserve, said the unemployment rate could hit 30% and Gross Domestic Product could fall by 50% in this planned shutdown. Bullard said everything is on the table while Neel Kashkari, his colleague from Minnesota, said that the Fed has more tools.
See Is the US already in a recession?
Senate Democrats voted against a fiscal stimulus bill brought forward by Republicans as it consisted of too few strains attached. Democrats are opposed to unlimited bailouts. Reports suggest the size could exceed $2 trillion dollars and would include 50-year bonds funded by the central bank. Frantic negotiations continue in Washington.
Finance ministers and central bankers of the G-20 will hold a video conference later on but are unlikely to issue a statement.
The Bank of Japan stepped into markets by offering ¥800 billion of repo operations. Tokyo is under growing pressure to cancel the Olympics due in late July.
NZD/USD: The Reserve Bank of New Zealand announced a Quantitative Easing program while the government places the country on lockdown. NZD/USD has been one of the biggest losers, falling around 1%. The Reserve Bank of Australia kicked off QE last week. In the eurozone and in Britain, printing new money seemed to help the currencies.
See Is money printing positive for currencies? Lessons from Lagarde's largesse, Bailey's bailout
Cryptocurrencies are edging higher after ticking down over the weekend. Bitcoin is trading just under $6,000.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD remained bid above 0.6500
AUD/USD extended further its bullish performance, advancing for the fourth session in a row on Thursday, although a sustainable breakout of the key 200-day SMA at 0.6526 still remain elusive.
EUR/USD faces a minor resistance near at 1.0750
EUR/USD quickly left behind Wednesday’s small downtick and resumed its uptrend north of 1.0700 the figure, always on the back of the persistent sell-off in the US Dollar ahead of key PCE data on Friday.
Gold holds around $2,330 after dismal US data
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
Bitcoin price continues to get rejected from $65K resistance as SEC delays decision on spot BTC ETF options
Bitcoin (BTC) price has markets in disarray, provoking a broader market crash as it slumped to the $62,000 range on Thursday. Meanwhile, reverberations from spot BTC exchange-traded funds (ETFs) continue to influence the market.
US economy: slower growth with stronger inflation
The dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.