Risk-off trading returned in Asia starting out the week this Monday after the US equity futures and global stocks were sold-off into the US Senate’s failure to advance the coronavirus rescue package bill. The delay in the US relief bill amplified fears over a global recession, in the face of the coronavirus crisis-induced lockdowns in the affected economies outside China.
The US stocks futures hit the lower circuit breaker at open, which sent the Australian equities down 8%, as markets ignored Australia’s second stimulus measures. The rest of Asia also followed suit, barring the 2% catch up rally in the Japanese markets. Gold prices popped up $10 towards $1500 levels on widespread risk-aversion.
Within the G10 currency markets, the US dollar slumped across the board in tandem with the Treasury yields on the concerns over the impending relief bill. Subsequently, most majors were offered some reprieve, except for the commodity-linked currencies, which were weighed down by the losses in oil and copper prices. Further, Australia and New Zealand announced the lockdown, which added to the growth worries. The Kiwi ignored the QE program launched by the Reserve Bank of New Zealand (RBNZ) and lost nearly 1%.
USD/JPY fell over 150-pips and breached the 110 level amid broad USD sell-off and as the anti-risk yen drew the bids on a flight to safety. EUR/USD, on the other hand, staged a sold comeback above 1.0700 from near multi-year lows while the cable also jumped back to the 1.17 handle.
Main topics in Asia
US President Trump and COVID-19 Task Force presser
RBNZ announces quantitative easing
G20 Finance Ministers will hold teleconference at 1100GMT on Monday March 23
US Senate stops Republican coronavirus bill – Reuters News
Fed’s Kashkari: We will at least have a mild recession – CBS interview
Australian stocks slip to 8-year low as S&P 500 futures hit limit down
US Pres. Trump approves disaster declaration for California over coronavirus
Coronavirus update: S. Korea confirms 64 new cases, NZ reports a jump by 36
ECB’s De Guindos: Coronavirus will put Europe into a recession
S. Korea may announce KRW27 tln of market measures on Tuesday – Yonhap
US Senate vote on coronavirus economic relief package to be delayed from earlier 1345 GMT
US Pres. Trump: We cannot let the cure be worse than the problem itself
RBA buys $2.3 bln of government bonds as part of its QE programme
BOJ: Banks borrow $34.9 billion from its 1-week dollar funding
Key focus ahead
The macroeconomic data will continue to play second fiddle to the coronavirus-related developments and the potential stimulus measures globally. The US dollar dynamics will also continue to play a key role amid the virus crisis led liquidity stress across the financial markets.
Meanwhile, there is nothing of note, in terms of economic news from the EUR docket, except for the German Bundesbank monthly economic report, which will be closely eyed, as Europe’s economic powerhouse grappled with recession risks.
In the NA session, the US Senate vote on the rescue package bill will hog the limelight amid the Eurozone Consumer Confidence and Canadian Wholesale Sales data releases.
EUR/USD: Double bottom near 1.0635 amid risk-off
EUR/USD is charting a bullish reversal pattern on technical charts amid another brutal sell-off in the global equity markets. The fears of a coronavirus-led slowdown in the global economy were bolstered by the US Senate's failure to push forward the rescue package.
GBP/USD extends recovery gains towards 1.1700 despite UK lockdown concerns
GBP/USD stretches pullback from the multi-year low. UK PM Johnson to announce sweeping laws amid concerns of lockdown. US Senate drops the Trump administration’s COVID-19 bill. Another voting in the US Senate, coronavirus updates will be the key.
Oil bears laugh at Texas-OPEC hopes, Gold resumes safe-haven role
Virus unquantifiable impact and blocked stimulus bill sink risk appetite: Global equities got off to another terrible start after Democrats blocked the Senate’s coronavirus economic response rescue package.
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