Forex news from the European morning session - 27 March 2020
Headlines:
- UK PM Boris Johnson tests positive for the coronavirus
- Spain reports deadliest day of the coronavirus outbreak with 769 deaths
- ICYMI: Trump is to review plans on whether to 'open the country up' this weekend
- Hong Kong reportedly set to announce new measures to contain the virus outbreak
- Hong Kong confirms 65 new coronavirus cases, biggest daily jump so far
- Tokyo governor confirms another 40 new coronavirus cases in the city today
- Italy may need new stimulus measures worth €30 billion - report
- Xi: China willing to work with the US on the virus epidemic
- RKI reports 42,288 coronavirus cases in Germany, up by 5,780 cases from yesterday
- Trump: Discussed in great detail about the coronavirus with China president Xi
- RBI cuts policy repo rate by 75 bps to 4.40%
Markets:
- JPY leads, NZD lags on the day
- European equities lower; E-minis down 2.6%
- US 10-year yields down 9 bps to 0.75%
- Gold down 0.8% to $1,619
- WTI down 0.8% to $22.40
- Bitcoin down 1.2% to $6,661
It was a slower session in the European morning as the market takes a cautious approach ahead of the weekend, with the risk mood keeping more defensive for the most part.
European equities started the day softer with losses around 1-2%, before extending them to 3-4% currently as we also see US futures lose ground - down by 2.6% now - after a solid performance over the past three days.
Coronavirus concerns continue to linger for the most part, with Germany seeing a consistent increase in cases, Hong Kong seeing its biggest daily jump in confirmed cases and Spain experiencing its deadliest day since the outbreak began.
In the UK, even prime minister Boris Johnson has tested positive for the virus now.
Amid the headlines, the dollar pared losses and held its ground during the session as we see EUR/USD back away from its key daily moving averages to fall to 1.1000 from 1.1087.
USD/JPY also backed away from a key test of its 200-day moving average as it moved higher from 108.24 to 108.80-00 levels currently.
The pound was a bit more mixed as it fell from 1.2300 to 1.2180 before climbing back up to 1.2290 and then paring gains to 1.2220 on the back of the Johnson virus news.
Despite the optimism from central bank and government measures this week, the question remains whether or not this is all enough to keep everything intact?
The dollar may have eased for now after the Fed action this week, but funding and credit pressures may not abate entirely so long as the economic situation remains dire.
It is going to be a whole new ball game next week and the fear is that this bear market rally will soon be meeting a really big reality check down the road - maybe as early as today.
