Forex news for New York trade on March 18, 2020:
- White House economic adviser Kudlow say US government might buy stocks
- ECB holding emergency call on virus response
- Jeff Gundlach: We’ve officially reached “disorderly”
- Detroit's largest automakers agree to shut down US factories
- GBPUSD crashes below the 1.1500 level now
- UK coronavirus death toll rises to 99 from 67 yesterday
- Sen. Sanders: "Absolutely false" that he is suspending his campaign
- Coronavirus death toll in Lombardy region in Italy jumps 319
- Crude oil inventories for the March 13 week 1.954K vs 3.3M estimate
- UK virus case stands at 2626, up from 1950 on Tuesday
- Trump confirms that US-Canada border will be closed to non-essential traffic
- New York City mayor says military assistance needed in the city
Markets:
- Gold down $40 to $1488
- WTI crude down $4.52 to $22.40 after hitting $20.06 low
- S&P 500 down 131 points, or 5.2%, to 2398
- US 10-year yields up 0.9 bps to 1.17%
- USD leads, GBP lags
What happened? The short version is that no amount of central bank easing, government spending or quarantines is going to make coronavirus go away. At best we can lock everything down until we get a vaccine or a treatment.
In that scenario, no one is going to lend and a large portion of the world's businesses are insolvent. No one is driving and oil prices are absolutely crumbling. Crude fell 28% at the lows before trimming the daily loss to only 17%. There's no price that will stimulate demand with everyone locked at home.
The Canadian dollar still somehow outperformed its commodity cousins as AUD and NZD crumbled, both touching 0.57 and the worst levels since 2002. The difference for the loonie is that the 2016 lows are still holding. We might see a repeat in the near-term if that breaks.
I can't believe I've got this far without mentioning the pound, where there as something akin to a flash crash. It fell more than 5% at the lows of the day including a very quick fall to 1.1450 from 1.1750 shortly after midday in New York. That drop was a perfect storm of technicals, negative-GDP sentiment and a USD funding crisis. After the washout it bounced to 1.1670 and is consolidating around 1.1600 now.
The euro followed the same path as the pound but to a much-less extreme course. From 1.10 early the selling accelerated from the break of yesterday's lows near 1.0950 and down to 1.0800 at the lows before a 110 pip bounce.
