Forex news for North American trading on March 2, 2020:
- S&P 500 gains 4.6% on hopes for rate cuts
- ISM February manufacturing 50.1 vs 50.5 prior
- US January construction spending +1.8% vs +0.6% expected
- US Feb Markit final manufacturing PMI 50.7 vs 50.8 expected
- Canada Feb Markit manufacturing PMI 51.8 vs 50.6 prior
- France now says it has 191 cases of coronavirus
- Klobuchar ends 2020 presidential campaign
- Italy will hike deficit forecast to 2.4% from 2.2% on virus - report
- ECB's Wunsch: V-shaped recovery 'not the only possible scenario'
- Former GE CEO Jack Welsh dies at 84
- ECB's de Guindos: Market reaction in part due to valuations, as they were stretched
- OPEC+ meetings reportedly to go ahead as planned on 5-6 March in Vienna
- Gold up $7 to $1592
- WTI crude up $2.62 to $47.37
- US 10-year yields up 1 bps to 1.13%
- EUR leads, GBP lags
The market is now primed for dramatic action by global central banks to step demand destruction from the coronavirus outbreak. An enormous rally in stocks was predicated on some kind emergency rate cut across multiple central banks. The jump accelerated after a report that G7 central bankers will be on a call with ministers on Tuesday.
Bonds and USD/JPY were skeptical of stocks early but got on board late in the day as US 10s moved up to 1.14% from a low of 1.02%. USD/JPY couldn't match the session high but came close at 108.33 in a late 30-pip jump.
The safe-haven flows and unwinds into the euro reversed late in a slide back to 1.1130 from 1.1180 at the highs. That was still another +100 pip day for the euro.
As the virus news came in, it dented gains at various times and the market even traded lower for a period but the bulls won out for now.
Oil is setting up for OPEC action late this week with a nice rally after days of unceasing selling.
All told, it was an impressive rebound for the bulls but puts central banks in a position where they will struggle to satisfy the market's demands.