Morning Market Review

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03/19/2020

EUR/USD

Today, during the Asian session, the EUR/USD pair is falling, continuing to develop a downtrend, which leads to the renewing of local minimums on the instrument since February 21. Now, the European currency has lost about 0.16%, testing the level of 1.0900 for a breakdown. The instrument remains under pressure amid the ongoing collapse in the stock markets and the growth of panic sentiment that is pushing investors to buy USD. Yesterday, European stock exchanges recorded the strongest decline in the last 7 years. Traders are also shocked by the price of oil, which fell to $20 per barrel (WTI Crude Oil). Yesterday’s macroeconomic statistics on consumer inflation in the EU met the forecasts but failed to provide significant support to the euro. The consumer price index in March rose by 0.2% MoM after a decline by 1% MoM in January. Annual inflation growth rates remained at the previous level of +1.2% YoY.

GBP/USD

The GBP/USD pair continues to renew record lows amid a sharp decline since March 10. Today, during the Asian session, the instrument tries to consolidate below 1.1500, the lowest level since 1985. Investors are actively buying up dollars in the market, fearing a negative scenario for the development of the coronavirus epidemic. Also, the UK, unlike many other countries, delayed the introduction of strict quarantine, and now investors fear that with an outbreak of illness, the health system may not be able to cope with the flow of patients.

AUD/USD

Today, during the Asian session, the AUD/USD pair is actively declining, renewing record multi-year lows against the ongoing rally of the US dollar. Panic in the market, as well as the sharp collapse of stock exchanges, are pushing investors to buy US currency, which currently serves as one of the main sources of liquidity in the market. Also to the situation with the coronavirus epidemic, the RBA decision on the interest rate is in the spotlight on Thursday. As many expected, the Australian regulator took additional measures to support the economy and lowered the interest rate by 25 basis points to 0.25%. At the same time, the published Australian labor market report for February added some optimism to the markets. So, the level of employment in February rose sharply by 26.7K jobs after rising by 12.9K last month. Analysts had expected an increase of only 10K. The unemployment rate in February unexpectedly dropped from 5.3% to 5.1% with a constant forecast.

USD/JPY

Today, during the Asian session, the USD/JPY pair is growing, renewing local highs since February 28. Amid a sharply negative picture in the stock markets and the difficult epidemiological situation in the world, investors are inclined to buy the dollar as a source of liquidity. Demand for the yen as a shelter asset remains quite low, although it allows its dynamics to be relatively calm. Additional pressure on the position of the Japanese currency has published poor macroeconomic statistics from Japan. Thus, according to the results of February, CPI slowed down from +0.7% YoY to +0.4% YoY against the forecast of growth to +0.8% YoY. However, the activity index in all sectors of Japan at the beginning of the year steadily increased by 0.8% MoM, which was significantly better than market expectations +0.2% MoM.

XAU/USD

Today, during the Asian session, gold prices show a negative trend, however, they make no attempt to consolidate below local lows since November 2019, renewed at the beginning of the week. Investors prefer the American currency to the precious metal, fearing that measures taken by the world Central Bank will be insufficient to curb negative trends. The US cannot yet calm the markets, which reflected in the sharp collapse of stock exchanges the day before. The Fed has promised to restore its mechanism for issuing loans directly to companies and households, which it has used during the 2008 financial crisis.

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