Morning Market Review

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03/20/2020

EUR/USD

EUR has shown rather active growth against USD during today's Asian session, recovering from an active rally in the last 3 trading days, which led to the updating of record lows of April 2017. The growth of the pair is observed against the background of profit taking by investors at the end of the week, while the fundamental picture is not changing much. World regulators are taking the most decisive measures to stabilize the situation, but the panic in the market has not yet been stopped. USD, despite the reduction in the rate to almost zero, is still considered a risk aversion and serves as a reliable source of liquidity. Macroeconomic statistics published from the euro area and Germany turned out to be mixed, but, as has already become usual recently, has remained without proper attention. German IFO Business Climate index fell from 96 to 87.7 points in March. German IFO Current Assessment index for the same period decreased from 99 to 93.8 points. German IFO Expectations index fell from 93.2 points to 82 points. At the same time, Construction Output data in the euro area in January reflected an increase from –2.3% YoY to 6% YoY, which was noticeably better than market expectations of 1.3% YoY.

GBP/USD

GBP is trading upwards against USD during today's Asian session, retreating from record lows since 1985. The instrument adds more than 1.2% and is testing the level of 1.1650 for a breakout. Investors are focused on yesterday's meeting of the Bank of England, at which it was decided to lower the interest rate from 0.25% to 0.1%, trying to minimize the damage from the spread of the coronavirus epidemic and slowdown the global economy. In addition, the British regulator increased the volume of the quantitative easing program from 435B to 645B pounds.

AUD/USD

AUD strengthens against USD during today's Asian session, retreating from record lows updated the day before. The corrective sentiment on the instrument began to strengthen on Thursday, which allowed AUD to win back most of the losses. The Reserve Bank of Australia announced next stimulus measures following other global regulators. The interest rate was reduced from 0.50% to 0.25%, while traders expressed cautious optimism in connection with the publication of a relatively good Australian labor market report for February. However, the markets agree that the February statistics weakly reflects the real situation in the economy and the March data will be significantly worse.

USD/JPY

USD is falling against JPY during today's Asian session, retreating from local highs since February 24. The decline in the instrument proceeds against the background of the growth of correctional sentiments in USD at the end of this week, while the general situation in the market does not change much. Macroeconomic statistics fade into the background, especially when it comes to February or even January data, and the market is firmly focused on the coronavirus pandemic and related measures that world regulators are taking to stabilize the economy.

XAU/USD

Gold prices are rising during today's Asian session, correcting against the background of a slight decline in USD. In addition, the low exchange rate of the instrument made the purchase of gold an attractive investment, given that fundamentally the situation in the markets does not change much. Gold is also supported by the rapid decline in interest rates by global regulators and additional quantitative easing measures designed to help a slowing economy.

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