Friday March 13th, 2020

Markets remain volatile as investors calculate the economic impact from the increasing closures caused by the coronavirus. Equity markets after entering into ‘bear’ market territory this week, appear to have calmed slightly this morning. Currency markets remain volatile with the US$ returning to the safe-haven currency of choice. Central banks & policy makers have instigated stimulus measure, but more made be required. Virus cases are approaching 130k globally, Chinese new cases are slowing, but European/North American cases on the rise. Overall, investors remain focused on coronavirus developments, health updates and policy responses. Intraday focus will be on US Michigan Consumer Sentiment Index data release.

Oil prices suffered its worst weekly fall since 2008 as Coronavirus impacted demand & produces increase supply. Oil prices bounced 5% this morning, but the potential for further volatility remains. Firming oil prices helped C$ stage a 1% recovery from its lows 1.3963, to open below 1.3850 this morning. Expect C$ to remain volatile as the economic impact from the virus unfolds and how oil producers will respond going forward. Topside resistance remains at 1.4100 (feb5th 2016), with the intraday base 1.3765.

Euro weakened further vs US$ and equity markets tumbled into bear market territory after the ECB failed to provide investors the stimulus response they had been looking for. German news agency reports that Germany is planning billions of euros in financial aid to help companies and employees impacted by the virus outbreak. The German Chancellor said that extraordinary circumstances justify suspending the debt limit after stating that up to 70% of Germans may contract the virus.

GBP weakened significantly vs US$ as the UK PM prepared the public for new restrictions in response to the coronavirus. The Brexit negotiations have taken a backseat and have had no impact on GBP. The BoE minutes today will be watched closely after the BoE unscheduled rate cut.