Monday March 23rd, 2020

Equity and commodity markets have opened weaker this morning on rising fears that current global stimulus isn’t enough to offset the economic impact from the coronavirus. Global virus cases grew to +340k, with the US having the 3rd largest number of virus cases at +35k, global deaths approach 15k. In the light of increasing global “lockdowns”, Goldman Sacks said it expected global real GDP to contract by 1% in 2020. YTD 2020 US$ index is up almost +7%, in contrast MXN-31%, ZAR -24% NOK -30% all hitting record lows vs US$. Its a similar story globally with most currencies have fallen between 5%-15% vs US$. The focus today will be on the US senate votes today on the Coronavirus Bill and G20 meeting.

Oil extends its losses with Brent Crude down 5% hitting $25 a barrel as demand tumbles and Saudi Arabia production increases. C$ has fallen almost 1% vs US$ this morning directly on the back of weakening oil prices. Canadian coronavirus cases remain relatively low in comparison to other G20 countries sitting just below 1,500, but still the economic impact is being felt. Resistance remains at 1.4690, if breached we could see 1.4940 (Apr03) next.

Euro remains under-pressure from the strain of lockdowns as virus cases surpasses 150K in Europe and with +5,400 related deaths in Italy alone. The ECB and EU governments have announced significant stimulus packages and Germany ready to take on more debt to counter the crisis. With the expectation that possibly the worst is yet to come from a human & economic standpoint, Euro remains vulnerable to further weakness. A break of 1.0600 could see a retest of 1.0340 (Jan17), further breach could see Euro retesting 1.000 vs US$.

GBP remains under pressure vs the almighty US$ as the UK government prepares for additional social restrictions. The UK has the 10th largest number of Coronavirus cases globally at +5,700 and has reported 281 deaths to date. The BoE and UK government have implemented major stimulus packages and the BoE has pledged an additional GBP200 bin in fresh QE with a promise of more to come. GBP remains under-pressure vs US$, 1.1404 is the key support, if breached expect possibly to 1.0640, last seen in 1985.