Monday March 30th, 2020

Over 110 counties have instigated travel and movement restrictions, with +1bln people globally under some form of lockdown restrictions. Global virus cases are approaching 750k, global related deaths hits +34,830 with +800 reported today. US$ index firmed almost 1% vs major currencies after the US extends restrictions until April 30th. Concerns over the economic impact from the virus prompted investors to buy safe-haven US, causing equities & commodities to weaken. Petro currencies CAD, MXN, IDR, RUB and NOK all came under renewed selling pressure as oil prices hit 2002 lows. Australia announced A$130bln stimulus package, initially rallying AUD. CNY & Asian currencies are stable vs US$ as China pledges to support its domestic economy. Focus remains on coronavirus developments, US President’s speech and US data releases.

Oil fell 8% this morning as demand fears increase in response to several counties including the US extending their lockdown periods.  Adding to Oil’s weakness, Saudi Arabia commented that they were not in talks with Russia despite pressure from the US. C$ has fallen 1% this morning from a combination of weaker oil prices and a strengthening US$. Re-coupling of C$/Oil prices this morning, plus a strengthening US$ could see C$ weaken further towards 1.4250 level. 

Euro came under pressure on weaker Eur sentiment data and a general strengthening of US$. Germany alongside other countries announced it was extending its lockdown restrictions until April 20th. Eurozone harmonized CPI due this morning will provide some short-term direction to the market. Markets appear to be setting up for another flight to US$ safety, causing Euro weakness. Next key support 1.0980 with resistance at 1.1150 vs US$.

A similar story for GBP, weakening vs a stronger US$ after last week’s significant rally. UK PM is sending a letter to the nation suggesting that things will likely get worse before they get better. The prospect of prolonged restrictions, possible no Brexit trade deal and a return to US$ safe haven could see GBP weaken further. Expect volatility to remain with GBP being driven by US$ direction. A break of 1.2310 could see a retest of 1.2150 vs US$, resistance remains at 1.2550.