Thursday March 26th, 2020

The US Senate passes $2-trillion stimulus package, which now moves to the House of Representatives for a vote on Friday. The US$ index continued to fall for a 4th consecutive day vs a basket of major currencies. Investors have pulled back from the US$ ahead of the US Initial claims data this morning. The US data is expected to show a surge in unemployment benefit claims as result of layoff’s related to the coronavirus. As global coronavirus cases approach 500k, we expect Investors to continue to want US$ as the safe-haven currency. Intraday US data releases, US Stimulus package developments & Fed Chair’s comments will dictate direction.

Oil prices remain under pressure as demand remains low with Europe, US & India lockdown restrictions and Saudi Arabia increasing supply. OPEC appears unable to stem the weak oil prices and US Republican lawmakers urges state dept to boost diplomacy on oil price war. C$ has rallied almost 2% from yesterdays open despite weak oil prices but benefiting from weaker US$. C$ breached 1.4150 support level opening up a retest of 1.4080. Under the current conditions, this could be an opportunity to purchase US$ on dips scenario.

Euro edged higher after the US Senate passed the stimulus bill, which was more of US$ easing vs Euro strengthening. Almost 10 European countries have called for issuing “corona-bonds” in an effort to tackle the economic impact from the Coronavirus.  Mixed messages on the spread of virus cases in Europe as Italian cases fall, but Spain hitting new records with 738 deaths reported on Wednesday. Intraday focus will be on the US Stimulus package, Fed Chairs Speech and US initial jobless claims.

GBP rallied overnight gaining strength from the US stimulus package and ahead of the BoE meeting today. The UK government said its ready to introduce more stimulus measures, focusing now on small businesses. GBP will focus on BoE statements and US Initial jobless claims for direction. GBP remains vulnerable to further weakness.