Wednesday March 11th, 2020

Global economic growth concerns continue to dominate the markets, but some positive signs are being seen as policy makers start to take action. BoE is the latest central bank to cut rates, announced lending support and the UK budget is expected to provide additional stimulus. The US$ remains under pressure as it struggles to recover after being disappointed with the US fiscal stimulus announcement. US Treasury Secretary is set to testify on Capital Hill and may provide more details of the administration’s plans.¬†Oil prices fall again as Saudi Arabia plans to raise output capacity to 13m BPD, rebuffing Moscow’s suggestion of new talks to cut output and restore pricing. Intraday US CPI data and the US Treasury Secretary’s comments will be followed closely.

Saudi Arabia appears set to raise its output capacity for the first time in over a decade with increased supply coming online in April. Oil prices slipped again by 3% today and the probability of OPEC intervening at this stage appears slim. Yesterday C$ tested a fresh 4 year low (1.3796) vs US$ before managing to rebound at the close. Oil prices remain vulnerable to further weakness as Saudi Arabia are set to increase capacity. A break of 1.3845 could open C$ to further weakness towards 1.4100 (feb5th 2016), intraday base sits at 1.3615.

Euro strengthens vs a weaker US$, boosted BoE actions and anticipation of possible ECB stimulus. Coronavirus concerns continue to grow as virus cases in Italy surpasses 10k, with France Germany & Spain having combined cases of +5K. Focus will be on US Secretary and US CPI data for direction. Expect Euro to remain vulnerable to further wide price swings.

GBP rebounded after the BoE cut interest rates, increased lending support and ahead of anticipated stimulus from the UK budget today. Brexit negotiations continue to be sidelined as investors focus on the economic impact from the coronavirus. The US Treasury Secretary’s comments will be watch closely for additional information on the proposed US Stimulus proposals.