Wednesday March 25th, 2020

The US Senate and the WH administration have reached an agreement on a $2-trillion package, the largest rescue package in American history. The Senate and the House of Representative are both expected to vote on the stimulus package today. The combination of $2-trillion package, alongside the Fed’s lending stimulus has initially helped calm the markets. The US$ index vs a basket of major currencies has fallen for a 3rd consecutive day and global equity markets have rebounded strongly on the US stimulus package news. Coronavirus developments remain the markets focus as total infections reach almost 450k and related deaths approach 20k. Intraday the US vote on the stimulus package, as well US Durable goods, Nondefense cap goods and Housing price index data are out this morning.

Oil prices initially rallied on stimulus news, but rebounded to start the N.America session down over 4%. Ongoing travel restrictions, US stockpiles and Saudi Arabia’s strategy to increase supply are negatively impacting prices. C$ originally rallied on the US stimulus news, weakened back towards 1.44 (mid-range) remaining vulnerable to further weakness. No Canadian data out this week. Investors will focus on the stimulus vote, US data and oil prices to dictate direction today. In the current market conditions, dips below 1.4350 may be considered US$ buying opportunities.

Euro rebounded marginally on the US stimulus news, but is struggling to breach 1.0900 level vs US$. German data this morning came out below expectations, adding pressure to the single currency. With over 155k virus cases in just Italy, Spain, Germany & France, the continent remains on lockdown until April 3rd and likely to extend. A break of 1.0880 could see an extension to 1.1050 vs US$. Alternatively a break of 1.0750 may see further weakness to 1.0580. Current levels may present good opportunities to sell Euro.

Prince Charles has tested positive for the Coronavirus, joining the +8,160 cases reported in the UK. GBP rallied +1%, breaking through 1.19 vs US$ on the US stimulus news. The UK shut downs have extended to the houses of parliament in attempts to control the virus spreading. BoE meeting Thursday will be eyed for any additional QE from the bank. Bias remains to sell GBP on rallies under the current virus conditions.