Forex news from the European morning session – 11 March 2020
- NZD leads, USD lags on the day
- European equities mixed; E-minis down 2.7%
- US 10-year yields down 10 bps to 0.70%
- Gold up 1.1% to $ 1,667.55
- WTI down 3.1% to $ 33.31
- Bitcoin down 1.8% to $ 7,852
The big story in the session today was the BOE following the Fed into performing a 50 bps emergency rate cut, bringing the bank rate down from 0.75% to 0.25%.
The central bank also announced additional financing to smaller firms to alleviate the pressure from the virus impact, coordinating their move with the UK government ahead of the budget release later today.
The pound fell initially, with cable sinking from 1.2930 to 1.2832 before rising to hit a high of 1.2977 during Carney’s press conference. But gains eased up a little after as risk continues to sit on shaky ground ahead of North American trading.
US futures were down as much as 3% before halving those losses, allowing USD/JPY to climb from a low of 104.10 to 105.30. However, gains were fleeting as we see futures fall back lower and in turn, dragging USD/JPY back to 104.80.
The dollar stayed weaker throughout as Treasury yields continue to struggle, with 10-year yields slipping to 0.63% initially before creeping up to 0.70% now.
The market is still largely weighing up the extent of the economic fallout from the virus outbreak and all the stimulus measures being offered up by governments across the globe. So far, the response isn’t too pretty.
But at least it is no bloodbath like the one we saw on Monday though. That said, volatility remains as high as ever and there are many moving parts in the market to be aware of right now. Keep the focus on the big picture and stay safe out there.