Australian Dollar Plummets as Markets Rocked by Coronavirus Panic

Australian Dollar (AUD) Battered by Coronavirus Driven Selloff

The Australian Dollar (AUD) fell sharply at the end of last week’s session amidst rising market anxiety regarding the coronavirus crisis. Jittery investors jettisoned risk-sensitive assets like the ‘Aussie’ on Friday on rising fears that a pandemic could trigger a global recession.

Looking ahead, the ‘Aussie’ could be in for further losses this week if the Reserve Bank of Australia (RBA) signals it will need to cut interest rates in the near-term to help protect Australia’s economy from the impact of the coronavirus.

Pound (GBP) Undermined by No-Deal Brexit Fears

The Pound (GBP) struggled to find momentum at the end of last week as economists remained concerned about the prospect of a no-deal Brexit. This comes after the UK outlined its position on trade negotiations with the EU on Thursday, with the government warning it may walk away from talks in June if a there is not a ‘broad outline’ of a deal by then.

Said talks will get underway this week, likely infusing fresh volatility into Sterling as they are likely highlight the huge gulf between the UK and EU in their aims for a future trade relationship.

Euro (EUR) Steady, ECB Unlikely to Act on Coronavirus

The Euro (EUR) closed last week’s session on steady footing, on the expectation the European Central Bank (ECB) will not take measures to counter the coronavirus on account of it having already expended most of its monetary arsenal. With the ECB unable to act it appears that Eurozone governments are finally going to step up with stimulus of their own, with EUR investor cheering amidst signs Germany is preparing to increase its fiscal spending.

Looking ahead, the Euro may remain buoyed this evening as the Eurozone’s latest manufacturing PMI will confirm growth in the bloc’s private sector soared to a one-year high in February.

US Dollar (USD) Muted, Fed to Cut Interest Rates in March?

The US Dollar (USD) trended in a narrow range at the end of last week, holding its ground as safe-haven demand offset expectations for an imminent rate cut from the Federal Reserve. USD investors are now all but certain that the Fed will cut interest rates in March in response to the threat posed by the coronavirus, with the only question being whether it will opt for a larger cut of 50 basis points.

Coming up, expect the US Dollar to come under pressure at the start of this week if the latest ISM manufacturing PMI reports a slowdown in US factory activity in February.

Canadian Dollar (CAD) Dented by Weak GDP Figures

The Canadian Dollar (CAD) trended lower on Friday as Canada’s latest GDP figures revealed domestic growth slowed to its worst pace since 2016 in the last quarter of 2019.

Further weighing on the oil-sensitive ‘Loonie’ was also a continued rout in oil prices, with WTI crude falling to $44 a barrel on concerns the coronavirus will hurt global demand.

New Zealand Dollar (NZD) Slumps as Coronavirus Spreads to New Zealand

The New Zealand Dollar (NZD) tumbled at the end of last week, with the news that New Zealand had reported its first coronavirus case piling additional pressure on the risk-sensitive currency.

Data Releases

March 2nd 07:45 AUD Terms of Trade (Q4) 0.8%
March 2nd 19:00 EUR Manufacturing PMI (Feb) 49.1
March 2nd 19:30 GBP Manufacturing PMI (Feb) 51.8
March 2nd 21:00 GBP UK-EU Brexit Trade Talks
March 3rd 01:00 USD ISM Manufacturing PMI (Feb) 50.2

Louisa Heath

louisa.heath@torfx.com


Related