The U.S. Dollar Remains Elevated As Volatility Persists.
Wednesday 1 April, 2020
Daily Currency UpdateUSD - United States DollarThe U.S. Dollar crept higher on Tuesday and into Wednesday trade, advancing against most major counterparts as investors adjusted end of the month and quarter positions. The dollar closed the first three months of the year as the best performer among majors up some 2.8 percent. At the same time, oil and commodity led currencies were the biggest losers with the Norwegian Kroner leading pack, having lost almost a 5th of its value, a move directly in correlation with the tumbling oil price. USD upside through Tuesday was capped, however, as the Fed announced further measure to ease funding pressures. A new program, dubbed the FIMA Repo Facility, has been engineered to improved dollar funding for other central banks. The new platform allows central banks to swap treasuries for overnight USD loans in a bid to ease liquidity strains further and free up capital to drive growth and enhance stability across the global economy. With cash becoming more readily available, the dollar will likely struggle to extend its recent upturn through the short term as markets adjust positions and risk sentiment improves.
Key MoversThis morning we have seen a raft of European releases. With the majority of them highlighting contraction, the standout release came from the Italian Manufacturing PMI. The headline figure is the weakest print since April 2009, with factory production falling at its fastest pace on record while operating conditions and order book volumes declined at their quickest rate for nearly 11 years. Another concern was the Eurozone's PMI Manufacturing release. Output, new orders, and purchasing all fell sharply as supply-side disruptions continue to intensify amid the virus outbreak and lock-downs globally. Hitting a seven and a half year low is a worry, but the real concern is we haven't even hit the peak decline, and virus-driven data doesn't form the best part of this March release, so this number is largely expected to decline further.Sterling slipped lower during Tuesday's trade as the pandemic sweeping the globe continues to dominate currency moves. Cable moved from a day's high of 1.2466 down to 1.2360. GBP/EUR followed the same way, moving from a day's high of 1.1343 down to 1.1224. It's been a light economic calendar for the U.K. since the start of the week, so virus chat has been in the driving seat for the best part. With a 'shocking' 27% rise in the deaths due to the deadly virus, not to forget a 14% surge in the cases, the U.K.'s policymakers are struggling to justify their efforts in taming the pandemic. The U.K. Government is coming under increased pressure to implement even stricture measures for the lock-down as cases continue to rise.
- EUR/USD: 1.0916 - 1.1036 ▼
- GBP/USD: 1.2330 - 1.2438 ▼
- USD/CAD: 1.4065 - 1.4272 ▲
- AUD/USD: 0.6038 - 0.6185 ▼
- NZD/USD: 0.5878 - 0.5977 ▼