Daily Currency Update

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The Greenback increases almost 1 percent versus the Euro following U.S. dollar funding stress in money markets. This has not been seen since the 2008 crisis.

USD - United States Dollar

The Greenback bounces strongly versus G10 currencies, following increased uncertainty over the impact of coronavirus outbreak. Every crisis boosts demand for cash, which is making companies demand U.S dollars, pushing the cost of U.S dollar funding higher (and interest rates in the money markets go higher). As a result, the U.S. dollar is increasing versus other FX pairs, which started at the beginning of this week. According to Bloomberg, as uncertainty grows, the decisive impact of the coronavirus is seen through the corporate treasurers rushing to borrow to bolster their reserves.

Key Movers

The Euro plunged against the U.S. dollar after the ECB kept interest rates unchanged, choosing instead to boost its QE program and add liquidity tools. The EUR/USD pair is trading almost 1 percent lower this morning, trading at 1.1150 at the time of this writing. ECB Head Christine Lagarde said that the virus response must be fiscal, “first and foremost,” adding that the next ECB press conference will be entirely online.

Turbulence has awoken from inactivity in the FX markets, and it started with uncertainty related to the economic effects of the pandemic situation. The worrying issue is that FX markets might revisit levels seen when the global financial crisis crippled markets in 2008.

Expected Ranges

USD/CAD: 1.3727 - 1.3860 ▲

EUR/USD: 1.1079 - 1.1220 ▼

GBP/USD: 1.2579 - 1.2690 ▼

AUD/USD: 0.6232 - 0.6401 ▼

NZD/USD: 0.6115 - 0.6180 ▼