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Safe-Haven Demand Over COVID-19 Elevates the Greenback

USD - United States Dollar

The USD's safe-haven demand kicked in on Monday and pushed the Dollar higher, reversing six days of consecutive losses. With the US injecting masses of funding into the economy, it has calmed the storm somewhat, but with the states soon to become the new epicenter of the virus, the greenback will be on unsteady ground. Data releases for the US is one to watch for the next few days, last week's jobless claims gave us a taste of the damage COVID-19 is doing to the economy and this week we have a raft of employment releases.
In other news, China surprisingly posted an increase in its Manufacturing PMI overnight. A figure above 50.0 shows expansion, and we saw 52.0 released. This was a massive jump from last week's all-time low of 35.7. In other Chinese data, new orders expanded, but exports and imports were still contracting, this is to be expected. However, as China is ahead from the rest of the world with recovery from COVID-19, therefore slowing the global trade with China.
The price of Oil also took a damaging blow yesterday after its price dropped below $20 a barrel, and this has caused issues for the commodity-based currencies, in particular the Canadian Dollar.
The US dollar advanced against the majority of significant counterparts through trade on Monday, finding support after a string of daily depreciation through last week. Month-end re-balancing helped bolster demand for the world base currency, driving the dollar index 1 % higher as the Euro fell back through 1.11 and 1.1050 and Sterling's upturn stalled.
While investors have checked the upturn of mid-March, there is still ample scope for USD upside. Despite the Fed injecting masses of funding into the global economy and stabilizing swap lines, USD demand and supply-side balances remain fragile. At the same time, another liquidity squeeze could prompt another run on emerging markets and risk assets, driving the Dollar higher.

Key Movers

The UK witnessed an increase of 180 deaths from the previous day and total confirmed cases rose by another 2,619 taking the total to 22,141 on Monday. Chief scientific adviser Sir Patrick Vallance said it would be two to three weeks before these social distancing measures begin to affect the numbers falling ill. On the positive side, the UK is extending efforts. It is close to opening the world's largest hospital built in 10-days while also ordering more ventilators, nearly 15,000, than the total number it says it needs to cope with the coronavirus pandemic. There was also some glimmer of hope across Europe as infection rates fell in Italy and Spain showing social distancing and lockdowns appear to be having an impact.
The Australian Dollar remained mostly range-bound through trade on Monday, despite broader USD gains and month-end rebalancing. The AUD bounced between intraday lows at 0.6112 and session highs at 0.6180, mostly holding onto the gains won throughout last week. The Federal government proffered a third economic stimulus package taking the total fiscal injection to 10% of GDP. The plan directs funds to key business and industry groups in a bid to shore up incomes and support cash flow while the economy comes to a grinding halt. Buoyed by the increased financial support equities advanced some 7%. At the same time, the AUD shrugged off a broad-based US dollar advance and further weakness in oil prices and jumped against major key crosses, testing 0.56 against the EUR while creeping ever nearer 0.50 GBP.

Expected Ranges

EUR/USD: 1.0926 - 1.1042 ▼

GBP/USD: 1.2242 - 1.2450 ▲

USD/CAD: 1.4163 - 1.4349 ▲

AUD/USD: 0.6075 - 0.6213 ▼

NZD/USD: 0.5926 - 0.6038 ▼