Here is what you need to know on Friday, March 20:
The US dollar takes a breather and is retreating after raging across the board throughout the week, as stocks find some calm after a wild week amid the coronavirus crisis. The respiratory disease has already taken the lives of over 10,000 people worldwide, with over 244,000 infected.
The Federal Reserve expanded its dollar swap program to additional central banks on Thursday after the initial move on Sunday to ease the pressure on the greenback. In the US, California issued a state-wide order to stay at home and New York mayor Bill de Blasio warned the city could run out of medical supplies. Lawmakers in Washington continue working on a relief bill aimed to be concluded by Monday. Other states may follow California.
See Is the US already in a recession?
EUR/USD is trading at the 1.07 handle after hitting 1.0652 on Thursday, the lowest since 2017. The European Central Bank introduced a new Quantitative Easing worth €750 billion to support vast government spending in Europe as several countries are under lockdown.
Italy has surpassed China in the number of deaths from coronavirus and is considering extending and deepening its restrictions. The disease continues spreading in Germany, France, and Spain with the latter seeing hospitals filling up.
GBP/USD is trading at the 1.16 handle after ranging over 300 pips on Thursday. The Bank of England surprised with the second rate cut in a week and also enlarged its QE program by £200 billion, an increase of around 45%. The move came as the new governor Andrew Bailey and his colleagues feared disorderly market action as Brits braced for a lockdown.
See Is money printing positive for currencies? Lessons from Lagarde's largesse, Bailey's bailout
Prime Minister Boris Johnson said Britain could turn the tide within 12 weeks after closing schools and taking other measures. Chancellor of the Exchequer Rishi Sunak is set to introduce new measures to support the economy later in the day. Brexit talks in doubt: David Frost, Chief UK Brexit negotiator is in self-isolation after showing symptoms of Covid-19 and as his European counterpart said he tested positive.
Oil prices have been surging into Friday, with WTI already some 30% off the lows of nearly $20 on Wednesday. The Canadian dollar has recovered, with USD/CAD trading at the 1.43 handle after topping 1.46 earlier this week. Canadian retail sales figures for January, before the crisis, are on the agenda today.
AUD/USD is also bouncing from the 17-year lows and is around at the 0.58 handle as the Reserve Bank of Australia began implementing its QE program. NZD/USD is also some 100 pips higher on the day, at the 0.57 handle.
USD/JPY is battling 110 after surpassing the round number on Thursday. The currency pair is moving with the dollar with the yen losing its safe-haven status.
US weekly jobless claims leaped to 281,000 from 211,000 in the first sign that the crisis is set to trigger unemployment. President Donald Trump has reportedly asked states not to publish employment figures while Goldman Sachs sees unemployment hitting 2.25 million. US Existing Home Sales for February are due out today
On Wall Street, a considerable amount of options expire on Wall Street, in what is called "quadruple witching" – that usually causes high volatility. With markets already wild, it could add fuel to the fire.
Cryptocurrencies are on the rise with Bitcoin topping $6,000 and other digital assets following suit.
More: Coronavirus market turmoil explained: Dollar, stocks, gold, oil, and more
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EUR/USD bounces off lows, retests 1.1370
Following an early drop to the vicinity of 1.1310, EUR/USD now manages to regain pace and retargets the 1.1370-1.1380 band on the back of a tepid knee-jerk in the US Dollar, always amid growing optimism over a potential de-escalation in the US-China trade war.
GBP/USD trades slightly on the defensive in the low-1.3300s
GBP/USD remains under a mild selling pressure just above 1.3300 on Friday, despite firmer-than-expected UK Retail Sales. The pair is weighed down by a renewed buying interest in the Greenback, bolstered by fresh headlines suggesting a softening in the rhetoric surrounding the US-China trade conflict.
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Week ahead: US GDP, inflation and jobs in focus amid tariff mess – BoJ meets
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