Here is what you need to know on Monday, March 9:
Markets are panicking with wild moves across the board, including flash crashes. Investors are increasingly worried about the spread of coronavirus and its impact on the global economy.
Coronavirus greatest worries: Over the weekend, Italy announced that it is locking down most of its north, an area including 16 million people – a quarter of the population – and most of its industry. The death toll jumped from 233 to 366 on Sunday, and the number of infections topped 7,000. Markets are also worried about the spread in the US – the world's largest economy – where testing for the respiratory disease has been slow. America's mortalities are only at 21, but some fear a leap. In total, over 110,000 cases are confirmed, and the death toll is around 3,800.
Mammoth bond moves: Investors are flocking into the safety of US bonds and reflecting an outright US recession. The benchmark US 10-year Treasury yield is dropping below 0.50%. PIMCO says an outright downturn is on the cards.
The US dollar is on the back foot against majors with USD/JPY falling below 102 at one point, the lowest since 2016, EUR/USD nearing 1.15, the highest since December 2018, and GBP/USD swinging above 1.31 at one point. The most extreme moves were reversed, but the USD/JPY remains below 103.
The greenback beat commodity currencies with AUD/USD flash-crashing below 0.64, NZD/USD to near 0.60. USD/CAD jumped above 1.37 and is holding onto gains above 1.36, amid the fall in prices.
Gold jumped to a new seven-year high at $1,703.19 before turning down and trading below $1,670.
Crude crashing: Saudi Arabia decided to kick off a price war, offering discounts to customers and ramping up production. The decision has come after talks between OPEC and non-OPEC countries – led by Russia – collapsed on Friday. WTI is trading below $30, down some 30% after falling on Friday. The Saudis originally wanted to prolong and deepen oil production cuts in the wake of the coronavirus crisis.
Stock markets in Asia are plunging with Japan's Topix entering a bear market – 20% down from the peak – and US eMini S&P futures pointing to a 5% plummet.
In economic data, Japan's final Gross Domestic Product saw a downgrade to -1.8% for the fourth quarter, worse than initially reported. The eurozone Sentix Investor Confidence is set to turn negative in March. Friday's US Non-Farm Payrolls figures for February – that beat expectations with 273,000 – have faded into the background.
Cryptocurrencies lost ground over the weekend, with Bitcoin falling below $8,000.
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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