A better market mood emerged in Asia on Tuesday, as the overall sentiment was boosted by the progress on the coronavirus economic relief deal worked on by the US Congress. Further, the Fed’s unlimited QE eased the pressure off the credit markets and pushed the US dollar further south while reviving the risk-on trades. The looming concerns about the virus-led lockdowns across the globe and its economic fallout took a back seat for now.
The US stocks futures rallied alongside the US Treasury yields and Asian markets, as the Japanese stocks surged over 7%. Gold prices extended the overnight gains and tested the 1600 level on Fed’s aggressive easing. Oil prices also rebounded amid a risk-on market profile.
Within the G10 currency markets, most majors extended the rebound on the extension of the losses in the US dollar across the board. The Aussie, however, outperformed and jumped as high as 0.5950, tracking the solid rise in gold and oil prices. The Kiwi also rallied 1% and briefly regain 0.5800 while USD/CAD lost 0.50% to test the bids just below the 1.4400 level. USD/JPY extended the drop but found support just above 110.00, rescued by the rally in equities.
Meanwhile, EUR/USD, on the other hand, held onto the recovery gains around 1.0800 while the Cable defended the 1.1600 mark amid stringent measures deployed by the UK PM Johnson to battle the virus spread.
Main topics in Asia
US VP Pence: We ask lawmakers to speed up the approval of the support package…
US President Trump: Called Fed’s Powell on Monday, told him he did a good job
China cites Hubei has 1 additional COVID-19 March 23
NZ confirms 40 new cases Of COVID-19
Mnuchin: Very close to deal on COVID-19 stimulus bill
US inflation expectations rise from decade lows on Fed's unlimited QE
South Korea stats: 76 new COVID-19 cases in 24 hours, total 9037
Beijing Govt: All overseas arrivals will be subject to centralised quarantine
US domestic passenger flights could virtually shut down, voluntarily or by government order – WSJ
RBA pumps liquidity, proposes bond buys to ease financial conditions, AUD/USD rallies 2%
NZ FinMin Robertson: Govt to set up NZD $6.25 bn business financing guarantee scheme
S. Korean Pres. Moon announces a total 100 trln won worth of market packages to fight coronavirus
S&P 500 futures and yields rise while US dollar drops on Fed's unlimited QE
US Pres. Trump: Republicans should not agree to Democrat stimulus measures
Canada to introduce new powers to spend, raise taxes without Parliamentary approval
BOJ’s Kuroda: Closely monitoring the market moves
BOJ: Banks borrow record $89.3 billion from dollar funding operations
Key focus ahead
Markets brace for a busy EUR macro calendar this Tuesday, with the Preliminary Markit Manufacturing and Services Purchasing Manufacturing Index (PMI) reports from across the Euro area and the UK, trickling in from 0815 GMT, to dominate, as they will suggest a sharp contraction in the business activity, in part due to the coronavirus impact.
Also, in focus remains the Constitutional Court Ruling on the European Central Bank (ECB) QE legality and UK’s CBI Industrial Trends Survey – Orders due later in the European session.
The NA session also sees the key US Markit Manufacturing and Services PMIs, followed by the New Homes Sales data and US API Weekly Crude Oil Stock report.
The US Congress relief deal will be closely eyed while coronavirus updates-driven broad risk sentiment and dollar price-action will continue to influence the markets.
EUR/USD: Dollar weakness powers gains, Eurozone PMIs eyed
The anti-greenback sentiment triggered by the Federal Reserve's (Fed) open-ended asset purchase program is boding well for the EUR and helping EUR/USD gain altitude. The spot, however, may come under pressure if the Eurozone and German preliminary Manufacturing PMIs disappoint.
GBP/USD: Firmer above 1.1600 ahead of UK/US Purchasing Managers Index
GBP/USD benefits from the broad US dollar weakness. The UK PM announces the most stringent rules post World War II to tame the coronavirus. The preliminary PMI data is likely to portray the first impressions of the deadly virus on the key activities.
Eurozone PMIs Preview: How calamitous is the coronavirus carnage? Three scenarios for EUR/USD
Eurozone PMIs are set to plunge in response to the devastating coronavirus crisis. French figures could have a more significant impact than usual due to their timing.
UK PMIs Quick Preview: First coronavirus-linked read is a lose-lose situation for GBP/USD
Markit's preliminary PMIs for March are expected to drop to contraction territory amid the coronavirus crisis. The data has been collected before stricter lockdown measures have been collected.
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