Coronavirus risks loom, USD bulls take a breather ahead of US Payrolls
Fundamental Forex Analysis

Coronavirus risks loom, USD bulls take a breather ahead of US Payrolls

The relentless rise in the coronavirus cases world-wide continues to keep the investors on the edge. The US dollar continued to enjoy the safe-haven flows, as the Asian equities turned negative alongside the US stock futures and Treasury yields.

COVID-19 cases surpass 1M worldwide with over 50,000 death toll.

Oil prices, meanwhile, consolidated the corrective slide from $27.30 to $23.34 amid hopes of Saudi-Russia deal to cut the oil output, as cited by US President Donald Trump. The traditional safety bet, gold, fell back in the red zone but managed to stay above the 1600 mark.

On the fx front, the anti-risk yen attempted a tepid recovery and dragged USD/JPY back below 108.00. The Aussie cheered upbeat Australian Retail Sales and China’s Caixin Services PMI and headed towards 0.6100 while the Kiwi dollar battled 0.5900.  The Canadian dollar tripped in tandem with oil prices, with USD/CAD firmer above 1.4150.

Among the European currencies, EUR/USD is off the six-day low but not out the woods yet, around 1.0850. GBP/USD also traded with mild losses below 1.2400. Meanwhile, the Swiss franc traded better bid vs. the US dollar amid broad risk-aversion.

Main topics in Asia

US Treasury Sec. Mnuchin: First support payments to be direct deposited within two weeks

UK Chancellor Sunak overhauls small business scheme after deluge of insolvencies–Mirror

Trump: Hopes Russia, Saudi Arabia will reach deal to cut production by as many as 15 mln bpd soon

US AA+ rating affirmed by S&P, outlook stable

Communist Party Secretary of China’s Wuhan says the risk of coronavirus resurgence in city still high

Australia Retail Feb Sales: 0.5% MoM (expected 0.4%)

Trump : “We hit 3M hard today after seeing what they were doing with their masks”

ADB cuts China’s 2020 GDP forecast to 2.3%

China Caixin/IHS Markit March Services PMI at 43.0 vs 26.5 in February

Japan’s Nishimura: Govt aims to decide on economic package early next week

RBNZ’s Orr: Central bank can increase the monetary stimulus if needed

NZ FinMin Robertson: Giving temporary relief for entities that are unable to comply with requirements due to coronavirus

PBOC’s Liu: Should consider CPI and other factors before adjusting benchmark deposit rate

Australian PM Morrison: Early modeling work on virus suggests Australia is tracking well

Key focus ahead        

Another busy docket today in Europe, as the Final Services PMI reports from across the Euro area economies will start trickling in from 0715 GMT onwards while the UK one will drop in at 0830 GMT. The Eurozone Producer Price Index (PPI, due at 0900 GMT, will be also watched out for some fresh trading incentives.

The NA traders will pay close attention to the US Non-Farm Payrolls data for March, in the face of the virus impact on the country’s job market. The data will be reported at 1230 GMT, followed by the Markit and ISM US Services PMIs around 1400 GMT. Markets will also take note of the Baker Hughes US Oil Rig Count data due at 1700 GMT.

Despite all the macro updates lined up for release, incoming virus-linked developments and dollar price movement will continue to remain a major driving force across the markets.

EUR/USD in a phase of bearish consolidation around 1.0850, US NFP eyed

With the US dollar bulls taking a breather following the latest upsurge, EUR/USD is licking its wounds ahead of the European open. The spot trades close to the six-day lows reached Thursday at 1.0820, as it awaits the critical US data for the next direction.

GBP/USD: Weaker below 1.2400 ahead of UK PMI, US data

GBP/USD bears the burden of broad US dollar strength while waiting for fresh impulse. UK plans to issue coronavirus “immunity passports”. Final reading of the UK’s March PMIs, US jobs report and ISM Non-Manufacturing PMI will be in focus.

US Non-Farm Payrolls March preview: If it’s terrible, it’s expected, if it’s not, April will be

Payrolls expected to lose 100,000 in March, first decrease since September 2010. Initial jobless claims average 4.9 million for two weeks. Dollar retains safe-haven status as public health crisis is unabated.

US Non-Manufacturing Purchasing Managers’ Index for March: The disaster may be delayed…until April

PMI expected to take largest one-month plunge in series history to the lowest level since the financial crisis. Data will not fully reflect the economic impact of the public health crisis.


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