Market News and Charts for March 09, 2020
Hey traders! Below are the latest forex chart updates for Monday’s sessions. Learn from the provided analysis and apply the recommended positions to your next move. Good day and Good Luck!
The New Zealand dollar fell weaker against the Canadian dollar despite the latter being affected by the decline in oil prices amid the intense coronavirus worries and oil price war initiated by Saudi Arabia after its talks with Russia over oil production curbs collapsed. The World Health Organization (WHO) declared a worldwide pandemic due to the spread of the coronavirus. This also comes after US President Donald Trump announced a ban on travelers from Europe for 30 days. It did not include the United Kingdom, however. The ban was announced overnight, although it wasn’t the first such containment measure from global leaders. In New Zealand, there are only five confirmed cases so far, all in Auckland, and zero deaths. Worldwide, the number of cases is approaching 135,000 in 127 countries. Fatalities are nearing 5,000. The rate of infection spread has also been breakneck, with 446 new cases in the past 24 hours.
Meanwhile, the euro is slightly perking up against the Canadian dollar, which is under extreme pressure as oil prices tank amid the Saudi-Russia oil price war. Canada has a current account deficit and is a major exporter of commodities, mainly oil. This condition makes the loonie sensitive to any slowdown in the global trade or capital flow. The premier of Alberta previously said the energy-rich Canadian province would halt oil production, if necessary, to support the industry, which would start laying off workers in response to the global oil war. And because of this, markets are expecting the Bank of Canada to cut its benchmark interest rate, which is currently at 1.25%, by as much as 75 basis points during its next policy decision on April 15. It would follow last week’s emergency rate cut of 50 basis points, made to mitigate the blow on the economy of the coronavirus pandemic. Canadian bond yields also tumbled across a flatter yield curve.
The New Zealand dollar plummeted against the Swiss franc in today’s sessions as the markets reel from risk aversion amid the coronavirus outbreak. Traders proceeded to buy safe-haven assets as they scale back exposure to risk on what is recorded as the Black Monday. The Swiss National Bank is expected to ramp up its market interventions to weaken the Swiss franc, according to data on Monday. So far, the bank has shied away from extra rate cuts to put the currency’s gains in check. Such interventions mean the SNB is trying to prevent a rapid and sustained rise of the currency sought by investors in times of economic turmoil. SNB Chairman Thomas Jordan has so far not matched cuts by the US Federal Reserve, Bank of Canada, and Reserve Bank of Australia to prop up their economies against a coronavirus downturn since the Switzerland economy has so far been robust, even as economies suffer blow-by-blow economic uncertainties.
Against another safe haven asset, the kiwi declined too as expected and hit a record low, opening a negative gap to hit a support level not reached since July 2012. The safe-haven appeal of the Japanese yen makes a return as investors flock safe-haven assets. Risk appetite is basically zero after oil prices crashed 30% and stock markets plummeted and panicked investors to sent currencies in wild swings. The yen’s appeal was further boosted as US Treasury yields slipped to record lows, with the benchmark 10-year yield falling below 40 basis points and the entire yield curve below 1% for the first time ever. Seeing this, markets became even more nervous as they assess the economic damage brought by the coronavirus fiasco. Saudi Arabia pledged to slash prices and boost production after the collapse of an OPEC supply agreement with Russia, essentially flooding the markets with cheap oil.
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