Market News and Charts for March 13, 2020
Hey traders! Below are the latest forex chart updates for Friday’s sessions. Learn from the provided analysis and apply the recommended positions to your next move. Good day and Good Luck!
The Australian dollar continues to plummet against the Canadian dollar on Friday after a catastrophic Thursday, tagged Black Thursday 2020, in which financial markets around the world crashed to record lows on a combination of coronavirus concerns and oil price conflict between Saudi Arabia and Russia. This comes in spite of the Reserve Bank of Australia’s injection of an unusually large amount of cash into the financial system on Friday. Panic rages across global markets, and this threatened to drain liquidity. The “Big Four” banks of Australia, meanwhile, have recovered from sharp losses earlier in stock market sessions. Australia’s government has also tightened lockdown measures to prevent the coronavirus from spreading across the country. Prime Minister Scott Morrison called for bans on non-essential gatherings of more than 500 people. He also encouraged people to reduce their overseas trips.
Against the Swiss franc, the Australian dollar continued to plummet as safe-haven appeal overwhelmed riskier currencies. For the short term, there is no indication the Australian dollar will reverse course, unless current stimulus from central banks and governments prove to be effective in mitigating the damage brought about by the fallout in the coronavirus pandemic. As for Switzerland, the government will make 10 billion Swiss francs, or $10.52 billion, available in immediate assistance to mitigate the economic impact of the coronavirus outbreak. At the same time, the government will impose checks on all borders and schools until at least April 4. The number of the confirmed infections in Switzerland and Liechtenstein exceeded 1,000. Globally, there is still no immediate sign the coronavirus spread is slowing down, while countries are adopting increasingly draconian measures to prevent its further spread.
Against the Japanese yen, another safe-haven currency, the Australian dollar had no luck, continuing to plummet even after efforts from worldwide major central banks. But the threat of the coronavirus fiasco is still also largely felt even in Japan. Even though its government said the Olympics will proceed as planned, the government and central bank officials are now more seriously weighing the risk of cancellation when making the projections for this year’s outlook. The Bank of Japan is slated to loosen its monetary policy next to alleviate the hit to business sentiment from the coronavirus outbreak and the subsequent market volatility. This move is still backed by the assumption that the economy will sustain a V-shape recovery in the near term, supported in part by the expected demand surge due to the Olympics in July. However, policymakers still fear the damage by the coronavirus crisis could upend that scenario.
The pair has been trading sideways, being the two most popular safe-haven currencies right now as the market roils in turmoil. The yen was weaker, however, against the Swiss franc, pushing the price up on the daily chart. The dollar played some role in the Japanese yen’s weakness, as investors dumped the yen for the dollar on Friday as the markets rebounded and welcomed signs the government and policymakers are making some efforts to tackle the economic shock of the coronavirus pandemic. The Bank of Japan is scheduled to announce its decision on Thursday, a day after the Federal Reserve’s turn. Speculations have it the Fed will not sit on the sidelines during the meeting. However, a rate cut does not appear to be on the options. Therefore, the yen may not be weaker after the decision. What’s more likely is that the BOJ will increase its exchange-traded fund (ETF) purchases to halt the decline in Japanese stocks and restore confidence.
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