Market News and Charts for March 23, 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!
As expected, the Australian dollar failed to hold on to its previous gains, trading in the red on Monday as the currency weakened against the Japanese yen, a traditional safe-haven asset. Although the exchange rate is still off its record lows, there’s some heavy selling pressure for the Aussie dollar. Over the weekend, Australian Prime Minister announced the government will inject A$66.4 billion into the economy to combat the adverse economic impact of the coronavirus pandemic. Around A$25.2 billion will be provided to support businesses and not-for-profit charities while also supporting small businesses. However, this did not let the Aussie currency keep its gains intact, as traders sold off the Australian dollar after the PM announced new restrictions on non-essential businesses such as clubs, pubs, nightclubs, cinemas, casinos, and others. Only schools, shopping centers, and home delivery services will remain open.
The pair, which is composed of the two most well-known safe-haven currency in the forex market, has been trading sideways, choppily exchanging rates as the markets opt to invest in safe-haven currencies. Recently, however, the Swiss franc has been getting the upper hand in trade as markets pull and push amid the coronavirus pandemic. Over in Japan, Prime Minister Shinzo Abe promised a “huge” stimulus that will involve at least $137 billion, which will be funded partly by deficit-covering bonds, according to sources. The BOJ also stands ready to expand its stimulus for the second straight month of April if the pandemic results in job cuts and capital expenditures significant enough to hinder the chances of an economic recovery, according to the sources. The Japanese economy is currently in a dire situation as it doesn’t have much firepower to counter a heavier economic downfall, hence its relative weakness against the Swiss franc.
The Swiss franc is also pummeling the Canadian dollar near its record lows to levels last seen in 2016. Last week has been choppy for the pair as the Canadian dollar attempted a rebound against the safe-haven currency, with oil prices rising up and providing a brief reprieve for the loonie. However, the oil-reliant currency failed to keep its gains intact as the downward pressure pushed prices within their current trading range. Apart from oil prices, the loonie is also heavily affected by the COVID-19 pandemic. According Canada’s trade financing agency, the pandemic will tip the economy into a short, sharp global recession this year before the world’s economy bounces back in 2021. Global growth will be at 1.6%, which, if true, would be the world’s worst performance since the 2008 financial crisis. It expects growth to recover and gain 5.3% in 2021, however, assuming the worst of the situation will occur in the first half of 2020.
The New Zealand dollar also cannot flex its muscles much against the Japanese yen, trading near 2012 lows. The kiwi weakened recently as the Reserve Bank of New Zealand surprised the markets after declaring a quantitative easing program, calling it a Large Scale Asset Purchase programme (LSAP). The move was a response to the threat of the coronavirus pandemic to the global economy. According to the RBNZ, the programme consists of up to $30 billion purchases of NZ government bonds, across a range of maturities, in the secondary market over the next 12 months. It added that the negative implications of the pandemic have continued to worsen, so the Committee agreed further monetary stimulus is necessary to meet its inflation and employment objectives. The RBNZ is among the major central banks that have jumped into the wagon of drastic measures to prop up the economy amid the grimmer and dimmer threat of COVID-19 pandemic fallout.
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