Market News and Charts for March 25, 2020
Hey traders! Below are the latest forex chart updates for Wednesday’s sessions. Learn from the provided analysis and apply the recommended positions to your next move. Good day and Good Luck!
The pair has been trading in the green in the previous sessions as the New Zealand dollar slowly creeps back to its previous levels. A recovery is probably on NZD bulls minds, particularly after the NZD rise after the country’s Prime Minister, Jacinda Ardern, declared a state of national emergency to keep up the fight against the ongoing spread of the coronavirus. Jacinda said the government was declaring the emergency and is pulling out all stops to prevent the virus from spreading further. Also, part of the reason the kiwi is rising in this pair is the US Federal Reserve’s announcement of another massive stimulus package to cushion the economy from the adverse impact of the virus. The Swiss franc also weakened after markets perked up due to the stimulus package. The Swiss currency is traditionally considered a safe-haven currency by traders, making it vulnerable to sudden optimisms in the market.
The pair recently experienced a pullback as the dollar weakened due to expectations of massive stimulus and quantitative easing from the Federal Reserve. Today, the dollar is paring back some of its losses against the Asian currency. Over in Singapore, the government is expected to deliver a supplementary budget on March 26. The Monetary Authority of Singapore (MAS) will also deliver its next policy decision on March 30. Markets are expecting more stimulus from the central bank. Meanwhile, Singapore’s government decided to close bars and entertainment venues in order to contain the spread of the coronavirus. This decision is considered to be another gut punch to the city-state’s economy that is already suffering from widespread disruptions to trade and tourism. Recently, confirmed cases in the city spiked and reached more than 550, mainly among residents who are returning from overseas trip.
The US dollar has also slipped largely against the Hong Kong dollar, with the buck barely taking back its losses to the Asian currency amid the health crisis. The exchange rate has fallen to record lows as the buck loses its shimmer against the HKD. The Hong Kong dollar’s strength is largely due to the fact that the US central bank has slashed key interest rates to zero. The strengthening also follows the Hong Kong Monetary Authority’s decision last week to cut its base rate by 64 basis points to 0.86%, which is comparatively less aggressive than the Fed’s 100-point cut. And because of the gap, the higher-yielding Hong Kong dollar assets are more attractive for investors. In the past month, traders have been buying the US dollar to buy the Hong Kong dollar, making it among the most profitable carry trade in the realm of the forex market. There’s also higher liquidity for the HK currency, with banks hoarding cash for quarterly regulatory checks.
The pair has so far stuck to its feet, although the more recent moves proved to be dire for the euro as the exchange rate failed to hold near steady levels. Volatility is seen as the pair traded gradually lower, with both the euro and the Danish krone fighting to get the upper hand. Recently, the rate slipped briefly September lows, but it quickly perched back to its current levels. The eurozone has been under intense pressure to support the economy as the region becomes part of the worst-hit locations by the coronavirus pandemic. European Central Bank president Christine Lagarde asked eurozone finance minister to seriously consider rolling out “coronabonds.” Meanwhile, the Danish central bank recently released a statement about the auction of US dollars alongside Sweden and Norway. It then took the statement back. However, it said the statement and the details within were correct. They only took it back because the statement “hasn’t been finalized.”
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