Friday, March 27, 2020

Asia Times: Dollar falls against major currencies as fear temporarily eases

Tags
  • Dollar
  • Gold
  • Pound
  • Stocks
  • Oil

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Market Recap: Dollar falls against major currencies as fear temporarily eases

US equities extended into a three-day rally on Thursday, after the Senate managed to agree and pass the US$2tn stimulus bill. House Speaker Nancy Pelosi signalled that the House will be attempting to approve the stimulus package by noon on Friday. US stocks manage to sustain its rally despite initial jobless claims growing more than ten times from last week, reaching a record 3.28mn claims for the week ended March 20th. The Dow was mostly pushed higher by Boeing's stock again, after the aircraft maker’s shares surged another 13.75% on Thursday, its fourth double-digit gain in a row. Boeing shares have now gained 90.03% since last Friday. In sector data, all sectors in the S&P500 rose more than 4% on Thursday. The utilities, real estate and health care sectors were the best performing among the S&P500 sectors.

Indexes Daily Change (%) Net Change Closing Price
Dow Jones +6.38% +1,351.62 22,552.17
S&P500 +6.24% +154.51 2,630.07
Nasdaq +5.60% +413.24 7,797.54
*Source: Bloomberg

The greenback fell against all major currencies as the US government's fiscal stimulus package likely helped fuel investors optimism for the US to avert a long-lasting recession. Sterling performed the best among the basket of major currencies, strengthening 2.74% against the greenback to rise just slightly above 1.2200's level after the BoE's Monetary Policy Committee (MPC) voted 9-0 to keep rates at 0.10% and signalled that the central bank is ready to ease policy further if needed. The Australian and New Zealand dollar extended gains as well, as risk aversion in financial markets starts to ease.

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Safe haven assets gained as well, likely as the general financial market looks to be recovering after an extended rout. Investors likely also entered into haven positions to hedge against a possible reversal in gains in the equities market as the number of coronavirus infections in the US and EU continue to climb. Gold, yen and US Treasuries all gained across the board. Benchmark 10-year yields fell 2.3bps to 0.84%.

Safe Haven Assets Daily Change (%) Net Change Closing Price
Gold +0.89% +14.44 1,631.34
Silver -0.49% -0.07 14.17
JPY +1.47% +1.63 109.58
*Source: Bloomberg
US Treasury yields Daily Change (bps) Yield (%)
2-Year -3.7 0.29%
10-Year -2.3 0.84%
30-Year -1.4 1.43%
*Source: Bloomberg

Oil prices dived however, after the Senate's US$2tn stimulus package draft did not include US President Donald Trump's call for the US government to purchase large amounts of crude oil to fill up the national reserve. Both Brent and WTI crude oil futures reversed all gains from earlier this week yesterday.

Oil Futures Daily Change (%) Net Change Closing Price
Brent Crude -3.83% -1.05 26.34
WTI Crude -7.72% -1.89 22.60
*Source: Bloomberg

In Asia, stocks look set to track US gains on Friday after ending in the red on Thursday. The Nikkei and KOSPI were trading more than 3% higher in the first hour of the trading session on Friday. Futures tracking major indices in the US fell on Friday morning, reversing any gains earlier in the trading session after cases of the coronavirus in the US jumped past China and Italy. The US now has more than 83,000 confirmed cases of the virus.

Asia Daily Change (%) Net Change Last Price  
Nikkei Index +3.40% +634.59 19,299.19  
KOSPI Index +3.11% +52.36 1,738.60  
ASX200 Index +0.30% +15.51 5,128.80  
*Source: Bloomberg

Economic releases for the day ahead include (all timings in GMT +8):

  • US Feb Personal Spending/Income Report (8.30pm)
  • US Feb Inflation Rate (PCE) (8.30pm)
  • US Mar Consumer Sentiment Survey (U. of Mich) (F) (11pm)