On the first trading day, risk aversion returned to markets as investors are worried about the rapid and massive coronavirus spread and its intensifying impact on the global economy. After a solid plunge seen in the last week, the USD gained ground and neared the 99.00 mark. Safe-havens also got boosted by the traders’ fears while risk assets lost its shine.
Governments all over the world continue to adopt stimulus measures aimed at supporting the economy and aiding businesses and people affected by the pandemic. On Friday evening, the US House of Representatives passed the coronavirus bill and shortly after Trump signed it into law. Today, the PBOC cut its reverse repo rate from 2.4% to 2.2% and infused 50 billion yuan to its financial system. South Korea will unveil a second extra budget of 7.1 trillion won to tackle coronavirus impact and assign 9.1 trillion won for emergency cash payments to families afflicted by the epidemic. Australian PM Morrison announced a package of A$130 billion over the next 6 months to help employees who had to suspend their work due to the coronavirus crisis.
However, markets seemed to ignore these rather positive headlines amid tougher lockdowns and a rise in the number of virus victims. The US, which has become the new epicenter, confirmed 142,735 cases while 2,489 people died from the pandemic. The situation in Italy is still dismaying while India, France, New Zealand, the UK, Poland and now Russia implemented strict mass quarantines. Coronavirus took the lives of over 30,000 people all over the world while more than 720,000 were tested positive for the epidemic.
Later today, G20 Trade Ministers will hold an emergency video meeting to discuss cooperation to support global supply chains severely hit by coronavirus.
As for the currency market, EURUSD and GBPUSD both entered the red zone. The shared currency fell below 1.10 while the Cable traded in the 1.2380 area. The Aussi and the Kiwi weakened against the safe US Dollar while the USDJPY pair broke the 108.00 level however further rapid decline was checked by some gains in the greenback.
As usual, traders will watch coronavirus headlines while macroeconomic releases took a back seat.