Monex: Valutamarkten koelen af - EUR/USD licht lager

April 15, 2020

Hieronder volgt een commentaar in het Engels van Ranko Berich, Head of Research bij Monex Europe op de Amerikaanse dollar, euro en het Britse pond.

USD

The dollar has managed to catch a bid this morning, as risk appetite soured somewhat overnight. The G10 currencies are in the red, with AUD, NOK, and NZD the biggest losers following good gains for the same currencies during more favourable conditions earlier in the week. Falls in crude oil prices this morning coincided with the change in tone in FX markets, as the Brent crude oil benchmark bell below $30 this morning after trading stable overnight. The prospect of stockpiles reaching their limit in the US contributed to increased fears that the weekend’s cuts from OPEC would prove insufficient to stabilise crude prices. Energy regulators in Texas heard testimony yesterday regarding a potential production cut in the state, but there was no indication of what ultimate action may be taken. State regulators such as the Texas Railroad Commission have various powers to limit production. The state of Oklahoma will begin a similar process in May. Elsewhere, Donald Trump announced a suspension in WHO funding and an investigation into the organisation’s handling of the coronavirus pandemic.

EUR

The euro rose against the dollar overnight and reached highs not seen since the beginning of April due to continually declining coronavirus cases. Meanwhile, EU leaders are drafting plans on how to revive their economies by gradually lowering containment measures and bringing life back to normal. EURUSD pulled back from its overnight highs this morning as French retail sales printed 24% lower in March compared to February, revealing how the nationwide lockdown crashed consumer purchasing. Final March inflation data from France printed slightly higher than consensus and the prior reading. This was insufficient to lift the euro as inflation data from Spain surprised slightly to the downside.

GBP

After continuing to trade with a firm tone yesterday, sterling has shown signs of weakness this morning and is trading lower against both the US dollar and the euro. The Office for Budget Responsibility released an economic scenario study yesterday that detailed the possible costs of the coronavirus pandemic and associated containment measures. Based on a three-month lockdown period, the OBR estimated that the UK economy would contract by an astonishing 35% in the second quarter, while unemployment would jump by two million persons. As grim as these figures sound, the scenario envisaged was actually fairly optimistic, in that gross domestic product growth would bounce back by the end of the year. Government revenues would collapse 15%, leaving the ratio of public sector debt to GDP as high as 95% at the end of the fiscal year - compared to 77% in the March forecast. Rishi Sunak said yesterday that the Government was not facing a case of “choosing between the economy and public health”, in a possible attempt to play down speculation that elements of the Cabinet were seeking to re-open the economy for fear of the economic costs of lockdown. The Chancellor of the Exchequer also signalled willingness to expand emergency lending schemes to small and medium businesses, which have reportedly seen slow uptake.