News & Analysis
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This morning’s cabinet shuffle turned out to be exiting after all, when Chancellor Sajid Javid resigned after reportedly being asked to replace his staff of advisors with choices picked by Number 10.
Yesterday saw the dollar come under pressure as risk appetite was improving, but this trend reversed overnight after China changed the way coronavirus cases are counted, resulting in an increase of more than 15,000 cases.
Improving risk appetite weighed on the US dollar yesterday and overnight, as the greenback sold off against NZD, AUD, RUB, and most other major currencies. Fed Chair Jerome Powell testified to lawmakers from the House on monetary policy and warned of risks to the global economy from the coronavirus infection.
GBP saw a slight rally yesterday and overnight, amid a major leak of part of the UK’s negotiating position in trade talks with the EU, and ahead of today’s release of gross domestic product data. The “opening position” of the UK was snapped by a long-lens camera while an unreleased briefing paper was carried into downing street, and is being widely reported on in UK newspapers.
Last week’s emergency three-day OPEC meeting in Vienna in response to news that China’s oil demand has fallen by 20% due to the coronavirus lockdown has yet to bear fruit.
The RBNZ surprised both our expectations and the market by holding rates unchanged in November, but must now navigate the risks of coronavirus to New Zealand’s small open economy.
Chinese authorities rolled out a now-familiar crisis response strategy to prevent panic in financial markets last week. Repo rates were cut by 10 basis points on Monday, and a net 550 billion yuan was pumped into repo markets over the first two days of the week. CNY...
Next week marks the first Riksbank meeting since December’s decision to hike the repo rate by 25 basis points and return policy to 0%. While the central bank signalled heavily that the return to zero would occur in either of the December or February meetings, the decision to hike rates sooner rather than later wasn’t unanimous.
Overnight China’s central bank began providing targeted lending aimed at enabling banks to provide cheaper and faster credit to businesses involved in combating the Coronavirus outbreak, and against shoring up risk appetite globally.
The weighted DXY index of USD vs major currencies is trading at a high for the year, and is on track to enjoy its biggest weekly gain since September. Today’s non-farm payrolls report, therefore, will be facing high expectations when it is released at 13:30 GMT.