The Yen surged by over 4% versus the commodity bloc currencies; massive intra-day movements by the standards of trading in the prevailing era as global markets slammed the risk-off button amid heightening panic about the global economic impact that the COVID-19 virus pandemic is having.
Oil prices were hammered, diving by a staggering 30%-plus, with the WTI benchmark hitting a $27.34 low. A price war has broken out between Saudi Arabia and Russia, with the former unleashing output in response to the latter’s intransigence about trimming supply at a time of falling demand. The resulting carnage in oil prices has exacerbated virus concerns. USDCAD lifted over 1.5% to a 34-month high at 1.3758, and more gains seem likely if oil prices sustained weakness, which would mark a significant deterioration in Canada’s terms of trade. CADJPY fell to its lowest levels since November 2011. AUDUSD, meanwhile, dove to a fresh 11-year low at 0.6320, while AUDJPY also descended farther into 11-year low territory.
USDJPY dove by over 3% to a 40-month low at 101.60, driven largely by safe haven demand for the Japanese currency. The Dollar has been trading mixed, gaining versus the commodity currencies and most developing-world currencies, particularly those of export oriented economies, while losing ground to the Euro and Sterling. EURUSD rallied 1.8% in posting a 13-month high at 1.1493, extending what has now been a 6.5% rebound from the 35-month low that was seen just 18 days ago at 1.0777. Ahead, the major “known unknown” remains how much the coronavirus spreads and how much economic damage from containment measures there will be before it becomes clear that the virus is on the wane. These are good times to be a long-term value investor.
How will US markets react later? The cash markets open an hour earlier than normal, for the next three weeks as North America moved to the Summertime, March 8 2020.
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Head Market Analyst
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