Virus wreaks havoc on the world

March 30, 2020

As the coronavirus continues to grip the planet, countries around the world are stepping up efforts to combat the spread, much to the detriment of economies.

The USD has been weakening over the last few days, due to the $2 trillion stimulus package announced by the White House. The EUR USD opened Friday at $1.10291 and slowly declined in early trading, hitting lows of $1.09531 mid-session. It bounced off those lows and rallied to a high of $1.11465 late in the day. It has come off those highs and in early Monday trading the euro is t $1.11046. The GBPUSD opened at $1.22007 and slipped to a low of $1.21289 shortly after the start of trade. It climbed and fell throughout early trading before picking up mid-session, marching to a high of $1.24857 late in the day. It is not far off those highs, currently trading at $1.24296.

The wild times for indices continues on a daily basis, with the Dow and the Dax bearing the brunt. The Dow began Friday in positive spirits after the biggest single-day rally occurred the previous session, when it gained 11%. However, we are in uncharted territory due to this virus, with the tumult being caused by it once again laying the Dow low. The index opened at a high of 22,654.87 and the losses quickly began to accumulate. The Dow sunk to lows of 21,447.16 late in the day before a short rebound was unable to be sustained and it eventually closed at 21,543.48. It has opened quite lower on Monday and is now trading at 21,254.00. The Dax followed the Dow’s lead after opening at 10,050.79. The losses piled up early for the German index and despite short reprieves, it was unable stem the flow. The Dax tumbled to lows of 9,511.61 in the final hour of trade before closing at 9,523.25. Like the Dow, the Dax has opened lower on Monday and is now sitting at 9,481.75.

The week ahead will once again be centred around the world health crisis, with economic data basically becoming superfluous. We are already seeing the effects of the virus on a variety of economic data points, while data being published this week is mainly acting as an indication of how far economic activity has deteriorated. However, some interesting figures to watch out for is the Manufacturing & Non-Manufacturing PMIs from China. There has been talk from China that they are starting to re-open factories as they claim that the virus is well under control. This would seem to be the reason why they are expecting a big jump in both figures, with Manufacturing tipped to come in at 44.9 (vs 35.7 last month) and Non-Manufacturing forecast to leap up to 42.1 (vs 29.6 last month).

Data published today and the most significant this week includes:

Today – Swiss KOF Economic Barometer, German Prelim CPI, Spanish Flash CPI, UK Mortgage Approvals, M4 Money Supply and Net Lending to Individuals

Tuesday – China Manufacturing & Non-Manufacturing PMIs, NZ ANZ Business Confidence, UK Current Account

Wednesday – US CB Consumer Confidence and ADP Non-Farm Employment Change, China Caixin Manufacturing PMI

Thursday – US Unemployment Claims and ISM Manufacturing PMI

Friday – US Non-Farm Employment Change, Average Hourly Earnings, Unemployment Rate and ISM Non-Manufacturing PMI, UK Final Services PMI, Caixin Services PMI


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