Forex news for Asia trading Monday 16 March 2020
The news over the weekend was of a continuing acceleration of the
economic impact of the coronavirus outbreak with Apple shutting down
all stores globally ex. China, and countries including France and
Spain going into various states of lock down.
Reserve Bank of New Zealand opened the new trading week with an
announcement of an emergency 75bp cash rate cut, which slashed more
than 2% from the NZD in very early trade, AUD down around 1%
alongside. But, the bigger news was to follow, with an announcement
from a weekend FOMC meeting of the Fed cutting to zero and adding in
700bn of QE, and with coordinated moves alongside from the ECB, BoE,
BOJ and others.
brief the Fed move:
- cut policy rates to 0%-0.25%
- commitment to holding rates close to zero “until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”
- Quantitative easing – Fed buying 500bn Treasuries & 200bn MBS
- banks can borrow from the window for up to 90 days
- signalled to banks they should use their liquidity and capital buffers to lend to household and firms
equities, trade in ES dropped to its limit low (if you need an
explanation on what this means, check out the post on the limit down
move bolded above).
equities as I post
- Nikkei: +0.11%
- Hang Seng: -1.97%
- Shanghai: -0.36%
- ASX: -6.69%
swung about in good sized ranges for the session – a great day for
the day traders in Asia with multiple plays:
- EUR/USD initially moved higher on the session to tickle 1.12 but since dropped under 1.11 (above there now)
- USD/JPY dropped as low as circa 105.75 before staging a 150+ point up-move to highs circa 107.55. USD/CHF followed a similar pattern, lows around 0.9445 and highs above 0.9550.
- Cable lows early around 1.2250 to highs circa 1.2425 before (nearly) all the way back down again.
- USD/CAD had early lows under 1.3735 before rebounding to highs just shy of 1.3900. Oil lost ground but is off the session lows.
- Both the AUD/USD and NZD/USD were sold heavily in the session but have
bounced from their lows. The RBA is preparing a policy announcement
from Thursday but in a statement today said they are prepared to buy
Australian government bonds. QE.
up is an announcement from the Bank of Japan, the Bank has moved its
scheduled meeting from later this week to today (the meeting began at
0300GMT). The last time the BOJ haled an emergency meeting was in
response to the 2011 earthquake disaster.