In the following week, many market observers will keep a close watch on the latest economic numbers, in hope of gauging just how severe the Covid-19 impact will be. Over the weekend, US investment bank Goldman Sachs forecast that the US economy would take a 24% hit to Q2 2020 gross domestic product (GDP). Federal Reserve President (St. Louis) James Bullard also speculated that the unemployment rate could surpass 30% at its peak.
Even though economic data will become more of an important element in the current crisis, many participants will continue to place the majority of their focus on both the government and central bank responses to the pandemic. Over the weekend, US congress has not been able to pass a stimulus package which has pushed global stock markets lower as the fresh week gets underway. No doubt there’ll be a lot more news coming from across the globe concerning attempts to ease the impact on business and consumers.
Foreign exchange markets will see a particular focus on the US dollar and whether steps taken by the Fed last week will improve market conditions. The greenback has surged lately as investors flock to the safety of the world’s reserve currency. From a global perspective, a strong dollar is negative, something which the Fed is more than aware of. Should this week see more demand for the buck then we should prepare for enhanced efforts from Jay Powell and co. to curb its advance.
Today’s economic calendar is very thin. As the new week begins many traders and dealers will be finding their feet awaiting any new developments or guidance from governments/central banks and assessing the implications for financial markets.
9:10am, March 23rd 2020
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