Yesterday saw financial markets moderately soothed by announcements from both the UK and US governments. Domestically, PM Johnson and Chancellor Sunak, held a joint press conference in which measures assisting both businesses and individuals were introduced.
The Chancellor announced a package, to the tune of £330-billion, which will help many businesses weather the ensuing storm and will also assist consumers to do the same. The press conference was well-received, the pound rallied off its daily lows ($1.2005 and €1.0940) but still closed the day down against many of its peers. Even though many people’s focus is elsewhere it’s clear, from the pound’s perspective, that the idea of extending the transition period between the UK and EU is required. Over in the US, the Trump administration announced a $1-trillion package which will work on potentially giving cash directly to many American citizens. Businesses were also provided many concessions with specific sectors such as the airline industry, offered assurances concerning their hardships based around current government policy. The greenback has been in strong demand recently with the buck‘s status as the global reserve currency, mixed with significant volumes of debt in recent times taken out in USD. Additionally, businesses in current need are drawing on credit lines denominated in US dollars. This combination has led to a big squeeze which saw the greenback rally nearly 2% against many counterparts yesterday. It would not be a surprise to see more intervention from the Federal Reserve in the coming days. Today’s economic calendar sees eurozone and Canadian consumer price indexes. In addition, US building permits and housing starts will also cross the wires. These will all be overshadowed by ongoing developments on the virus-front.
8:17am, March 18th 2020
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