Risk-on Start To The Week – Focus On Central Bank Stimulus
Monday saw a significant risk-on day across financial markets. Stock markets surged as expectations of central bank stimulus filtered across global markets. On the currency front, the star performer was the euro. It ignored the stabilisation of risk-appetite as participants scrambled to purchase the shared currency throughout Monday’s trading session.
The EURUSD pair pushed itself above the $1.11 figure and made solid inroads to the handle across European trade. The pound remained within a fairly tight range against the greenback for the day which saw the GBPEUR rate plunge below the €1.15 mark. The currency pair has seen a huge move in the last week of trading. The price has fallen the best part of 5.5-cents in a similar amount of time. This almost appears a gift to any businesses or individuals who are currently holding euro reserves. After months of upward pressure, the pair appears to be taking a breather from the firm upward trend.
Participants will remain focused on central banks and their response to the current Coronavirus outbreak. The first major central bank response arrived overnight with the Reserve Bank of Australia cutting interest rates by 25 basis points down to 0.5%. Now even lower than UK interest rates! The move is intended to ease financial conditions for Australian businesses and individuals who have been impacted by the slowdown in trading activity based around the country’s close proximity to China.
On the data front, today sees UK construction PMI as well as eurozone CPI in the European morning session. The afternoon sees a New York regional business gauge while the evening has Australian services PMI scheduled.
Written by Viv Savani. 8:51am, March 3rd 2020
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