IFX Market Report: Friday 3rd April 2020

The pound hit a three-week high against the euro on Thursday and held recent gains versus the dollar, as the British currency was swept up in global market swings that weakened the euro broadly.

The pound has rebounded in recently after crashing amid coronavirus-driven panic in global markets last month to levels not seen in more than a decade versus the euro and since 1985 against the greenback. It climbed further versus the euro on Thursday as the single currency slid broadly on investor concerns at the disagreement between eurozone governments over a rescue package for countries struggling to cope with the coronavirus pandemic.

Sterling was last up 0.9% against the euro, its highest level since March 11. The dollar made a similar 1% gain on the euro.

Against the dollar, sterling was flat at $1.2374, after shedding its earlier gains after risk sentiment in markets faltered on dire U.S. jobless data. However, it has retained gains made over the past week.

The pound remains lower against both the single currency and the dollar since the start of the year, by around 4% and 7% respectively.

GBPUSD opened at 1.2407 and rose to a morning high of 1.2461 before dropping to close at 1.2371

GBPEUR opened at 1.1347 and rose across the day to close at a high of 1.1408

The dollar rose against a basket of currencies for a second consecutive day on Thursday as investors, concerned about the prospect of a global recession, continued to flock to the safe-haven greenback. Initial claims for unemployment benefits rose to 6.65 million in the last week from an unrevised 3.3 million the previous week. The figure far exceeded the estimates of around 3.50 million.

Investors are now looking to Friday’s US non-farm payrolls report for March. Economists are forecasting US job losses of 100,000 for last month, a sharp change from job gains of 273,000 in February. That would be the first decline in jobs since September 2010. The United States has over 200,000 confirmed COVID-19 cases - the most worldwide - which has sent investors flocking to safe-haven assets. Globally, coronavirus cases topped 1 million on Thursday, according to a tally by Johns Hopkins University.

The cost of raising U.S. dollar funds in the yen and euro swaps market stabilized on Thursday, with premiums favouring the other currencies, suggesting that greenback demand had receded from earlier in the coronavirus pandemic. In afternoon trading, the dollar index was up 0.7% and against the yen, the dollar also rose 0.7%.

The euro continued its decline, falling more than 1%, after hitting a one-week low. The Fed’s efforts to improve dollar liquidity have boosted other currencies such as the Norwegian crown, which advanced further on Thursday, to a three-week high against the euro. It was last trading up 2%.

EURUSD opened at 1.0934 and fell steadily across the day to close at 1.0844

Older posts
Newer posts