Collinsonfx Daily Market Commentary

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Daily Market Commentary

The Dow had opened the week full of confidence, surging more than 1600 points and followed this in early overnight trade with gains of a further 900 points. These gains have added nearly 25% to the Dow on coronavirus lows. Italy and Spain has seen falls in new cases and death rates have stabilised, while the New York hot spot appears to be cooling before any of the models predicted. This allowed a huge improvement in risk sentiment, forcing the Dollar lower and bond yields to rise. The mitigation taken to combat the coronavirus appears to be working and plans are now forming to return to work.

The fall in the US Dollar allowed the EUR to rebound strongly, to 1.0940, while the Yen traded 108.85. The GBP had been particularly damaged by the news that PM Johnson had the virus and was moved to hospital, but he appears to have stabilised and the GBP surged back to 1.2330. The ECB announced they would change further rules, agreeing to purchase sub-investment grade bonds, which will include Greek Bonds. I would imaging they will attract a lot of offers? President Trump is looking to extend the small business plan by $200 Billion, as demand is so high!

The RBA left rates unchanged and confirmed a 'tapering' bond purchase program. The RBA has been in the secondary bond markets buying bonds, but has said this will 'taper', as demand dictates. This combined with rising risk sentiment, rocketed the AUD back up to 0.6200, dragging the NZD on it's coattails, with the NZD rising to 0.6000. The RBA and RBNZ are in the private and public sector debt market calming the waters, as treasury debt issuance breaks records, while analysts see 'light at the end of the tunnel'.