UK employment data was mixed; unemployment increased by 17.3K in February, lower than anticipated, and average earnings including bonus stood also beat expectations at 3.1%. The unemployment rate rose to 3.9% from 3.8% previously, which largely negated the good data.
The Pound succumbed to another round of aggressive selling yesterday, nosediving 275 pips before finding support near the 1.2000 mark after the UK Chancellor Rishi Sunak announced a £330 billion stimulus package. Overnight, Boris Johnson reiterated that the transition period would end as scheduled on December 31st, which hobbled any Pound recovery overnight. With no tier one economic releases today from either the UK or the US, coronavirus will likely drive market risk sentiment.
As investors looked past the Fed's emergency move to slash interest rates to zero, a modest recovery in the global risk sentiment led to a strong recovery in the US Treasury bond yields and eventually underpinned the greenback. This coupled with the ongoing funding squeeze around the buck was further cited as a key factor behind the abnormal USD demand.
Meanwhile, the disappointing release of the US monthly retail sales, which was largely offset by an upward revision of the previous month's readings, did little to provide any meaningful impetus and passed unnoticed.
The Euro is looking to regain some strength lost yesterday against the Dollar. Bouncing around the 1.0970 as we begin today's trading session. The pair fell from 1.1180 to 1.0996 on Tuesday to confirm the biggest single day loss since June 2018.
The Euro, which uncharacteristically is acting as a ‘safe-haven’ was offered as US stocks rallied, most likely due to the fiscal stimulus talks by the US. Markets also offered the common currency on the back of the disappointing German Zew survey, which indicated investor confidence has fallen to the lowest level since the financial crisis.
Data to watch
12:30 - USD - Building Permits
Posted in Daily Market News on Mar 18 2020