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Economic Data to Take a Back Seat Once More As Governments Step Up to Combat COVID-19

It’s another testy day ahead for the markets as the virus spread continues and governments look to take further measures to combat the virus…
Bob Mason
Businessman touching stock market graph on a virtual screen display.

Earlier in the Day:

It was a relatively quiet start to the day on the economic calendar this morning. The Kiwi Dollar and Japanese Yen were in action through the early part of the day, with economic data in focus.

While economic data was in focus, the markets also reacted to the overnight moves in the U.S and the U.S administration’s plans to combat the impact of the virus.

For the Kiwi Dollar

Economic data was limited to 4th quarter current account figures that had a muted impact on the Kiwi.

The current account deficit narrowed from NZ$10.28bn to NZ$9.23bn, year-on-year, with the deficit narrowing from NZ$6.35bn to NZA$2.66bn quarter-on-quarter.

The Kiwi Dollar moved from $0.59552 to $0.59598 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.02% to $0.5947.

For the Japanese Yen

The trade balance jumped from a ¥1,313.2bn deficit to a ¥1,109.8bn surplus in February, year-on-year. Economists had forecast a surplus of ¥917.2bn.

According to figures released by the  Ministry of Finance,

  • Exports fell by 1%, following a 2.6% decline in January. Economists had forecast a 4.3% slide.
    • Exports to China fell by just 0.4%, with exports to Taiwan and Singapore surging by 11% and 13.1% respectively.
    • There were notable declines in exports to Europe, however, with exports to Germany and the UK sliding by 6.6% and by 7.6% respectively. Switzerland was, in fact, the only Western European trade partner to increase imports from Japan (+32.2%).
    • Exports to the U.S fell by 2.6%.
  • Imports tumbled by 14% in February, following a 3.5% decline in January. Economists had forecast a 14.4% slide.
    • Imports from China tumbled by 47.1%, resulting in a 24% slide in imports from Asia.
    • There were also notable declines in imports from the U.S (-5.9%) and Western Europe (-7.8%).

The Japanese Yen moved from ¥107.354 to ¥107.505 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.32% to ¥107.36 against the U.S Dollar.

Elsewhere

At the time of writing, the Aussie Dollar was down by 0.12% to $0.5993.

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The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. The Eurozone’s finalized February inflation figures and January trade data are due out later this morning.

Barring a slide in consumer prices in February, the numbers are unlikely to have a material impact on the EUR.

We’ve seen the EU shut its borders and economic conditions deteriorate through March, pointing to a possible Eurozone recession. Any positive numbers will be of little relief, while weak numbers will have an impact when considering the likelihood of more weakness to come.

Outside of the numbers, however, expect updates from member states on fiscal policy and the spread of the virus to continue to influence.

At the time of writing, the EUR was down by 0.02% at $1.0995.

For the Pound

It’s a quiet day ahead on the economic calendar, with no material stats due out of the UK to provide the Pound with direction.

A lack of stats will leave the Pound in the hands of the British government that has yet to take more aggressive measures to curb the spread of the coronavirus.

At the time of writing, the Pound was up by 0.46% to $1.2111, with oversold conditions providing some early support.

Across the Pond

It’s a relatively busy day ahead on the U.S economic calendar. February housing starts and building approval figures are due out. With mortgage rates at record lows and confidence in the sector on the rise at the turn of the year, the February numbers are unlikely to reflect sentiment towards the coronavirus.

The focus on the day will be the Coronavirus Bill and the Senate vote. Expectations are for the Bill to pass unaltered. Any last mount hiccups could test the markets…

We will also expect updates on the spread of the virus to also influence. News hit the wires overnight that all 50 states had coronavirus cases, making it more difficult to contain the virus at the state level. An acceleration in the pace of contraction will weigh on risk appetite.

The Dollar Spot Index was down by 0.10% to 99.475 at the time of writing.

For the Loonie

It’s also a relatively busy day ahead on the economic calendar, with February inflation figures due out later today.

We would expect softer inflation figures to weigh on the Loonie, with any pickup in inflationary pressures likely to be considered short-term.

Deflationary pressures are expected to build as crude oil prices tumble and the country goes into shutdown mode.

Outside of the numbers, crude oil prices and the Canadian government’s plans to combat the virus will remain the key area of focus. As things stand, the Bank of Canada will need to deliver more and soon, though there may be some apprehension after the market’s reaction to the FED move…

The Loonie was down by 0.24% at C$1.4236 against the U.S Dollar, at the time of writing.

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