Daily Market Charts and Analysis March 06, 2020

Here are the latest market charts and analysis for today. Check them out and know what’s happening in the market today.

GBPJPY

Trading just above the 200-day moving average, the GBPJPY pair within a tight range this week as bulls and bears engage into a tug-o-war, although the sentiment is largely bearish. The sterling appears ready to extend its rally as traders focus on the UK budget set to be released on March 11. At the same time, participants are keeping close tabs on signs the Bank of England wouldn’t rush into an interest rate cut. There were also some constructive comments from the EU after the first round of EU-UK trade negotiations. Meanwhile, the gains in pound will likely remain capped as the Japanese yen proves to still be the safe-haven currency it has been, with risk appetite still sour and participants continue to be cautious. On the coronavirus front, Japan has experienced an uptick in Covid-19 cases. It also reported disappointing manufacturing and non-manufacturing data that might tip the country’s fragile economy into recession.

CADJPY

The Canadian dollar continues to weaken against the Japanese yen in the wake of the Bank of Canada’s 50-basis point rate cut. It also marked a sharp downward pivot for the 50-day moving average, indicating the near-term will likely stay bearish for the pair.  The rate cut was a surprise for the market with the drastic rate cut. Also, the statement from the BOC was brief but clear: it pointed fingers to the coronavirus outbreak for its decision, describing the virus as “a material negative shock” to the Canadian and world economic outlook. At the same time, the bank affirmed the first quarter of 2020 would be weaker than it had previously expected. It said the drop in the country’s terms of trade, if continued, would weigh down on income growth. The bank also signalled it would offer monetary stimulus, saying they reaffirm their commitment “to use appropriate policy tools.” Sinking oil prices also worsened the loonie’s performance.

GBPCHF

The British pound is underperforming against the safe-haven Swiss franc as the market still remain cautious as coronavirus fears dominate the markets. Both the United Kingdom and Switzerland have 111 cases each, and both have already recorded one death. On the data front, Switzerland’s gross domestic product slowed to 0.3% on a quarterly basis in fourth quarter 2019, compared to an advance of 0.4% in the prior quarter. Meanwhile, the consumer price index slipped 0.1% on a yearly basis in February, compared to a gain of 0.2% in the previous month. Over in the UK, the Bank of England is trying to measure the scale of the hit to Britain’s economy from the spread of coronavirus before any decision to provide more stimulus, according to Governor Mark Carney. Unlike the Fed and the Bank of Canada, the BoE will probably adopt a wait-and-see approach before it takes any action. Carney, thought, still said would take any step to support the economy.

EURAUD

The euro has risen steeply against the Australian dollar, which has weakened after the Reserve Bank of Australia cut rates recently. The euro is currently taken as one of the best performing currencies in the forex market. However, a report suggests the euro may be among the most economically exposed to a global pandemic. For the macro front, the Australian government’s economic stimulus package is starting to have a more defined shape. Hard-hit sectors are tourism and education, and these will probably receive prompt assistance, while businesses in general will get help with cash flow. Treasury secretary Stephen Kennedy said this week that any stimulus package would come in two broad phases. The first phase will offer targeted assistance to sectors directly hurt by the fallout from the coronavirus to keep businesses open and employees in jobs. Then, the second phase would be directed at households to keep consumer confidence up.