COVID-19 Int'l Spread Only Game In Town

It's all about the COVID-19 and the spillover effects for the global economy as an increasing number of countries announce new cases. This backdrop continues to weight very heavily on the Aussie, the Kiwi, equities, bond yields or Oil to name a few. The COVID-19 narrative has overpowered everything with the market still digesting the true dimensions of this crisis. Find out the latest in today's report...

Quick Take

The behavior in financial markets continue to portray how deeply concerning the COVID-19 situation has gotten as numerous agencies around the globe set the stage for an upcoming ‘pandemic’, even if that’s a term that the highest health authority (WHO) is yet to adopt. After two days of a meltdown in the equity market, a temporary pause ensued, even if that's far from helping to turn around the 'risk-off' sentiment. The broader aggressive selling recently seen elsewhere from bond yields, Oil, Aussie/Kiwi, or the spike in the VIX, remember, encapsulates the huge ramifications of a COVID-19 pandemic as more countries impose airline/event cancellations, travel curbs and quarantines, with the social, economic and health-related costs associated with it. The increased exposure into funding currencies (EUR, CHF, JPY) and selling in the commodity-linked complex such as the Aussie, Kiwi and Canadian Dollar keeps on going. Of note is the acceleration in CAD weakness. The Euro and Swissy have shown the most demand interest, even if in the last 24h, the US Dollar starts to challenge that status as its likely transient spell of weakness is finally showing signs of reversing back up. The Pound, meanwhile, was engulfed by sell-side action since the early stages of Europe, as the market readies to hear the UK mandate for the upcoming post-Brexit trade talks.

(Click on image to enlarge)

Narratives In Financial Markets

* The Information is gathered after scanning top publications including the FT, WSJ, Reuters, Bloomberg, ForexLive, Twitter, Institutional Bank Research reports.

Authorities keep warning of a COVID-19 spread: German and US health authorities are warning that the COVID-19 infection is set to spread and strain health systems. The US CDC recently stated that it is when and not if that COVID-19 will hit the States. Meanwhile, the WHO, still refusing to call it a pandemic, said that the globe is “simply not ready” to tackle the widespread of the virus. German Health Minister Spah warned about “the beginning of a coronavirus epidemic”, while FDA officials warn the COVID-19 virus is on the "cusp" of being a pandemic.

The world isn’t ready for such crisis: Michael Every, Head of Market Research at Rabobank, wrote a note to clients in which he agrees that the world isn’t ready, noting the following. “Imagine the strain on health services even in developed countries if COVID019 were to sweep in, especially with up to 20% of the population aged over 65 and hence most vulnerable based on the observed mortality pattern so far. We simply don’t have enough hospitals or ICU units anywhere.”

Trump no longer denies possible spread of COVID-19 in the US: The US President Donald Trump said in a speech that the coronavirus will probably spread in the US, which has prompted him to consider possible travel restrictions from Italy, South Korea even if he added that now is not yet the right time. The USD and equities sold off on Globex.

1 2 3 4
View single page >> |

The Daily Edge is authored by Ivan Delgado, Head of Market Research at Global Prime. The purpose of this content is to provide an assessment of the market conditions. The report takes an in-depth ...

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.


Leave a comment to automatically be entered into our contest to win a free Echo Show.