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Forex Major Currencies Outlook (Mar 23 – Mar 27)

We expect lockdowns to engulf more and more countries making economic data secondary to the fiscal and monetary measures, preliminary PMI data will be among the first to show direness of the situation.


At the emergency meeting held over the weekend Fed has cut rates to 0%. The length of loans to banks has been increased to 90 days and reserve requirements for banks have been lowered. They have launched a new QE program which will total $700bn of which $500 is for treasuries and $200 for MBS (Mortgage Backed Securities). The cut was deemed necessary to alleviate the pain of economic slowdown caused by the virus and ease the credit conditions as liquidity is seriously drying up. 

Retail sales for February disappointed coming in at -0.5% m/m vs 0.2% m/m as expected. Core retail sales came in flat vs 0.4% m/m as expected. Silver lining is that both headline and core readings for previous month have been revised up. These are the pre-virus data and although there will be some initial surge on grocery buying in March, April reading going to be very bad. Industrial production came in at 0.6% m/m vs 0.4% m/m as expected. 

This week we will have housing and durable goods data along with final reading of Q4 GDP and data on PCE inflation, personal spending and income. 

Important news for USD: 


  • New Home Sales


  • Durable Goods Orders


  • GDP


  • PCE
  • Personal Spending
  • Personal Income 


ZEW survey numbers for March were abysmal. Current situation plunged to -43.1 vs -15.7 the previous month. Both German and EU expectations plunged back into negative coming in at -49.5. Prevailing pessimism is shown in the expectations reading indicating that, apart from a certain contraction in Q1, contraction in Q2 is highly likely. Both final headline and core CPI for February came in at 1.2% y/y while the trade surplus in January shrank to EUR17.3bn from EUR21.5bn the previous month on the back of falling exports -0.1% and rising imports 2.4%. Ifo data plunged showing the state and expectations in German economy with Ifo president saying that German economy could shrink by 6% due to the economic slowdown. 

France has imposed a ban on short selling of stocks. The duration of the ban is not stated, but possibly it could last a month. Italy joined them with ban on short selling lasting 3 months. France will guarantee EUR300bn of bank loans to businesses and defer taxes and social security payments. Germany announced the willingness to provide up to EUR500bn of bank loans to businesses. ECB has announced EUR750bbn stimulus package to fight the off the economic impact of coronavirus named Pandemic Emergency Purchase Program (PEPP). It is a new and temporary asset purchase program targeting private and public sector securities that will be conducted by the end of 2020. 

This week we will have preliminary March PMI and consumer confidence data. 

Important news for EUR: 


  • Consumer Confidence Index


  • Markit Manufacturing PMI (EU, Germany, France)
  • Markit Services PMI (EU, Germany, France)
  • Markit Composite PMI (EU, Germany, France) 


The January employment report already started to show cracks as the unemployment rate and claimant count change ticked up to 3.9% and 3.5% respectively. Employment change (three month) came in at 184k vs 140k as expected with average weekly earnings coming in at 3.1% 3m/y vs 3% 3m/y as expected but ex-bonus category showed a drop. 

The UK announced a new support package which includes a loan guarantee program for £330bn, almost 15% of GDP as well as £20bn grant and tax cuts. Airlines, retailers, and hospitals are the main targets to receive support. GBPUSD has fallen below 1.18 for a lowest reading since 1985. In an extraordinary meeting BOE has made an additional 15bp rate cut putting the interest rate at 0.10%. They have also decided to increase holdings of government bonds, effectively introducing new QE. The majority of new purchases will comprise of government bonds but the BOE will also buy corporate bonds. The size of the program rises to £645bn from £200bn. 

This week we will have preliminary March PMI data, inflation and consumption data and BOE meeting. Interest rate has already been lowered to 0.10% and we expect it to stay there. 

Important news for GBP: 


  • Markit Manufacturing PMI
  • Markit Services PMI
  • Markit Composite PMI


  • CPI


  • Retail Sales
  • BOE Interest Rate Decision


Meeting minutes showed RBA’s preparedness to ease further should economic conditions deteriorate. An extended period of lower rates is necessary to support the economy. Q1 growth will be noticeably weaker than expected and it is hard to predict length of slowdown. AUDUSD has fallen below 0.60 for the first time since 2003. February employment report showed employment change of 26.7k vs 13.5k the previous month. Full-time employment was 6.7k while part-time employment was 20k. The unemployment rate fell to 5.1% from 5.3% and participation rate has ticked down to 66% from 66.1%. Although the reports are very good, with falling unemployment rate, the situation in the world is deteriorating and RBA is under pressure to react and they have delivered. Another 25bp rate cut was announced putting the rate at 0.25%. They started buying bonds in secondary market across the yield curve on Friday. RBA governor Lowe stated that purchase of bonds will be done selectively.

February data from China show devastating numbers. Retail sales fell -20.5% y/y vs -4% y/y as expected, industrial production fell -13.5% y/y vs -3% y/y as expected while fixed asset investments managed to plunge -24.5% y/y vs -2% y/y as expected. The impact of coronavirus on the economy has shattered even the worst expectations.


RBNZ has also cut interest rate in an emergency meeting over the weekend. New OCR is now set at 0.25% from 1% previously. RBNZ states that OCR will stay at this level for at least 12 months. If more stimulus is required, they prefer introducing QE than pushing rates into negative territory. When the markets opened upon hearing the news NZDUSD was pushed below 0.60 level and continued declining to new 11-year lows. GDT auction came in at -3.9% for a fourth consecutive auction of falling prices with skim milk powder leading the way of decline (-8.1%).

This week we will have trade balance data.

Important news for NZD:


  • Trade Balance


Manufacturing sales in January came in at -0.2% m/m vs -0.6% m/m as expected. This is the fifth consecutive month of declining sales. Sales decreased in 9 of 21 industries, led by lower sales in the transportation equipment and petroleum and coal products industries. The food industry posted the largest gain. Oil has dropped almost below $20/barrel and in combination with other issues caused by global slowdown it propelled USDCAD above the 1.465 level.

February CPI came in at 2.2% y/y down from 2.4% y/y the previous month while core measures came in-line with expectations, 2.1% y/y for median, 1.8% y/y for common and 2% for trimmed. These readings have very little value and impact on the market which is preoccupied with virus. March reading will be of much more interest.


BOJ kept the rate steady at -0.1% and doubled the annual pace of ETF purchases to JPY12 trillion with willingness to take additional easing measures if needed to support the economy. Governor Kuroda stated that these measures are a part of cooperation with other nations and added that -0.1% is not a limit and that rate could go lower. He added that there will be increases in purchases of corporate bonds as well. Government is considering ramping the support with an economic package worth more than JPY30 trillion.

Core machinery orders in January improved to 2.9% m/m and -0.3% y/y while final January industrial output saw an improvement from preliminary reading to 1% m/m and -2.3% y/y. February trade balance report showed larger than expected surplus of JPY1109.8bn that was achieved on imports (-14%) falling faster than exports (-1%). National CPI fell to 0.4% y/y from 0.7% y/y the previous month and both ex-food and ex-food, energy came in at 0.6% y/y down from 0.8% y/y the previous month.

This week we will have preliminary March PMI and inflation data.

Important news for JPY:


  • Markit Manufacturing PMI
  • Markit Services PMI
  • Markit Composite PMI


  • Tokyo CPI


SNB total sight deposits for the week have risen indicating their action to limit CHF’s gains. They have left the rate unchanged at -0.75% and added that they will intervene more strongly in the FX market to stabilise the situation. The Franc is now, according to them, “even more highly valued”. Governor Jordan reiterated the need for fiscal policy to assist with monetary policy measures adding that cutting rates is unfavourable at the moment. Given that they are already at -0.75% there is really no point in cutting them even lower.

You can follow all economic events on the Economic Calendar page on our Website. MT4 server time is set to GMT+2 and if you need assistance converting MT4 server time to your local time you can use some of the online time converters such as WorldTimeBuddy.

Please note that this analysis should not be used as investing advice as it is only an overview of the economic events influencing the markets. Please remember that MT4.VAR. and MT4.ECN. accounts have Market Execution. Please note how Execution works during high impact news and other times of low liquidity.

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