Yesterday US Fed surprised the markets by launching a massive $700bn quantitative easing program as well as an interest rate cut by 100bps to 0-0.25%. Based on FOMC’s statement “The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States. Global financial conditions have also been significantly affected. Available economic data show that the U.S. economy came into this challenging period on a strong footing. Information received since the Federal Open Market Committee met in January indicates that the labor market remained strong through February and economic activity rose at a moderate rate”.
Despite that, US trading futures are losing more than 5% and reached their technical limit-downs. The status in EU markets is much worse as all major indices opened with a big gap to the downside. GER30 is dropping -7%, FRA40 – 8%, UK100 -5% while FTSE MIB is getting “destroyed” with -13% as Italy announced a major increase in their death toll to 368 due to coronavirus. Likewise, all major Asian indices ended lower with major losses.
Reviewing the forex market, all JPY pairs are sinking as well as the US dollar remains weak vs its counterparts. EURUSD has hit the upper side of its wide range as well as the 38.2% Fibonacci level. USDJPY is heading to the lower side of its rising short-term channel.
EURUSD Hourly chart
USDJPY 240m chart
Regarding business news, Air France announced that will decrease their capacity around 70 to 90%. Also, Fiat Chrysler Automobiles will suspend the majority of its European plants’ output in the until 27/3. Similarly, United Airlines cut its flight capacity in half due to the COVID-19.
Most traders anticipate the G7 call concerning the coronavirus outbreak though markets haven’t yet discounted anything positive until now.
Today’s economic calendar includes the following news:
UnitedStates – G7 Call on Coronavirus
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