News

Dollar Index Extends Rally, Stock Futures Rebound

USD

The dollar index, which measures the greenback against a basket of major currencies, extended upside rally to a three-year high of 101.80. The euro and pound tumbled sharply as the coronavirus continued to spread fiercely in Europe. Both currencies account for almost 70% of the dollar index basket. The GBPUSD tumbled to $1.1447, the lowest since 1985, and the EURUSD declined to $1.0800. On the other hand, the dollar gained on the back of the falling commodity currencies such as the Australian dollar, New Zealand dollar, and Canadian dollar. The AUDUSD dropped to a seventeen-year low of $0.5506, the NZDUSD fell to $0.5469, the lowest since the financial crisis, and the USDCAD edged higher to 1.4667, the highest since 2016. Meanwhile, the European Central Bank announced a new asset purchase program of 750 billion euros and the Australian central bank slashed interest rates to a historical low of 0.25%, and started an asset purchases program for the first time, to ease the impact of the pandemic on the economy and restore confidence.

Equities

Major US stock index futures trimmed losses incurred during the Asian session. Stock benchmarks dropped overnight to test yesterday's low but recovered slightly following the announcement of further easing measures around the world. The Dow Jones Industrial Average futures June contract rose to 20000, the S&P500 futures rallied to 2429, and Nasdaq futures advanced to 7325.

Metals

Gold prices remained weak, pressured by defensive selling. Investors liquidated their gold positions to protect their investments in stocks. The price of a gold ounce dipped to $1464, the price of a silver ounce dropped to an eleven-year low of $11.64, and palladium futures hovered near $1450.

Oil

Oil prices declined sharply yesterday to hit their lowest levels since 2002. The coronavirus stopped travel and suspended the economic activity leading to lower demand for oil. Moreover, the increased probability of a sharp global recession weighed on the oil demand outlook on the long run. Meanwhile, top oil producers are looking forward to ramp up their production after the collapse of the OPEC+ talks early March. The West Texas Intermediate crude futures declined to $20.52, and Brent futures fell to $24.53. Oil benchmarks recovered partial losses on short covering, and the announcement of a massive asset purchase program by the ECB to support the economic activity.

Major Economic Events

GMT Country Event Expectation Previous

12:30

US

 Philadelphia Fed Manufacturing Index (Mar)

10.0

36.7

12:30

US

Initial Jobless Claims

220

211

13:00

SA

South Africa Reserve Bank Interest Rate Decision

5.75%

6.25%

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