USD/JPY is trading
between a range of 108.50 and 108.87 in Asia on Wednesday, currently
consolidating and flat on the session. While yesterday’s positive risk mood
extended to Europe on optimism that the pace of new COVID-19 cases may be
slowing, the US markets were unable to hold. Despite, the US Secretary of
Housing said there are hopeful signs that COVID-19 cases in the US could level
out sooner than predicted, US stocks tanked into a sea of red towards the end
of the day.
The bulls were out at
the starting blocks on Wall Street and mid-day session comments from New York,
Gov. Andrew Cuomo who said that daily hospitalizations were plateauing in the
state boosted risk appetite. However, the markets fell and investors were quick
to cash in. Consequently, After a day of gains, the Dow finished 0.1%, or 26
points, lower. At its highest point, the index had been up 937 points. The
S&P 500 closed down 0.2% and the Nasdaq Composite finished 0.3% lower:
In other news, the UK
Prime Minister Boris Johnson is reported to be in good spirits and a stable
condition in intensive care. Also, Japan’s Prime Minister Abe has declared a
state of emergency in Tokyo and six other provinces and plans to combat the
economic fallout of COVID-19 with a huge fiscal stimulus package. “The
package, worth ¥16.5trn, equates to 20% of GDP.
Meanwhile, European
leaders are meeting to discuss a policy tool-kit potentially worth up to €540bn
(3.8% of GDP). However, it will be challenging to get a broad agreement between
European leaders on the debt mutualization plan. In the US, Treasury Secretary
Steven Mnuchin is seeking an additional USD250bn for small business
loans,” analysts at ANZ bank explained.
Eyes on the Fed
minutes
As for US 2-year
treasury yields, they initially rose from 0.26% to 0.30% but later retraced to
0.26%, 10-year yields similarly tracing 0.72% to 0.78% and then back to 0.71%
as US equities surrendered initial gains. This brings us to the minutes from
the FOMC’s which are from the unscheduled 15 March meeting. These are now due
and markets will be looking to them for “details on the thought process in
bringing forward the meeting by 3 days to a Sunday and cutting the funds rate
by 100bp, analysts at Westpac explained.
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