CURRENCY PATROL LOCKDOWN DAY 40 – 07 HOURS 11 MINUTES
By the close of trade on Tuesday, the South African rand strengthened against the US dollar.
- Global risk appetite was lifted by further easing of COVID-19 lockdown restrictions globally.
- To support the flow of credit to households and businesses, the federal bank regulatory agencies today announced an interim final rule that modifies the agencies’ Liquidity Coverage Ratio (LCR) rule to support banking organizations’ participation in the Federal Reserve’s Money Market Mutual Fund Liquidity Facility and the Paycheck Protection Program Liquidity Facility.
- The greenback lost ground after the US ISM non-manufacturing PMI fell to its lowest level since 2009, as the coronavirus pandemic brought economic activity in the country to a near-screeching halt.
- US trade deficit widened by the most in over a year in March, as a record drop in exports offset shrinking imports.
- St. Louis Federal Reserve President, James Bullard, warned that the unemployment rate could now be a little above 20.0% and that benchmark rates will likely stay near zero for years, not months.
- The yield on benchmark government bonds fell yesterday. The yield on 2021 bond declined to 3.91% while that for the longer-dated 2030 issue fell to 9.74%.
In early trade on Wednesday, the US dollar is trading 0.1% higher against the South African rand at R18.5351, while the euro is trading 0.1% higher at R20.0924. The British pound has gained 0.1% against the South African rand to trade at R23.0555.
By the close of trade on Tuesday, the euro declined against most of the major currencies.
- Ministers are considering a new multibillion pound intervention into the coronavirus crisis through a scheme that would accelerate payments to cash-starved small businesses. Sky News has learnt that the Treasury and Bank of England are in discussions about an emergency programme targeted at providers of supply chain finance. Under the plans, which are at an exploratory stage, the Covid Corporate Financing Facility (CCFF), which was set up to buy commercial paper from large blue-chip companies, would be amended to promote faster payments of SMEs’ invoices.
- Consumers in the UK are fearful the country is heading for a recession, with almost 90% expecting unemployment to rise as a result of the coronavirus (COVID-19) crisis. The Consumer Confidence Index run by YouGov and the Centre for Economics and Business Research (CEBR) has fallen steeply since the introduction of the lockdown, and now stands at its lowest since 2012.
- Germany’s highest court gave the European Central Bank three months to justify bond purchases under its flagship stimulus programme or lose the Bundesbank as a participant. The Euro was at the epicenter of the volatility hitting the currency market in the last 24h as German judges, in a process that has been dragging on for over 5 years, challenged the ECB on its QE activity, giving now three months to justify bond buying program.
- On the data front, the eurozone’s producer price index (PPI) suffered its steepest fall since the 2008 financial crisis in March, as the COVID-19 pandemic sharply reduced demand for energy.
In early trade on Wednesday, the euro has marginally slipped against the US dollar to trade at $1.0839, while it has marginally gained against the British pound to trade at GBP0.8716.
NOVEL CORONAVIRUS MAP
3,644,198 confirmed cases
259,155 reported deaths