Breaking News
Close
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Central Banks Offer More Stimulus, FX Jump On Month-End Flows

By Kathy LienCurrenciesApr 30, 2020 21:12
uk.investing.com/analysis/central-banks-offer-more-stimulus-fx-jump-on-monthend-flows-200441151
Central Banks Offer More Stimulus, FX Jump On Month-End Flows
By Kathy Lien   |  Apr 30, 2020 21:12
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
When we look back at April 2020, it could very well be the worst month ever for the global economy. Across the globe, governments took the unprecedented step of ordering their citizens to stay at home and shutting down all non-essential businesses. Most businesses were closed. Central banks around the world warned about the significant weakness in April data with the jobless rate expected to hit double-digit levels. Millions of people were put out of work as economic activity ground to a halt. Yet, for the markets, April wasn’t a terrible month. In fact, the Dow Jones Industrial Average rose more than 15% after falling sharply in February and March. The U.S. dollar, which rose sharply in March, limited its gains to the euro and Swiss Franc in April. Instead, it fell against all other major currencies, including the Australian and New Zealand dollars. Aggressive monetary and fiscal stimulus from all corners of the world helped to stabilize markets that had gone haywire in February and March.  
 
Central banks continue to increase support for consumers and businesses. The big announcement today came from the Federal Reserve, which said it will be expanding its Main Street lending facility to accommodate larger businesses with a lower minimum loan size. This follows a steep decline in personal income and spending along with a slightly higher than expected jobless claims report. Despite softer data and more stimulus from the Fed, USD/JPY ended the day sharply higher as end-of-the-month flows triggered big moves.  
 
Meanwhile, the European Central Bank kept its main refinancing rate unchanged, cut the lowest rate on its targeted loan operation and announced new operations for banks. This new program called the Pandemic Emergency Long Term Refinancing Operation, or PELTRO for short, provides loans at ultra-low interest rates (minus 1%). The ECB also said it was prepared to increase the size and adjust the composition of its pandemic emergency bond purchase program. These steps are in response to ECB President Christine Lagarde’s worry that the economy could shrink as much as 12% this year and 15% in Q2 on a quarterly. She felt that the speed and scale of the recovery is highly uncertain, so they are “fully committed to doing everything possible” within their mandate to support every citizen of the Eurozone. Earlier this morning, we learned that Eurozone GDP contracted by 3.8% in the first quarter, which was right in line with expectations. Initially the euro sold off after the rate decision and Lagarde’s comments, but the single currency recovered strongly into the London close on month-end buying.  
 
The main takeaway from all three of this week’s monetary policy announcements is that central bankers did not sugar coat their economic outlooks. They are taking the downturn in their economies very seriously. They are worried that their contractions will deepen. They have not only taken steps this week to offset the decline, but also pledged to do more.
 
The commodity currencies were mixed, with the New Zealand dollar extending its gains, while the Canadian and Australian dollars pulled back slightly. NZD benefitted from upward revision to business confidence and ANZ activity. Chinese PMIs were also better, with improvements in non-manufacturing PMI offsetting a decline in manufacturing. According to the latest monthly GDP report, even before COVID-19 hit North America in a meaningful way, Canada’s economy was slowing. In the month of February, Canadian GDP stagnated, which was weaker than the forecast for 0.1% growth. No major economic reports were released from Australia, but the currency fell hard during the New York session. Australian manufacturing PMI numbers are scheduled for release this evening along with first quarter producer prices.
Central Banks Offer More Stimulus, FX Jump On Month-End Flows
 

Related Articles

Andey Goilov
The Yen Remains Weak By Andey Goilov - Apr 25, 2022

This April turned out to be the hardest time for the Japanese Yen – the asset plummeted to its 20-year lows against the USD. On Monday 25 April, the Yen is trading at 128.55,...

Central Banks Offer More Stimulus, FX Jump On Month-End Flows

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
omid rajabi
omid rajabi Apr 30, 2020 21:25
Saved. See Saved Items.
This comment has already been saved in your Saved Items
its very very good
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
DOWNLOAD APPApp store
Investing.com
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
or
Sign up with Email