The Kiwi Dollar has held up reasonably well overnight as the US Dollar resumed its general decline. Global stock markets have taken another hit as markets expressed their disappointment in the US governments stimulus plan, with risk sentiment taking another dive. Safe havens are back in favour, with the Japanese Yen and Swiss Franc both making good gains. The British Pound has lost ground after a surprise rate cut from the Bank of England overnight.
Bank of England Cuts Rates
The Bank of England announced a 50-basis point emergency rate cut this morning for the first time since the 2008 financial crisis. The surprise announcement is part of a coordinated effort with the UK government to inject a double dose of stimulus to keep recession at bay.
All Eyes on ECB
After recent rate cuts in the U.S, UK, Canada, and Australia, attention turns to the ECB and their decision on interest rates tonight. So far the ECB has taken no action in response to the Coronavirus outbreak, but reports have suggested that ECB President Lagarde has told EU leaders that without coordinated policy action across Europe another Global Financial Crisis could develop. However, economists are expecting the ECB to hold rates at -0.5%, but deliver a suite of other strong policy measures to combat the coronavirus situation.
Greenback Slides on US Stimulus Plan
After rebounding yesterday from Monday’s collapse, US stocks are once again deep in the red as fear and uncertainty continue to drive markets. Investors are overwhelmingly disappointed in the Trump Administration’s stimulus plan (or lack thereof), which has driven last night’s selloff. The declining demand for US assets is hurting the dollar, which is down for the 12th time in 14 days.
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