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The US dollar loses its momentum amid the coronavirus outbreak. Last week, the US beat China to have the largest number of COVID-19 cases around the world. This was followed by a statement from the US president. Trump said the next 2 weeks could be the most painful as he is anticipating around 240,000 deaths. The $2 trillion-dollar stimulus package had helped the US economy to recover in the short-term. However, analysts said the amount will not be enough to cover the losses incurred by companies starting February Aside from that, the US is not benefiting well from the price war between Saudi Arabia led OPEC (Organization of the Petroleum Exporting Countries) and Russia. The price of crude oil today, April 01, was the lowest in 18 years. Trump said he is ready to mediate between Saudi and Russia to help crude oil get back to its previous price. The statement was welcomed by oil producing countries like Canada and Norway.
The Australian dollar is under pressure amid the looming interest rate decision by the RBA on April 07. Currently, Australia has an interest rate of 0.25%. The country already cut its rate twice following the breakout of the deadly coronavirus. The possibility that the Reserve Bank of Australia will cut another rate next Tuesday was due to the disappointing Manufacturing Purchasing Managers Index (PMI) report yesterday, March 31. The report posted 49.7 points, below the 50.2 points previously recorded. This was the 10th contraction on the report in the past 12 months. Japan was also in contraction, but analysts believe the 3rd largest economy in the world has more bullet compared to Australia. Meanwhile, Japan’ s foreign bonds buying increase to -65.7 Billion from -590.9 Billion in the previous report. On the other hand, Japan’s foreign stock buying further decreased to -1,462.1 Billion from -1,241.8 billion earlier.
The greenback will suffer in the following days following a series of disappointing results. United States Conference Board Consumer Confidence went down to 120.0 points, its lowest since June 2017. Unemployment on the ADP report also posted a staggering -27K result. This was the lowest result since the 2008 Global Finance Crisis. As one of the largest oil producing countries, the US also suffered from the slump in crude oil prices which entered its lowest price for 18 years. The country’s ISM Manufacturing Purchasing Managers Index (PMI) almost entered contraction at 50.1 points. The figure is also lower from its previous record of 50.9 points. On the other hand, Australia’s Manufacturing Purchasing Managers Index (PMI) was once again in contraction. What set the 2 countries apart was the statement made by US President Donald Trump yesterday, March 31. He said the US might see a death of almost 240,000 Americans in the next 2 weeks.
The Australian dollar will suffer a major blow after it goes back into contraction for its Manufacturing Purchasing Managers Index (PMI). Investors are worried that the Australian government and the Reserve Bank of Australia (RBA) might have no ammunition left to counter the economic threat of the coronavirus. On the other hand, Canada surprised investors with a strong PMI result. Meanwhile, gross domestic product (GDP) month-over-month (MoM) report saw a 0.1% gain which worries investors if Canada can keep up with the economic impact of COVID-19. Despite this, some investors are optimistic with the recent announcement by US President Donald Trump. He said that America is willing to intervene with the oil price war between its ally Saudi Arabia and Russia. This was to support crude oil prices, which recently saw a territory not seen in 18 years. This will give boost to the Canadian dollar in coming sessions.
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