The US Dollar was struggling to regain traction during London trade on Monday as FX traders consider the growing possibility that the US Federal Reserve will need to take on an even more accommodative policy given the potential impacts to the economy from the Coronavirus. On Friday, the Chairman of the Fed had said, after another down day on Wall Street, that the Fed would “act as appropriate” in order to provide economic support. Analysts believe that a rate cut could come as soon as this month; the Fed meets for its usual 2-day policy discussions on March 17th and 18th. Many analysts believe that the Fed’s move is likely to act as a catalyst for other major central banks to similarly act.
As of 11:11 am in London, the EUR/USD was trading lower at $1.1089, a gain of 0.544%; the pair has ranged from a low of $1.10237 to a high of $1.10941. The GBP/USD was down at $1.2776, a loss of 0.03603% and off the session low of $1.27546. The USD/JPY was trading at 107.6580 Yen, down 0.37% and moving from the session trough of 107.260 Yen.
Markets are bracing for a slew of PMI surveys today. So far today, the outcomes of the various purchasing manager surveys have largely been mixed. In Asia, the Caixin manufacturing survey for February came in far worse than expected at 40.3, against a predicted reading of 45.7. In the Eurozone, the February manufacturing sector PMIs for Germany, France, Spain and the EU were better than expected but, with the exception of Spain, all below the 50.0 threshold which separates an expanding sector from a contracting one. The PMI surveys for Italy and the UK were both disappointing, missing analysts forecasts. Later in the day, Markit Manufacturing is likely to show a flat reading of 50.8, according to the latest poll, while the ISM Manufacturing PMI could show a decline to 50.4.