Bank Of England New Chief Bailey Promises 'Prompt Action' On Covid-19 Shock

Trading 16 mar 2020 Commentaire »

The UK central bank will act promptly again to support the economy amid the shock caused by the spread of the coronavirus, or Covid-19, Bank of England's new chief Andrew Bailey said on Monday. The central bank was "very keen" to ensure that the temporary damage to the UK economy did not permanently impair long-term growth, Bailey said in an interview to Sky News. "That's why you saw prompt action last week, that's why you will see prompt action again when we need to take it, and the public can be assured of that," he told the broadcaster. Bailey described that the coordinated monetary action by six leading central banks on Sunday as "strong coordination among central banks" and it was due to some "pretty big dislocations" in markets. The Bank of England said it will pump more US dollar funds to the financial system at cheaper rates.


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IMF's Georgieva Seeks Coordinated And Synchronized Global Fiscal Stimulus

Trading 16 mar 2020 Commentaire »

The International Monetary Fund's Managing Director Kristalina Georgieva called for a coordinated global fiscal stimulus and said the lender stands reading to use its $1 trillion lending capacity to help its 189 members to ease the economic shock from the spread of the coronavirus, or Covid-19.

In a blog post on the IMF website on Monday, Georgieva said, "Additional fiscal stimulus will be necessary to prevent long-lasting economic damage."

Fiscal measures that involve increasing health care spending, and containment measures such as social distancing and early monitoring, will help slow the rate of infection and virus spread, she noted. Further, governments should extend measures such as policies including increased paid sick leave and targeted tax relief to businesses and people, she added.

"Beyond these positive individual country actions, as the virus spreads, the case for a coordinated and synchronized global fiscal stimulus is becoming stronger by the hour," Georgieva said, citing the stimulus provided during the global financial crisis of 2009.

"The IMF stands ready to mobilize its $1 trillion lending capacity to help our membership," she said.

The lender can provide as much as $50 billion to emerging and developing economies, initially, through flexible and rapid-disbursing emergency response toolkit for debt relief, and up to $10 billion to low-income members through our concessional financing facilities, which carry zero interest rates.

The IMF has already received interest from about 20 more countries, she said.

The Catastrophe Containment and Relief Trust of the IMF aims to help the poorest countries with immediate debt relief, thus freeing up vital resources for health spending, containment, and mitigation. Recently, the United Kingdom pledged $195 million, thus boosting the size of the fund to $400 million.

The lender hopes to raise the fund size to $1 billion through donations from members, the IMF chief said.

Georgieva welcomed the coordinated monetary policy action by six leading central banks on Sunday that included interest rate cuts, asset purchases and lowering the pricing of US dollar swap lines, and other individual actions by different central banks on Monday, to provide liquidity and boost sentiment in the financial markets that keep crashing on fears of a severe global recession as the spread of the Covid-19 hamper human activity across continents.

Central banks in advanced economies should continue to support demand and boost confidence by easing financial conditions and ensuring the flow of credit to the real economy, Georgieva said. She said swap lines may need to be opened for emerging market economies in future. In emerging and developing economies, she said central banks will need to balance capital flow reversals and commodity shocks using measures such as interest rate cuts, monetary stimulus, foreign exchange interventions and capital flow management.

Regarding regulatory response, the IMF chief urged financial system supervisors to aim to maintain the balance between preserving financial stability, maintaining banking system soundness and sustaining economic activity.

This crisis will stress test whether the changes made in the wake of the financial crisis will serve their purpose, she said.

"Only through sharing, coordination, and cooperation will we be able to stabilize the global economy and return it to full health," she concluded.


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New York Manufacturing Activity Unexpectedly Contracts In March

Trading 16 mar 2020 Commentaire »

New York manufacturing activity unexpectedly contracted in the month of March, according to a report released by the Federal Reserve Bank of New York on Monday.

The New York Fed said its general business conditions index plunged to a negative 21.5 in March from a positive 12.9 in February, with a negative reading indicating a contraction in regional manufacturing activity.

Economists had expected the general business conditions index to show a much more modest decrease and remain positive at 4.0.

The steeper than expected represented the largest point decrease on record and dragged the index down to its lowest level since 2009.

The sharp decline by the headline index came as the new orders index plummeted to a negative 9.3 in March from a positive 22.1 in February and the shipments index tumbled to a negative 1.7 from a positive 18.9 percent.

The number of employees index also slumped to a negative 1.5 in March from a positive 6.6 in February, indicating employment levels were little changed over the month.

The report also said the prices paid index edged down to 24.5 in March from 25.0 in February, while the prices received index slid to 10.1 from 16.7.

Looking ahead, the New York Fed said optimism about the six-month outlook fell sharply, with firms less optimistic than they have been since 2009.

The index for future business conditions plunged to 1.2 in March from 22.9 in February, suggesting firms no longer expect general business conditions to be better over the next six months.

A note from economists at Oxford Economists said the New York Fed's report is likely to be the first of many indicators signaling economic activity has slowed sharply in the wake of the coronavirus outbreak.

"We are not surprised to see the index measuring manufacturing firms' expectations also plunge to their lowest since the financial crisis - it's hard to expect anything other than pessimism from manufacturers given the current backdrop," the economists said.

"Coronavirus represents a multi-layered shock that will cause supply disruptions, choke off demand and tighten financial conditions," they added. "We expect manufacturing to remain in a slump over the coming months."

On Thursday, the Philadelphia Fed is scheduled to release its report on regional manufacturing activity in the month of March. The Philly Fed Index is currently expected to drop to 28.0 in March from 36.7 in February.


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*IMF: Stands Ready To Mobilize $1 Trillion Lending Capacity To Help Members

Trading 16 mar 2020 Commentaire »

IMF: Stands Ready To Mobilize $1 Trillion Lending Capacity To Help Members


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Turkish Lira Drops To 1-1/2-year Low Against U.S. Dollar

Trading 16 mar 2020 Commentaire »

The Turkish Lira fell sharply against the U.S. dollar during the European session on Monday, as investors awaited a rate reduction by Turkey's central bank on Thursday.

The benchmark lending rate is expected to be reduced by 50 basis points to 10.25 percent.

Turkish Treasury and Finance Minister Berat Albayrak said that the government is set to announce financial and economic measures this week as the number of confirmed cases tripled to 18.

The Turkish Lira fell to a 1-1/2-year low of 6.4072 against the greenback from Friday's closing value of 6.3306. If the Lira falls further, it is likely to test downside target around the 6.7 region.


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New York Manufacturing Index Unexpectedly Plunges Into Negative Territory

Trading 16 mar 2020 Commentaire »

New York manufacturing activity unexpectedly contracted in the month of March, according to a report released by the Federal Reserve Bank of New York on Monday.

The New York Fed said its general business conditions index plunged to a negative 21.5 in March from a positive 12.9 in February, with a negative reading indicating a contraction in regional manufacturing activity.

Economists had expected the general business conditions index to show a much more modest decrease and remain positive at 4.0.

The steeper than expected represented the largest point decrease on record and dragged the index down to its lowest level since 2009.


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*New York Manufacturing Index Plunges To -21.5 In March

Trading 16 mar 2020 Commentaire »

New York Manufacturing Index Plunges To -21.5 In March


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Pound Drops On Virus Worries

Trading 16 mar 2020 Commentaire »

The pound declined against its major counterparts in the European session on Monday, as coordinated stimulus actions by global central banks failed to ease fears over the impact of the Covid-19 on economy.

Sentiment deteriorated as the number of Italian COVID-19 cases surged and the U.S. expanded a travel ban to the U.K. and Ireland.

The U.K. government is facing growing calls to take more drastic measures as thirty-five people died after testing positive for coronavirus in the country.

Markets were also reacting to the shutdown of Europe to contain the spread of the coronavirus.

In economic releases, U.K. house prices rose to a record in March, data from property website Rightmove showed.

House prices increased 3.5 percent on a yearly basis to GBP 312,625 in March. This was the highest growth since December 2016. On a monthly basis, house prices gained 1 percent in March.

The pound declined to more than a 5-month low of 1.2259 against the greenback from last week's closing value of 1.2277. The pound is poised to challenge support around the 1.21 mark.

The pound depreciated to 1.1553 against the franc, its lowest level since August 2011. Should the pound falls further, it is likely to test support around the 1.15 region.

Data from the Federal Statistical Office showed that Switzerland's producer and import prices declined in February.

The producer and import prices fell 2.1 percent year-on-year in February.

The pound touched a 6-1/2-month low of 0.9133 versus the euro, compared to last week's closing value of 0.9036. The next possible support for the pound is seen around the 0.92 level.

The pound extended slide to a 6-1/2-month low of 129.80 versus the yen from last week's closing quote of 132.59. The pound may locate support around the 128.00 level.

The Bank of Japan enhanced its massive monetary policy easing, in addition to coordinated measures with other leading central banks, to tackle the financial market downturn caused by the concerns over coronavirus outbreak.

The policy board has decided to loosen the monetary policy through conducting various operations including purchases of Japanese government bonds and the US dollar funds-supplying operations.

Looking ahead, New York Fed's empire manufacturing survey for March and Canada existing home sales for February are due out in the New York session.


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Ireland Trade Surplus Increases In January

Trading 16 mar 2020 Commentaire »

Ireland's trade surplus increased in January as exports rose and imports declined, figures from the Central Statistics Office showed on Monday.

The trade surplus increased to EUR 6.39 billion in January from EUR 4.85 billion in December. In the same month last year, the trade surplus was EUR 6.08 billion.

Exports rose a seasonally adjusted 6.39 percent monthly in January, while imports fell 8.0 percent.

On an unadjusted basis, exports rose 9.0 percent annually in January, while imports declined 6.0 percent.


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*Ireland Jan Imports Down 8% On Month

Trading 16 mar 2020 Commentaire »

Ireland Jan Imports Down 8% On Month


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