It was a calm Wednesday with little to report, as the local currency treaded water for most of the day, ending the session little changed from previous close.
Sideways trading was the dominant theme in the local currency market with activity from both demand and supply counters remaining well balanced through the session at the 3700-3720 levels.
In the day ahead, we expect the current trading levels to prevail, as players continue watching out for any change in fundamentals that might provide the local currency with some impetus.
The greenback resumed its decline after President Trump’s coronavirus speech fell short of expectations and strengthened the demand for safe havens.
President Trump announced a month-long ban of European travel to the US; this comes as cases of the Corona Virus increased world over, further weakening near term economic prospects. Central banks are working to limit economic damage of the outbreak, with most cutting interest rates to support their economies.
The Euro traded higher on the back on dollar weakness and amid a risk-off mood in the global markets. The European Central Bank is certain to unveil new stimulus measures at today’s policy meeting following Christine Lagarde’s remarks to do whatever it takes to support the Eurozone.
Sterling was range-bound on Wednesday although it lost ground temporarily after Bank of England announced a 25 basis point rate cut to 0.25%. In addition, doubts about the EU-UK talks remain elevated amid coronavirus fears while traders look to further economic stimulus by the government.