Forex Today: Central Banks in step, BoC cuts 50bps, RBNZ next?

Here's what you need to know for Thursday 5th March:

It was the second 1000+ point tally for the DJIA in its 124-year history on Wednesday as markets went bargain hunting following the promising efforts by global authorities to lift sentiment in financial markets and contain the spread of the coronavirus. In addition to Tuesday's emergency rate cut from the Federal Reserve of 50 basis points, the Bank of Canada slashed rates by 50bps, and US lawmakers decided upon an $8 billion response to the coronavirus, approving more than $3 billion for developing treatments for COVID-19 and $2.2 billion for containment. Consequently, climbed 1,171 points, or 4.5%, to end around 27,090, pulling back all of the 800 points lost in the prior session. Also, US data was rosy and Biden's lead over Democratic rival Bernie Sanders boosted sentiment. 

Key events

• Bank of Canada slashed rates by 50bp rate cut, beating expectations; similarly to the Fed's message, the central bank stands ready to adjust policy further if required.
• US Feb ISM rose to 57.3 vs 55.5, 89% of industries reported growth.
• IMF made USD50bn virus interest-free loan facility available for poor countries.
• US lawmakers decided upon an $8 billion response to the coronavirus, approving more than $3 billion for developing treatments for COVID-19 and $2.2 billion for containment.
• Incoming BoE Governor, Andrew Bailey, said he expects to have to provide supply-chain finance; will co-ordinate action with the Treasury.
• US 10 year bond yields settling below 1%.

FX action and forecasts 

• AUD/USD Forecast: Recovery from decade-low might be limited

• USD/JPY Forecast: Maintains bearish perspective near 2020 lows

• GBP/USD Forecast: Holds above key support but recovery lacks momentum

• EUR/USD Forecast: Takes a breather after sharp rally, but bullish bias persists

Commodity complex

Commodities were on the front foot. Industrial metals were broadly higher, with copper and nickel leading gains.  Copper was bid from a low of 2.5690-2.5990. Oil was also eeking out a gain, climbing from a low of 46.67 to a high of 48.39. Iron ore futures also pushed higher. Gold and other precious metals were relatively unchanged.

Aussie trade balance and RBNZ up next 

Following the three central banks cutting rates this week on the dollar bloc, the Reserve Bank fo New Zealand is in the firing line for a cut as well. "We changed our forecast to a 50bp cut on Monday, and the coordinated global response backs that, and the BoC’s move last night will only cement market expectation," analysts at ANZ Bank forecasted. 

Meanwhile, the Australian Trade Balance is on the hit list for today's Asian session. Preview to follow: