Dollar Moves off Lows, but Experts See Trouble Ahead By Investing.com


© Reuters.

By Yasin Ebrahim 

Investing.com – The dollar trimmed its losses on Friday, but experts warn the recent strength of the greenback is on borrowed time, particularly against the euro, as its interest rate advantage is slipping away amid expectations for rates to drop into negative territory next year.

The , which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.17% to 98.73, after hitting a session low of $99.45.

The move of lows comes after investors digested a historic loss of U.S. jobs for the month April as the Covid-19 pandemic led to shuttered businesses across the country.

The U.S. lost jobs last month, the worst on record, but below economists’ forecast of 22 million. The jumped to 14.7%.

But with the parts of the country lifting restriction in recent days, many were quick to suggest that worst was over in the labor market as temporary layoffs made up the bulk of layoffs.

Against the backdrop of rising hopes for an economic recovery, the euro is likely to find its footing and recoup some its losses against the greenback, Commerzbank (DE:) said.

“The Corona crisis brought significantly increased volatility to the EUR-USD exchange rate. Nevertheless, we have not changed the EUR-USD forecast,” Commerzbank said. “The higher risk premium for Europe’s currency, from which EUR-USD is suffering, should be partially reduced with the economic recovery.”

In the hunt for yield, meanwhile, investors have favored the U.S. against other countries, some of which have cut rates to below zero.

But this advantage is wearing thin, Commerzbank argues, as U.S. fed funds futures contracts are pricing in a negative fed funds rate in 2021 amid expectations for a recession.

“More importantly, the former interest rate advantage of the U.S. dollar has permanently shrunk. This does not justify a substantial overvaluation of the USD outside of times of crisis. We continue to expect EUR-USD rates around 1.14 by end-2020,” the bank added.

was up 0.13% to $1.0846, but was on track for weekly loss.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Pandemic slams Asia’s factories, activity hits financial crisis lows By Reuters


© Reuters. Employees work on a production line manufacturing metal parts for furniture at a factory in Hangzhou

SYDNEY (Reuters) – Asia’s factory activity was ravaged in April, business surveys showed on Monday, and the outlook dimmed further as government restrictions on movement to contain the coronavirus outbreak froze global production and slashed demand.

A series of Purchasing Managers’ Indexes (PMIs) from IHS Markit fell deeper into contraction from March, with some diving to all-time lows and others hitting levels last seen during the 2008-2009 global financial crisis.

Similar gauges out of Europe due on Monday and later in the week are also expected to show industry conditions wallowing around record lows, reinforcing the International Monetary Fund’s warning the global economy is headed for its biggest decline since the 1930s.

The PMI for South Korea, Asia’s fourth-largest economy and a global manufacturing powerhouse, skidded to 41.6 in April, the lowest reading since January 2009. Japan’s PMI released last week similarly fell to an 11-year low.

“The bad news is that the hit to industry in many places is unlikely to be past the worst,” Alex Holmes, Asia Economist at Capital Economics, wrote in a note.

“Global demand has slumped and we don’t think it has bottomed out yet. The latest incoming data for the U.S. and Western Europe point to an unprecedented slump in demand. And while China’s economy has started to recover, demand there remains very weak.”

Last week, China’s official PMI showed factory activity still growing in April, albeit more slowly than March, while the private-sector Caixin PMI showed a dip into contraction, although at a much gentler pace than the rest of the world. Significantly, exporters in both surveys were jolted by steep falls in orders.

While China appears to be ahead of others in emerging from the economic paralysis inflicted by the pandemic, any recovery is expected to be gradual and unlikely to fire up an immediate resurgence in global demand.

The PMI for Taiwan, a major producer of high-end technology components, fell to 42.2, its lowest since 2009 and down from an expansionary 50.4 in March.

The declines in South Korea’s and Taiwan’s PMIs showed contractions that were less severe than those seen in other economies in the region, with indicators in India, Malaysia, Indonesia and Vietnam all reporting plunges to record lows.

In India, Asia’s third-largest economy, new orders and output shrank at the steepest pace since early 2005 and factories cut jobs at the fastest rate in the survey’s history.

Capital Economics’ Holmes said while South Korea and Taiwan held up better than other Asian peers, thanks mostly to effective government policies to contain the virus, conditions have nonetheless worsened.

Official data released last week showed the coronavirus sent South Korean exports plunging in April at their sharpest pace since the global financial crisis.

South Korean tech giant Samsung Electronics (OTC:) Co Ltd last week said it expected profits to decline in the current quarter due to a slump in sales.

It said that while work-from-home orders and growth in online learning would underpin demand for memory chips, the outlook for smartphones and TVs was bleak as consumers put off discretionary spending.

The production slump is of particular concern to policymakers, who are worried about the socially destabilising effects of massive unemployment as firms in both factory and service sectors slash headcount.

A private-sector survey in Australia on Monday showed job advertisements plunging a record 53.1% in April, a decline that was almost five times larger than the previous record of 11.3% in January 2009.



GBP/USD off Lows, but Some See Risk Ahead as Brexit Talks Set to Resume By Investing.com


© Reuters.

By Yasin Ebrahim 

Investing.com – moved off one-months lows on Thursday, but remained under pressure as focus shifted to the risk of the U.K. leaving the EU without a deal as both parties are set to renew talks next week.

GBP/USD fell 0.52% to $1.2449, but had been as low as 1.2408 intraday.

Brexit will again be a key driver for sterling, Rabobank said. It warned of a potential slide in sterling below $1.20 in the next three months amid the economic uncertainty around whether the U.K. and EU will be able to agree on a post-Brexit deal on their future relationship.

A day earlier, the U.K and EU agreed dates for the next three rounds of negotiations, with talks set to take place by video conference in the weeks beginning April 20, May 11 and June 1. 

Others have also echoed the bearish sentiment on sterling.

Commerzbank (DE:) said it sees ending the year at 89 pence per euro, as the U.K. has not indicated it is willing to extend the deadline for trade talks.

Without a deal, Britain risks leaving the EU without a trade deal, which many believe will heap further pressure on the economy at a time when growth is expected to come under heavy pressure due to the impact from the Covid-19 pandemic.

“While my base case is that Brussels and London will come to some kind of agreement at the last minute, I do think that there will be a phase of uncertainty with higher sterling volatility before that happens,” said Thu Lan Nguyen, a foreign-exchange strategist at Commerzbank, according to Bloomberg. “It is far from clear whether the British government really will be willing to extend negotiations due to the current crisis.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Wall St. looks for light at end of tunnel, sees risk stocks will re-test lows By Reuters


© Reuters. FILE PHOTO: The Wall Street sign is pictured at the New York Stock exchange (NYSE) in the Manhattan borough of New York City

By Megan Davies

NEW YORK (Reuters) – Wall Street analysts and investors see a risk that stocks could retest recent lows in the coming days or weeks as they worry about the spread of the virus and its impact on the economy, although some spot glimmers of light at the end of the tunnel.

Wall Street’s main indexes fell more than 1.5% on Friday as the coronavirus abruptly ended a record U.S. job growth streak. The S&P 500 () closed at 2,488.65, after rebounding about 13% from its intra-day late-March low, although it is still down more than 26% from its mid-February record high.

Markets have shown some signs of stabilization as investors parse a broad range of signals for clues on the trajectory they may take in coming weeks.

Some point to easing volatility and improving liquidity in fixed-income markets as signs that the worst of the sell-off may be over. Investor sentiment, often seen as a contrarian indicator, is one signal pointing to an eventual turnaround in U.S. stocks. Still, markets remain turbulent and far off their highs.

U.S. Surgeon General Jerome Adams warned on Fox News Sunday that “this is going to be the hardest and the saddest week.”

However, there have been some positive signs. New York Governor Andrew Cuomo said deaths had fallen slightly from the prior day, even though he cautioned that it was not yet clear whether the crisis in the state was reaching a plateau.

Michael Hewson at online trading company CMC Markets said that U.S. futures may get a lift on Sunday by a “fall in the death rate in NY” and some other places. U.S. futures were up more than 1 percent soon after opening on Sunday.

Here is a roundup of some analyst and investor views from the past few days:

– Julian Emanuel at U.S. broker-dealer BTIG said in a research note on Sunday that if history is any sort of guide, he expects a “retest of the March lows in April, as the public health and economic bad news is likely to reach its parabolic peak.”

Emanuel said that part of what could make a bottom for stocks in the coming days is a realization that the real reopening date for the economy is not the end of April but rather the end of May.

Emanuel added that stocks often trough “when the headlines are most adverse, hope scarce, and emotions high” and said that as investors, “we want to be ready for that time, and we think it is coming in April.”

Emanuel pointed to one “uncommon phenomenon indicative of systemic hedging,” saying the S&P 500 , which measures volatility, is currently above the VIX, which is “usually reserved for times of market stress.”

– Whitney Tilson, founder and CEO of Empire Financial Research, a publisher of investment newsletters, who previously ran hedge fund Kase Capital, said in an email on Sunday that he believes New York City “stopped the rapid spread of the virus around March 19,” and that the number of new cases is now in decline. Tilson said data that NYC Health was releasing on new cases gave a more hopeful picture.

– Christopher Wood at Jefferies wrote in a research note dated Friday that they are still expecting, at a minimum, “a re-test of the previous low on the S&P 500”, as well as a re-test of the 10-year Treasury bond yield low, and forecasts that will coincide with a renewed rally in the U.S. dollar.

Wood wrote that “markets are heading into the peaking of the bad news in Europe at the same time as cases in Britain and America, both behind in terms of the virus cycle because of the failure to lockdown earlier, continue to rise sharply,” Wood wrote. “This news flow is likely to unnerve investors in the short-term for understandable reasons.”

Still, Woods said “when that peaking out does occur, it should generate a decent tradeable rally.”

Jefferies equity strategist Steven DeSanctis, however, in a separate note said, said that hedge funds’ de-risking “seems to be behind us.”

– Andrew Slimmon, managing director and senior portfolio manager on all long equity strategies at Morgan Stanley (NYSE:) Investment Management, said in emailed comments from a podcast on Friday that he also expects some “retest of the lows” but said it is possible that “we will not get back to the lows.”

He charts three stages of bear markets – the “panic low,” the “relief rally” and the “retest” and said the market is currently in the second stage. He sees financial services and consumer stocks as areas that are particularly attractive.

– Brad McMillan, chief investment officer for Commonwealth Financial Network, wrote in emailed comments on Friday that “April is going to be a tough one, with lots of real — and very scary — headlines. The market will certainly respond to those headlines, so we should expect more volatility and quite possibly a retest of the March lows.”

– Michael Purves, at Tallbacken Capital Advisors, wrote on Friday that the VIX curve appears to be reflecting a few high-level but important scenarios/risks, of rolling U.S. blackouts as incremental populations get hot, and that U.S. health policy is less cohesive than it is in other countries.

Purves also said there is “an ever growing number of second order impacts from this economic shut down which may not reveal themselves for several months (fiscal stimulus implantation risks, food inflation, labor strikes, rising political risk, unsuccessful reboot of Asian economies, re-outbreak of Corona cases etc.)”

(This story was refiled to add that Morgan Stanley comments were from a podcast)



Bond investor Jeffrey Gundlach bets stocks March lows to be surpassed in April


FILE PHOTO: Jeffrey Gundlach, CEO of DoubleLine Capital LP, presents during the 2019 Sohn Investment Conference in New York City, U.S., May 6, 2019. REUTERS/Brendan McDermid

(Reuters) – Bond investor and DoubleLine Capital Chief Executive Jeffrey Gundlach said on Tuesday he believes the coronavirus sell-off is not over yet and that the lows stocks hit in March will be surpassed in April due to uncertainty over the outbreak.

“I think we are going to get something that resembles that panicky feeling again during the month of April,” he said in a webcast.

The S&P 500 lost 12.52% in March in its biggest monthly decline since the 16.94% slide of October 2008.

“The low we hit in the middle of March, I would bet that low will get taken out,” he said.

Gundlach said the market is acting “somewhat dysfunctionally” and that projections by banks that the U.S. economy will quickly recover were too optimistic.

“We will get back to a better place, but it’s just not going to bounce back in a V-shape back to January of 2020,” he said.

Gundlach said earlier in March that there was a 90% chance the United States would enter a recession before the end of the year due to the effects of the coronavirus pandemic.

Cleveland Federal Reserve Bank President Loretta Mester said on Tuesday that U.S. economic data for the first half could be “very bad” due to efforts to slow the spread of the coronavirus.

President Donald Trump and his top healthcare advisers urged Americans to follow strict social distancing measures ahead of a “tough two weeks” that could see at least 100,000 deaths from the coronavirus in the United States.

Reporting by Kanishka Singh in Bengaluru; Editing by Sonya Hepinstall



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GBP/USD Off 35-Year Lows as U.K. Goes Into Lockdown to Curb Covid-19 Outbreak By Investing.com


© Reuters.

By Yasin Ebrahim

Invesing.com – The pound moved off 35-year lows on Friday, though remained under pressure, even as the U.K. government proposed more stimulus measures to combat the Covid-19 pandemic, and imposed further restrictions to limit contagion across the country.

rose 1.69% to $1.1679 after falling to $1.1414, its lowest level since 1985.

Prime Minister Boris Johnson, meanwhile, said all cafes, bars, pubs and restaurants in the UK would shut on Friday night for the foreseeable future, as efforts to contain the coronavirus spread intensify.

The announcement arrived as the U.K. detailed further measures to cushioned the economic fallout from the pandemic. U.K. businesses would have until the end of the financial year to repay value-added tax (VAT) accrued from now through June, the government said.

The government also pledged to cover 80% of the salaries of people who are unable to work amid the coronavirus-led disruptions.

 

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Pound Slides to Weakest Since 1985, Surpassing Brexit Vote Lows By Bloomberg


© Reuters. Pound Slides to Weakest Since 1985, Surpassing Brexit Vote Lows

(Bloomberg) —

The pound fell to its lowest level against the dollar in over three decades as the shocks caused by the coronavirus rippled through global markets.

Investors fled from U.K. assets as the pandemic began spreading through Britain, with many fearing Prime Minister Boris Johnson’s response has fallen short compared to measures taken by other European nations. Sterling has also suffered due to heightened global demand for the greenback, with a gauge of dollar strength up for a seventh session.

“A combination of the safe haven dollar bid, the global asset sell-off and liquidation of long positions from the election are all weighing on the pound,” said Neil Jones, head of foreign-exchange sales to financial institutions at Mizuho Bank Ltd.

fell as much as 1.9% to $1.1828, surpassing even the lows it recorded in the aftermath of the 2016 Brexit vote. It was last lower in 1985, when the world’s richest nations signed the Plaza Accord to weaken the dollar and haul the U.S. economy out of a recession.

Alongside the pound, U.K. sovereign bonds plummeted after the government announced a rescue package for businesses in an attempt to stop the coronavirus wrecking the domestic economy. The yield on U.K. bonds rose to their highest in over two months, while the stock index dropped around 5%.

Banks have been wrongfooted after being bullish on sterling, with a median estimate compiled by Bloomberg forecasting the pound at $1.30 by June. Option markets indicate a less optimistic picture, with traders going from neutral on its prospects to the most bearish since the December election.

(Updates with options pricing, bank forecasts, gilts.)

©2020 Bloomberg L.P.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Dollar Extends Gains Against Yen; Pound off Lows as U.K Unveils £330B Stimulus By Investing.com


© Reuters.

By Yasin Ebrahim 

Invesing.com – The dollar extended its gains on Tuesday, thanks to a surge against the yen as risk appetite returned amid a rally on Wall Street after the Federal Reserve and the Trump administration rolled out new stimulus measures to combat the Covid-19 outbreak.

The pound moved off the lows against the greenback after the UK unveiled further stimulus measures to support businesses affected by the virus. 

The , which measures the greenback against a trade-weighted basket of six major currencies, rose by 1.77% to 99.88.

The Fed rolled out financial-crisis-era measures again this week after detailing plans to create a lending facility to support short-term commercial debt markets to avert a liquidity crisis from the impact of the coronavirus spread.

Treasury Secretary Steve Mnuchin, meanwhile, outlined a $850 billion stimulus package to support the economy, that could include payroll tax cuts, checks mailed to taxpayers and support for industries such as airlines that have been battered by the outbreak.

The stimulus initiatives underpinned the broader rebound on Wall Street, prompting investors to reduce bullish bets on the yen.

rose 1.30% to Y107.30.

Elsewhere, the pound fell 1.40% to $1.2094, but remained above session lows after the U.K. unveiled additional fiscal support to help businesses and prop up the broader economy. 

U.K. Chancellor of the Exchequer Rishi Sunak pledged £330 billion of government-backed loans and more than £20 billion in tax cuts and grants to support businesses affected by the novel coronavirus.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Japan business mood plunges to decade lows on coronavirus woes: Reuters Tankan By Reuters


Japan business mood plunges to decade lows on coronavirus woes: Reuters Tankan

By Tetsushi Kajimoto

TOKYO (Reuters) – Japanese business confidence plunged to decade lows in March as the spreading coronavirus outbreak stoked fears of a global recession and sent stock markets tumbling, the Reuters Tankan survey showed on Tuesday.

The monthly poll suggested that the Bank of Japan’s tankan quarterly survey due April 1 will show a sharp deterioration in business sentiment both at manufacturers and non-manufacturers.

The global spread of the virus has hammered world trade, supply chains and tourism, dealing a heavy blow to Japan’s fragile economy, which is teetering on the edge of a recession.

The souring business mood could derail capital spending, one of the few bright spots in the Japanese economy. That will heap pressure on the government and the central bank to deploy more stimulus measures.

The BOJ eased monetary policy on Monday by pledging to buy riskier assets such as exchange-traded funds (ETF) at double the current pace, joining global central banks in combating the widening economic fallout from the epidemic.

All manufacturers across industries were pessimistic about business conditions, according to the Reuters poll of 501 large- and mid-sized nonfinancial companies, of which 242 firms responded on condition of anonymity.

Among service sector firms, no firms except those in real estate/construction and information/communications were optimistic.

Most of the companies expressed fears of the virus’ impact on their business, on top of already weak consumer spending due to an October sales tax hike and sluggish global demand aggravated by the U.S.-China trade war.

“We cannot see how much impact the virus may have on our business in March. We fear sharp drops in sales,” a manager at a chemicals firm wrote in the survey.

A machinery maker manager said: “Just as the U.S.-China trade friction seems to be settled for the time being, the new virus is causing worry about downward revision to our profits.”

The sentiment index at manufacturers fell to minus 20 in March from minus 5 in the previous month, while the service-sector gauge dropped 25 points to minus 10, the Reuters Tankan poll showed. A negative figure means pessimists outnumber optimists.

The manufacturers’ index hit the lowest since December 2009, the depths of the global financial crisis.

Non-manufacturers’ were the most pessimistic since June 2011 in the wake of the Fukushima nuclear disaster.

Manufacturers expected to be even more glum in three months’ time, with the index seen falling further to minus-25 in June, while service-sector morale was seen unchanged in June.

The BOJ’s December tankan showed big manufacturers’ mood hit a near seven-year low in the fourth quarter as the Sino-U.S. trade war curbed external demand and the October national sales tax hike to 10% from 8% dealt a blow to consumer demand.

Japan’s economy, the world’s third largest, shrank at a 7.1% annualized rate in October-December, and many economists see another contraction in the current period, which would spell a technical recession – or two straight quarters of negative growth.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



World stocks succumb to virus fears, Treasury yields hit record lows By Reuters


© Reuters. FILE PHOTO: Signage is seen outside the entrance of the London Stock Exchange in London

By Ritvik Carvalho

LONDON (Reuters) – Global stock markets tumbled and government bonds rallied on Friday as disruptions to business from the spreading coronavirus epidemic worsened, stoking fears of a prolonged economic slowdown.

European shares opened sharply lower, with travel stocks bearing the brunt. The pan-European index was down 3.5% by midday in London, reaching its lowest level in more than six months ()

Germany’s DAX () slid 3.5%, Britain’s FTSE 100 () fell 3.2% and France’s CAC 40 () fell 3.7%. The MSCI All-Country World Index (), which tracks shares across 49 countries, was down 0.84%.

After their worst weekly performance since the 2008 financial crisis, global stocks measured by the MSCI index are up 1.7% this week, as policymakers provided stimulus to combat the economic effects of the virus.

(Graphic: Global stocks’ performance vs reported coronavirus cases – https://fingfx.thomsonreuters.com/gfx/mkt/13/2961/2926/globalstocks.png)

Yields on U.S. Treasuries fell to record lows and Treasury futures jumped as investors increased bets the Federal Reserve will follow this week’s surprise rate cut with further easing.

The yield on benchmark 10-year Treasury notes () fell to a record low of 0.6950% on Friday. The two-year equivalent fell to 0.4510%. ()

The Fed made an emergency interest rate cut of 50 basis points earlier this week. The Bank of Canada and the Reserve Bank of Australia also cut rates, with investors expecting other major central banks to follow suit soon.

Officials and companies in Britain, France, Italy and the United States are struggling to deal with a steady rise in virus cases that have in some cases triggered corporate defaults, office evacuations, and panic buying of daily necessities.

“The interplay of virus containment fears and stimulus measures means that in the near term we expect market volatility to persist,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.

Money markets are pricing in another 25 basis-point-cut from the current 1% to 1.25% range at the next Fed meeting on March 18-19 and a 50-basis-point cut by April. Minneapolis Federal Reserve President Neel Kashkari said late on Thursday the Fed could cut rates further if needed.

Germany’s benchmark 10-year Bund yield fell to a six-month low, within striking distance of last year’s record lows. [GVD/EUR]

The flu-like virus emerged late last year in central China and has since spread to more than 80 countries. More than 3,000 people have died. Travel restrictions and factory closings aimed at curbing the spread of the virus are expected to pressure global growth.

Many investors were awaiting the release of U.S. non-farm payrolls later on Friday. Recent U.S. economic data have been encouraging, but concerns about coronavirus are likely to overshadow any signs of a strong labour market.

Earlier in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan () fell 2.05%. Japan’s Nikkei stock index () sank 2.94%. Australian shares () were down 2.44%.

Shares in China fell 1.22%. Stocks in Hong Kong <.his>, another city hard hit by the virus, fell 2.12%.

In currencies, rapidly falling yields hammered the dollar The index that measures the dollar’s strength against a basket of other currencies, was down 0.7%. [FRX/]

Against the Japanese yen , the dollar fell to a six-month low and was last at 105.29 yen. It sank to a two-year trough of 0.9347 Swiss franc .

“The driver is the equity markets and the collapse in U.S. bond yields this week,” said Kenneth Broux, FX strategist at Societe Generale (PA:).

“It’s been a knee-jerk reaction. What we have now is a reversal simply on the declining U.S. equities and the compressing differential. [FRX/]

The euro () gained 0.8% to trade at $1.1328. Markets in the euro zone are pricing in a 93% chance that the European Central Bank will cut its deposit rate, now minus 0.50%, by 10 basis points next week.

Oil prices slid more than 4% to their lowest since July 2017 after Reuters reported that Russia would not agree to steeper cuts in oil output to support prices.

By 1153 GMT, LCOc1 was down $2.06, or 4.1%, to $47.93 a barrel. U.S. West Texas Intermediate () was down $1.94, or 4.2%, to $43.96. [O/R]