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Central Bankers have been scurrying to adapt to the new economic climate that is shaping up during the Coronavirus epidemic. Exchange rates are moving faster with more volatility and forex traders have been trying to adjust to the increased action that a Coronavirus economy brings.
The economic situation is bleak at best with most economies suffering from the need to reduce large gatherings to a minimum. Everybody will reduce their daily activities and also their spending. The Central Banks are backing supportive financial policies during these times.
The ECB announced a Pandemic Emergency Purchase Programme because of the tightening of financing which has an envelope of 750 Billion Euro.
The monetary policy in Japan is in a bit of a crisis scenario. The economy was sputtering before the Coronavirus and now it is expected to drag even further. The Olympic games were also postponed which would have helped get over the hump. Recently Japan’s status as a safe haven currency has also weakened with the United States asserting itself as a safe haven.
The Reserve Bank Of Australia is enacting some of the most comprehensive of monetary policy measures that seem flexible enough to be able to cope with different outcomes posed by the Coronavirus epidemic. The AudJpy was in almost a free fall for 3 weeks before Governor Philip Lowe made his announcements about Australia’s monetary policy changes about four days ago. This effort by the Reserve Bank Of Australia really shows that they are an important piece to the global effort to stem the tide of Coronavirus economic implications.
The Bank Of Canada continues to show its growing role as a player on the world stage. So far its monetary policy has stayed flexible and its economy may be in a situation where it rebounds as well as any other economy because they have taken steps to ensure the bond markets do not freeze up.
In the United States, the Federal Reserve announced extensive new plans to support the economy. In Switzerland, the Swiss Bank says it will intervene more strongly in the currency market to counteract the upward rise of the Swiss franc, which makes Swiss products more expensive for trading to other countries.
The major industrialized economies are gearing up for economic uncertainty. The best positioned economies are those that have studied the possible results of life with the Coronavirus. This is a complicated subject so the studies are still ongoing. I will revisit the subject in a few weeks to see what other measures have been enacted to mitigate the Coronavirus economic factors.
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