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  • GBP/JPY sinks as cable drops to 1985 lows.
  • US markets temporarily suspending trading for the fourth time in two weeks.

In a coronavirus sell-off in markets, trigger yet further circuit breaker son Wall Stree today, an exodus to cash has seen the US dollar take off and a flight to safety impacting GBP the hardest and commodity-FX close behind. USD/JPY has so far held up but GBP/JPY has been crushed. GBP/JPY is trading at 126.13 at the time of writing between a range of 124.02 and 130.33. 

We are seeing levels not traded since the GFC across the board and in GBP, we have seen the lowest level since 1985 as it fell to a low of 1.1449, (the Jan 1985 low was in the 1.12 handle). The DXY has hit a high of 101.71 from 99.15 the low. US Treasuries fell, rates rallied and despite the central bank’s recent efforts to draw in liquidity in the dollar market, they have fallen falling on deaf ears – the dollar funding squeeze is well underway and higher volatility in FX as liquidity dries up is potentially here to stay.

White House to the rescue, markets in a state of panic

US markets temporarily suspend trading for the fourth time in two weeks with the S&P 500 and the Dow plunging. The DJIA has now completely erased all its gains since President Trump took office as the benchmarks burrow their ways even deeper into bearish market territories.

“If 2008 was the Great Financial Crisis, this is the Great Virus Crisis,” said Ed Yardeni, president of Yardeni Research.

However, this time around, there seems it is little the central banks can do, rate cuts are blunted by the fact that people have to stay at home and business are closing. The White House plans to bail out hard-hit industries and cut checks to Americans, but it does little to reassure investors. Volatility is here to stay in FX.

GBP/JPY levels