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Kathy Lien

Kathy Lien

Kathy Lien is an Internationally Published Author and Managing Director of BK Asset Management. Her trading books include the following: 1) For beginners, “The Little Book of Currency Trading (2010, Wiley).” 2) THIRD edition of the highly acclaimed, internationally published “Day Trading and Swing Trading the Currency Market: Technical and Fundamental Strategies to Profit form Market Swings (2015, Wiley).” 3) Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game (2007, Wiley) 4) High Probability Trading Setups for the Currency Market E-Book (2006, Investopedia)

Articles by Kathy Lien

AUD Climbs to 3 Month Highs Ahead of RBA – What to Expect

13 hours ago

AUD Climbs to 3 Month Highs Ahead of RBA – What to Expect
Daily FX Market Roundup June 1, 2020
The first day of June kicked off with broad based US dollar weakness. The greenback traded lower against all of the major currencies as equities moved higher. Americans are growing increasingly nervous about the protests in US cities but investors have been unfazed. We can’t see this optimism lasting as it is almost certain that the protests will impact investor confidence. Historically the economic impact of protests and riots tend to be short-lived, but rising virus cases could be a dangerous consequence. The protests are important but the number of protestors screaming without masks poses a major risk to the progress being made. If COVID-19 cases spike in New York City, the proposed

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No Bombshells from Trump, FX Rally in Relief

4 days ago

No Bombshells from Trump, FX Rally in Relief
Daily FX Market Roundup May 29, 2020
All week President Trump teased the market with the possibility of big changes in the relationship between the US and Hong Kong/China but to everyone’s relief, his press conference revealed nothing exceptionally damaging. Trump said the US will be terminating its relationship with the World Health Organization, which was widely expected. There was no mention of tariffs of the phase 1 trade deal. He said the travel relationship for HK would be changed and they would review HK’s special policy exemptions. Currencies and equities rallied in relief. US data was weak with personal spending falling -13.6% in the month of April and the trade deficit widening to -$69.7B from -$65B. Personal incomes rose 10%

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FX: Risk on Trades Could Lose Steam

5 days ago

FX: Risk on Trades Could Lose Steam
Daily FX Market Roundup May 28, 2020
US equities extended their gains on Thursday on the back of better than expected economic data. Durable goods fell less than anticipated, jobless claims hovered around 2 million and the market largely shrugged off downward revision to US GDP. Currencies also rallied with euro, sterling the Australian and New Zealand dollars leading the gains. As US-China tensions heat up, we are surprised by the nonchalant attitude in the markets.
The relationship between the world’s two largest economies is expected to chill significantly over the next few days and the ramifications could be significant. Beijing officially approved a new law that would significantly reduce Hong Kong’s autonomy. Activist groups would be

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Euro Cracks 1.10 – Fade or Trade?

6 days ago

Euro Cracks 1.10 – Fade or Trade?
Daily FX Market Roundup May 27, 2020
For the first time in nearly 8 weeks, EUR/USD broke through 1.10. Since Germany and France first proposed their recovery fund, we’ve been talking about a more meaningful turn in euro and have been looking for a break of this key level. Now that it happened, investors are focused on the upside but further gains should be limited ahead of the European Central Bank’s monetary policy announcement next week. Compared to other central banks, the ECB has been less eager to lower interest rates in favor of their Pandemic Emergency Purchase Program, which central bank member Villeroy described as a “masterpiece.”
In the last 24 hours, we’ve heard from a number of monetary policy officials who all seem to suggest that

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FX Traders Bet on Reopenings & Vaccine

7 days ago

FX Traders Bet on Reopenings & Vaccine
Daily FX Market Roundup May 27, 2020
The race for a COVID-19 vaccine is in high gear and as more companies leap into the effort, the rally in currencies and equities reflect the market’s hope for a medical solution to the worst economic and social crisis in modern history. It decimated the economy and claimed the lives of more than 350,000 people but with curves peaking and countries reopening, many investors hope that the worst is behind us. The risk of a second wave is serious but it may be some time before that becomes a major concern. Investor sentiment became so depressed at the onset of the virus that we’re seeing fierce rallies on good news. Novavax started its first human study, which follows last week’s positive reports from Moderna.

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China – How Much Trouble for FX?

11 days ago

China – How Much Trouble for FX?
Daily FX Market Roundup May 22, 2020
China is once again a hot spot for geopolitical uncertainty and social unrest. This week China unveiled a plan to take a stronger stance on antigovernment protests and dissents in Hong Kong. They proposed new security laws that would punish opposition to the mainland. While the details have not been revealed, this would be a major blow to civil liberties and the city’s autonomy. The fear is that this would elicit a strong response from the US who could see this as a reason to reexamine Hong Kong’s special trade status with the US. In recent weeks, tensions have flared between the US and China with the US calling for China to take responsibility for the COVID-19 outbreak. The US threatened to delist Chinese

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FX: China Worries Challenge Early Signs of Global Recovery

12 days ago

FX: China Worries Challenge Early Signs of Global Recovery
Daily FX Market Roundup May 21, 2020
The US dollar traded higher against all of the major currencies today but its gains were modest as investors worry about ongoing US-China tensions. The Trump administration approved arms sales to Taiwan at the opposition of China and the Senate passed a bill that could delist Chinese companies from US exchanges if they cannot prove that they are not owned by the Chinese government. With that said, PMI reports across the globe reinforce early signs of a global recovery. This should be no surprise considering that economic activity completely shutdown in April – so on a percentage basis, any recovery in May will be significant. It’s a completely different story of course on an absolute

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Recovery Signs Encourage Safe Haven Flows Out of Dollar

13 days ago

Recovery Signs Encourage Safe Haven Flows Out of Dollar
Daily FX Market Roundup May 20, 2020
The US dollar is trading lower against all of the major currencies this morning. Stocks and 10 year Treasury yields perked up again on the back of strong results from Lowe’s and Target. Lowe’s reported 11.2% increase in same store sales in Q1 while Target said strong online shopping fueled 10.8% rise in same store sales last month. Results such as these reinforce the market’s view that the worst is behind us. With more states reopening, oil prices recovering and progress on vaccine development, investors are finding more and more reasons to be optimistic, which helps to fuel the recovery in currencies and equities.
With that said, the dollar is on its backfoot ahead of this afternoon’s

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Tide Turning for EURO?

14 days ago

Tide Turning for EURO?
Daily FX Market Roundup May 19, 2020
Most of the major currencies powered higher today even though stocks gave up part of Monday’s gains. USD/JPY rose above 108 but ended the NY session closer to 107.75. In fact, early rallies faded as the day progressed with EUR/USD and USD/JPY coming off their highs. According to the latest economic reports, US housing market activity contracted further in the month of April with housing starts falling 30% and building permits falling 20%. Of course this is no surprise because housing will be one of the sectors that suffer the most from COVID-19 and will take the longest to recover. Figures on new and existing home sales will be even worse. Federal Reserve Chairman Powell also spoke this morning and his comments were a

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Currencies Rally as Stocks Soar on Vaccine, Powell Optimism

15 days ago

Currencies Rally as Stocks Soar on Vaccine, Powell Optimism
Daily FX Market Roundup May 18, 2020
Investors have a number of reasons to feel optimistic at the start of this new trading week and their positive sentiment is reflected in the strong moves in equities and currencies. First and foremost, Moderna Therapeutics, an American biotech company reported very positive early stage human trial coronavirus vaccine results. All 45 participants who received the vaccine produced COVID-19 antibodies. There’s nothing more valuable than a medical solution but Moderna admitted that if all goes well, it will be early 2021 when a vaccine is ready for the market. Also, scientists have said its not clear that antibodies can provide sufficient protection since some patients were reinfected after

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Dollar Shrugs Off Weak Data as May Indicators Signal Bottom

18 days ago

Dollar Shrugs Off Weak Data as May Indicators Signal Bottom
Daily FX Market Roundup May 15, 2020
The news flow in the last 24 hours has been decidedly negative with US retail sales falling more than expected, relations between China and the US souring further and Germany slipping into recession. Yet investors were unfazed with stocks ending the day flat and USD/JPY recovering earlier losses. In the US, consumer spending dropped -16.4% in the month of April, a record decline for retail sales. Clothing sales were down -78%, electronic sales were down -60% and furniture purchases fell -58%. This follows an -8.7% drop the previous month. Yet stocks and USD/JPY recovered initial losses because many feel that the worst is behind us for now. States are reopening in May, which should help

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What’s Driving Dollar Gains in Early NY Trade

19 days ago

What’s Driving Dollar Gains in Early NY Trade
Daily FX Market Roundup May 14, 2020
The US dollar extended its gains against all of the major currencies this morning. Some market watchers are attributing the dollar’s rise to President Trump’s support for the greenback because in an interview this morning with Fox News he said “it’s a great time to have a strong dollar.” However the truth of the matter is that the currency is rising for other reasons because Trump’s dollar outlook has no real impact on its direction.
Instead, investors are still reeling from the Federal Reserve’s perspective on negative interest rates. Fed Chairman Powell made it clear on Wednesday that negative rates are not on the table because their effectiveness is questionable and the central bank has other

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Dollar Rises as Fed Powell Rules Out Negative Rates

20 days ago

Dollar Rises as Fed Powell Rules Out Negative Rates
Daily FX Market Roundup May 13, 2020
The US dollar traded higher against all of the major currencies on the back of risk aversion and comments from Federal Reserve Chairman Jay Powell. While his outlook was very cautious, Powell ruled out negative interest rates. In his economic update webinar, Powell said the virus raises concerns of long term economic harm and the outlook is uncertain with downside risks significant. Therefore additional policy measures may be needed to shield the economy as the loss of thousands of businesses would limit recovery. The unemployment rate could rise further as he expects the peak in the next month or so. Powell really didn’t have anything good to say about the economic outlook outside of the

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More Easing from RBNZ? Not So Fast. And Powell Outlook

21 days ago

More Easing from RBNZ? Not So Fast. And Powell Outlook
Daily FX Market Roundup May 12, 2020
The Reserve Bank of New Zealand meets tonight and the big question is whether or not they will ease. On April 20th, RBNZ Governor Orr said negative rates are not ruled out and they will be thinking about additional stimulus in May. However with interest rates hovering just above zero at 0.25%, the bar for a rate cut is high. Instead, if the central bank were to ease, the next move would more likely be an increase in Quantitative Easing rather than lower interest rates.
Yet the jury is still out on whether more easing is necessary at this time. Since Orr’s comments 3 weeks ago, New Zealand data has been mixed with credit card spending and building permits plunging, but the trade balance

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Highlights for Dollar this Week and more

22 days ago

Highlights for Dollar this Week and more
Daily FX Market Roundup May 11, 2020
The US dollar kicked off the new trading week stronger against all of the major currencies. Friday’s non-farm payrolls report showed massive job losses in the month of April but these ugly numbers were still better than expected, paving the way for a recovery in the greenback. Today’s gains should be no surprise considering how the greenback traded after the jobs number especially since there were US economic reports to threaten the move on Monday.
Investors will tread more cautiously as the week progresses with inflation data on Tuesday, Fed Chairman Powell’s speech on Wednesday and retail sales on Friday. Aside from Powell, we’ll hear from a number of Fed officials including Bostic, Kashkari, Harker,

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FX: How to Trade Worst Non-Farm Payrolls Report Ever

26 days ago

FX: How to Trade Worst Non-Farm Payrolls Report Ever
Daily FX Market Roundup May 7, 2020
This Friday’s US non-farm payrolls report is expected to be the worst ever. Economists believe that more than 21 million jobs were lost in the month of April, which would drive the unemployment rate up to 16%. The last time the jobless rate was in the double digits was in 1983, just after the 1980s recession. Historic job losses should drive currencies and equities lower but with everyone looking for an ugly report, how much impact will it really have on the markets?
Expectations is one thing but price action is another. Taking a look at currencies, the persistent sell-off in USD/JPY over the past few weeks tell us that forex traders have positioned for a weak report and while staggering job

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USDJPY & GBPUSD – Destined For More Losses Ahead of Big Events?

27 days ago

USDJPY & GBPUSD – Destined For More Losses Ahead of Big Events?
Daily FX Market Roundup May 6, 2020
As we close in on Friday’s non-farm payrolls report, investors are growing nervous. Stocks ended the day in negative territory after rallying more than 100 points. The US dollar extended its slide against the Japanese Yen for the fourth day in a row but safe haven demand drove the greenback higher against other major currencies. Sterling was hit the hardest which is no surprise considering that the Bank of England is expected to release lower economic projections on Thursday. Next to the Yen, the Australian dollar was the most resilient thanks to a larger increase in retail sales.
According to ADP, US companies cut more than -20 million jobs in the month of April. Non-farm payrolls

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Dollar Shrugs Off ISM but Could Crash on NFPs

28 days ago

Dollar Shrugs Off ISM but Could Crash on NFPs
Daily FX Market Roundup May 5, 2020
Investors took the US dollar and US equities higher on Tuesday following better than expected data. Service sector activity contracted at its fastest pace since 2009 but the decline in non-manufacturing ISM from 52.5 to 41.8 was better than the market’s 38.0 forecast. This cold comfort ahead of Friday’s jobs report was enough to ease the market’s concerns but the details of the report give us no reason to be optimistic about non-farm payrolls. The employment component of the report dropped to its lowest level ever and the same was true for new orders. This deterioration in two of the most telling aspects of the service sector illustrate the depth of the economic contraction in April. The trade balance

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This Week’s FX Trading Opportunities Begin Tuesday

29 days ago

This Week’s FX Trading Opportunities Begin Tuesday
Daily FX Market Roundup May 4, 2020
This is a busy week for the forex market and the opportunities begin on Tuesday with the Reserve Bank of Australia’s monetary policy announcement and the US’ non-manufacturing ISM reports. There are two central bank meetings on this week’s calendar along with labor market data from New Zealand, US and Canada. Of all these reports, non-farm payrolls on Friday will be the most market moving as the US is expected to report the worst month for job losses ever. However before we get to the end of the week report, the US dollar and the broader financial markets will be taking their cue from the White House and other economic reports that can give us insight to NFPs like non-manufacturing ISM and ADP.

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Will the Dollar Extend its Slide in May?

May 1, 2020

Will the Dollar Extend its Slide in May?
Daily FX Market Roundup 05.01.20
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
The first day in May kicked off with losses for currencies and equities. The Dow Jones Industrial Average tumbled more than 600 points while the Australian and New Zealand dollars dropped approximately 1%. These declines were driven by weaker than expected manufacturing activity in Australia and reports that the US is looking for ways to punish China over the coronavirus outbreak. Investors completely shrugged off the smaller than anticipated deterioration in the ISM manufacturing index and uptick in construction spending. On Thursday President Trump threatened to hit China with a fresh round of tariffs that could nullify last year’s hard

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Central Banks Offer More Stimulus, Currencies Pop on Month End Flows

April 30, 2020

Central Banks Offer More Stimulus, Currencies Pop on Month End Flows
Daily FX Market Roundup 04.30.20
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
When we look back at April 2020, it could very well be worst month ever for the global economy. Across the globe, governments took the unprecedented step of ordering their citizens to stay at home and shutting down all non-essential businesses. Most businesses were closed. Central banks around the world warned about the significant weakness in April data with the jobless rate expected to hit double digit levels. Millions of people were put out of work as economic activity ground to a halt. Yet for the markets, April wasn’t a terrible month. In fact, the Dow Jones Industrial Average rose more than 15% after

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Dollar Lower on FOMC. No Sugar Coating from Powell

April 29, 2020

Dollar Lower on FOMC. No Sugar Coating from Powell
Daily FX Market Roundup 04.29.20
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
The prospect of a treatment for coronavirus along with talk of more stimulus by the Federal Reserve sent equities and currencies sharply higher. The Dow Jones Industrial Average jumped more than 600 points and the US dollar fell as investors snapped up high beta currencies. The New Zealand dollar was the best performer followed by the Australian and Canadian dollars. The rally in euro was more tempered ahead of the European Central Bank’s monetary policy announcement.
The Federal Reserve is taking the economic toll of COVID-19 very seriously. In the FOMC statement, they said the virus poses big risks over the medium term and the

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FOMC Preview: No Rate Cut but 3 Things to Watch

April 28, 2020

FOMC Preview: No Rate Cut but 3 Things to Watch
Daily FX Market Roundup 04.28.20
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
The US dollar traded sharply lower ahead of Wednesday’s first quarter GDP report and Federal Reserve monetary policy announcement. Consumer confidence also fell to its weakest level in 4 years. Between tomorrow’s 2 big events, GDP should be more market moving than FOMC because the Fed is not expected to change interest rates. GDP will give us the first look at how badly the US economy was hit by COVID-19 and if the contraction was deeper than expected. There was only 2 weeks of full lockdown in Q1 so investors will immediately sell dollars on soft data as they fear that the Q2 numbers will be even worse. A contraction of any size

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EURO and USD – Watch for Losses this Week

April 27, 2020

EURO and USD – Watch for Losses this Week
Daily FX Market Roundup 04.27.20
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
This is a big week for the US dollar and euro. There are monetary policy meetings by Federal Reserve and the European Central Bank along with first quarter GDP numbers scheduled for release. The first look at Q1 GDP is always more market moving than later reports and may even have a more significant impact on currencies than the rate decisions. We know that the US and Eurozone economy contracted in the first 3 months of the year but the question is by how much. Major countries in Europe went into lockdown mode approximately 3 weeks before major US states so we can expect Eurozone GDP growth to be weaker than the US. Yet the Federal

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3 Rate Decisions, GDP & Earnings Marks Busy FX Week

April 24, 2020

3 Rate Decisions, GDP & Earnings Marks Busy FX Week
Daily FX Market Roundup 04.24.20
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
For most of the major currencies and USD/JPY in particular, consolidation was the primary theme this week. The trading range for USD/JPY was less than 80 pips and, on most days, less than 50. February, March and early April was marked by thousand point swings in stocks but as these moves subsided, trading ranges in FX narrowed. But volatility should return in the week ahead with three central bank rate decisions, first quarter GDP reports from the US and Eurozone, Chinese PMIs and a very busy earnings calendar. Many big names like Apple, Amazon, Google, Facebook, Microsoft, Exxon, Shell, Pepsi, Starbucks, General Electric and 3M

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Dollar Loses Grip, Behind 3 Best and Worst Performers

April 23, 2020

Dollar Loses Grip, Behind 3 Best and Worst Performers
Daily FX Market Roundup 04.23.20
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
US dollar bulls relinquished control of the market today. With the exception of euro and the Swiss Franc, the greenback traded lower against all of the major currencies. More than 4.4 million people filed for unemployment benefits last week, which was slightly better than expected but failed to help the greenback because over the past 5 weeks, 26.45 million Americans lost their jobs which effectively erases all of the new jobs created over the past 10 years. Of course, everyone hopes that these are not permanent job losses and that furloughed workers will return once the economy restarts but the need for ongoing social

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US Dollar Soars as Risk Continues to Tumble

April 21, 2020

US Dollar Soars as Risk Continues to Tumble
Daily FX Market Roundup April 21, 2020
Dow futures are down -500 points this morning and the sell-off is accompanied by fresh gains for the US dollar. The greenback kicks off the NY session stronger against all of the major currencies with the exception of the Japanese Yen. However the battle between the more desired safe haven (USD or JPY) has kept the pair frozen in a narrow 80 pip range for the last 48 hours. Ten year Treasury yields are also down sharply as investors shift from equities to Treasuries.
The oil collapse created all out pandemonium in the financial markets with everyone still trying to figure out what triggered the historic move. OPEC nations are talking about production cuts while President Trump said the US will be

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Canadian Dollar Crushed by Crude

April 20, 2020

Canadian Dollar Crushed by Crude
Daily FX Market Roundup April 20, 2020
The new trading week kicked off with an aggressive sell-off in crude and renewed gains for the US dollar. The primary focus today was the Canadian dollar which sold off aggressively on the back of falling oil prices. The front crude futures contract dropped more than 300%, turning negative for the first time ever. As reported by our colleague Boris Schlossberg, oil has fallen to its lowest level in two decades on “the collapse of global demand with market dynamics further exacerbated by the price war between Saudi Arabia and Russia,” but this is more than a demand issue. Given the extent of the breakdown in oil, technical factors are probably in play as well will be revealed in the future. With that said, the

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Why EURO Could Still Hit 3 Year Lows, Chinese GDP Next

April 16, 2020

Why EURO Could Hit 3 Year Lows, Chinese GDP Next
Daily FX Market Roundup April 16, 2020
If there’s one thing that’s certain in forex, it is that the dollar is king. The greenback traded higher against most of the major currencies despite another round of worrisome data. More than 5.2 million people filed for jobless claims benefits last week, housing starts fell by the largest amount in three decades and the Philadelphia Fed index hit a 45 year low of -56.6. Yet the data wasn’t as terrible as the market had feared. Economists were looking for claims to rise by 5.5 million with investors bracing for another 6 million print. Building permits also fell less than expected. However the reaction in equities and currencies confirms that other investors are not optimistic. In fact, the

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US Dollar Gains – Why its Unfazed by Terrible Data

April 15, 2020

US Dollar Gains – Why its Unfazed by Terrible Data
Daily FX Market Roundup April 15, 2020
Wednesday’s US economic reports were terrible. Retail sales fell -8.7%, the largest one month decline ever. The Empire state manufacturing survey also hit a record low of -78.2 but unlike retail sales, which was slightly worse than expected, the forecast for Empire was -35. Industrial production fell -5.4% which was also slightly worse than expected. The Beige Book was overwhelmingly pessimistic with the Federal Reserve noting that economic activity contracted sharply in recent weeks. They said employment fell in all districts steeply in many cases and all districts reported highly uncertain outlooks among business contacts with most expecting conditions to worsen in the next several months.

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