The markets kicked off on Monday with optimism due to US President Donald Trump’s desire to unlock the US economy. Ben Carson, Secretary of the US Department of Housing and Urban Development also added to this optimism when he commented to FOX news that Gilead’s Remdesivir appeared promising as a potential treatment for COVID-19.
Equity markets reflected strength with the Dow Jones up 3.0% and the S&P 500 went 2.7% higher.
AUDUSD continued to enjoy its 3-day bullish streak which began on Thursday the previous week.
The GBPUSD also enjoyed recovery although not a sharp one, as UK Prime Minister Boris Johnson expressed high cautiousness about easing lockdown restrictions to avoid a second wave of infection.
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NZDUSD jumped 50 pips as trader’s attention was briefly caught by the release of the New Zealand consumer price index data. Inflation data was healthier than forecasts predicted.
However, traders quickly returned to the reality of the pandemic and adjusted their optimism accordingly, reflected in a return journey to the bear side.
Gold started the week continuing the bearish footing of the previous week, however fundamentals offered optimism: the FEDs massive quantitative easing program and uncertainty caused by COVID-19 kept gold attractive.
The S&P 500 energy index suffered heavy losses due to plummeting oil prices. WTI futures made history with its May contract falling to negative, subzero territories, closing at -$37.60 per barrel. However, June’s contract remained at $22 per barrel.
The news of mass shooting in Canada and the plunge in oil prices weakened the Canadian dollar against the US dollar reversing a 20-day losing streak of the USDCAD, moving it up by 0.55%.
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USDCHN surged after People’s Bank of China cut 1-year and 5-year loan prime rates.
Equity selloff ramped up demand for USD as traders scrambled to fly to safety, close positions and cut their losses.
Gold started its recovery from a 12-day low consolidating around $1680.
Early Wednesday, the US passed the $484 billion Corona relief package to aid small businesses and fund healthcare infrastructure. This improved investor risk appetite and caused a decrease in the previous demand for the US dollar.
WTI continued its bearish play below $11. However prices stabilized at day end leading to recovery in global indices. Demand for dollar regained strength towards closing.
On Thursday, the greenback’s demand ended slightly weaker again. Euro performed badly as EU representatives failed to reach an agreement for a relief package. GBPUSD stayed strong above the 1.2300 level.
USDJPY tested 108.04 as headlines indicated that the Bank of Japan was contemplating removing bond-buying limit and was expected to come to a conclusion at its next policy meeting on April 27. But it fell back to 107.60.
Investors ran to gold for safety raising it to $1738. WTI continued its recovery trading around $15 per barrel.
On Friday, EURUSD continued its bad performance ending the week in red trading around 1.0800 after an attempted recovery hit the 1.0820 resistance. US dollar index ended the week positively. Gold’s rally stalled below $1740.
It is evident that the coronavirus pandemic still dwarfs the now scanty economic calendar in influence over global economy. We still expect actions in the financial markets to be catalyzed by it and its qualitative data.
Victor Nnadi C.
Independent Researcher at Growthnotes Enterprise.
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