· The dollar eased on Wednesday as the slowing spread of the coronavirus and moves to re-open economies encouraged investors’ to favour riskier assets, though there was caution ahead of central bank meetings in the United State and Europe.
The dollar has tracked risk sentiment closely through the coronavirus crisis, and was broadly softer on other majors on Wednesday, slipping a fraction against the rangebound euro and pound, while the yen strengthened 0.3% to a six-week high 106.55 per dollar.
The greenback lost most ground against the Antipodean currencies.
The Australian dollar AUD=D3 rose about 0.6% to a seven-week high of $0.6533 - a sixth straight daily gain that has it tracking toward its best month in four years. The kiwi NZD=D3 rose by the same margin to a two-week high $0.6119.
A public holiday in Japan and caution ahead of the U.S. Federal Reserve meeting ending later in the global day, and the European Central Bank meeting on Thursday kept currency markets subdued.
· USD/JPY Price Analysis: Slips further below 107.00 to refresh six-week low, bears eye sub-106.00 area
USD/JPY refreshes the six-week low while taking the offers near 106.50, down 0.33% on a day, during the early Wednesday’s trading session.
In doing so, the pair portrays the five-day losing streak while also extending the break below a horizontal line comprising early and mid-month lows near 106.90.
Also supporting the bears is the pair’s drop beneath 50% Fibonacci retracement level of February-March downside, which in-turn pushes them towards a horizontal line joining March 05 low and March 10 high around 105.95/90.
During the pair’s further downside below 105.90, 105.00 could lure the sellers.
Meanwhile, an upside clearance of 106.90 will have to cross the monthly resistance line, currently near 107.60, as well as cross 61.8% Fibonacci retracement level of 108.00 to recall the buyers.
· EUR/USD Forecast: Get ready for US Q1 GDP and the Fed
EUR/USD short-term technical outlook
The EUR/USD pair has been unable to sustain gains beyond a daily descendant trend line coming from a late March high at 1.1147. The pair retains its neutral stance, quite normal ahead of the upcoming critical events. In the 4-hour chart, it remains confined between its 20 and 100 SMAM, while technical indicators eased within positive levels, now hovering around their mid-lines. The bullish potential will be clearer on a break above 1.0920, while the bearish case can gain adepts on a break below 1.0750.
Support levels: 1.0790 1.0750 1.0710
Resistance levels: 1.0865 1.0900 1.0940
CORONAVIRUS CRISIS:
Total confirmed cases: More than 3,146,200
Total deaths: At least 218,139
The coronavirus COVID-19 is affecting 210 countries and territories around the world and 2international conveyances: the Diamond Princess cruise ship harbored inYokohama, Japan, and the Holland America's MS Zaandam cruise ship.
US cases: At least 1,035,765 and deaths: 59,266
Thailand cases: At least 2,947 (+9) and deaths: 54
The spring is shaping up to post the biggest contraction in U.S. economic growth since the Great Depression in the 1930s, but the first quarter is also likely to be pretty bad.
The coronavirus pandemic slammed the U.S. hard enough in March to plunge what had been a modestly growing economy into the first recession in almost 11 years.
Economists polled by MarketWatch predict gross domestic product shrank by 3.9% in the first quarter, marking the steepest drop since the Great Recession in 2009.
Here’s what to watch in Wednesday’s GDP report, which will be released at 8:30 a.m. Eastern.
· China’s state-run Xinhua news agency reported on Wednesday, country’s parliament will start its annual meeting on May 22, over two months later than originally scheduled due to the fallout from the coronavirus outbreak.
China's top political consultative body, the Chinese People's Political Consultative Conference, has also proposed to start its annual session on May 21, Xinhua added.
· Planemaker Airbus (AIR.PA) on Wednesday posted a 49% slump in first-quarter adjusted operating profit to 281 million euros ($304.7 million) as revenue dropped 15% to 10.631 billion euros amid the “gravest crisis the aerospace industry has ever known”.
· Barclays on Wednesday reported a 42% fall in first-quarter net profit year-on-year and opted to take a £2.1 billion ($2.62 billion) credit impairment charge, as it attempts to anticipate the fallout from the coronavirus pandemic.
· Fed likely to renew vow to use all tools to brace economy
The Federal Reserve, which has pumped trillions in emergency funding into U.S. financial markets to stem the damage from the coronavirus pandemic, is expected on Wednesday to reiterate its promise to do whatever it takes to support the world’s largest economy.
The U.S. central bank may also signal how long, and by what benchmark, it plans to leave interest rates near zero after the recovery begins from what many economists forecast will be the sharpest downturn in recorded U.S. history this quarter.
What no one is expecting from policymakers at this meeting is a detailed forecast for the economy, given the uncertainty around the impact of the virus before a treatment or a vaccine can be found.
“We expect the committee to lay down specific inflation and unemployment thresholds that would need to be met before the committee would consider raising the target range for the federal funds rate,” economists at Barclays wrote in a note to clients.
· Trump hails U.S. coronavirus testing as infections cross a million
The United States has reported more than a million coronavirus infections only because of its testing, President Donald Trump said on Wednesday, hailing the effort as being “much better than any other country in the world”.
“The only reason the U.S. has reported one million cases of coronavirus is that our testing is sooo much better than any other country in the world,” Trump said on Twitter.
· Satellite imagery showing recent movements of luxury boats often used by North Korean leader Kim Jong Un and his entourage near Wonsan provide further indications he has been at the coastal resort, according to experts who monitor the reclusive regime.
· Moody’s slashes near-term oil price forecasts
Amid deeper global economic contraction-induced lower demand for oil products, Moody’s Investors Service downgrades near-term oil price forecasts for West Texas Intermediate (WTI) and Brent.
Moody's price assumption for WTI, the North American benchmark crude is now US$30 per barrel (bbl) for 2020 and US$40 in 2021.
For the main international crude benchmark Brent, Moody´s sees prices averaging US$35 per bbl this year and US$45 in 2021, while oil production will decline in 2020-21 because of both the agreed OPEC+ deal and production shut-ins in the US and Canada.
Moody's expects production cuts to gather speed in the second half of 2020.”
· WTI Price Analysis: Teases inverse Head-and-Shoulders above $13.00
WTI June futures on NYMEX extends the post-API data recovery moves to $13.40, up 8.50% on a day, amid the Asian trading session on Wednesday.
In doing so, the black gold teases the neckline of an inverse Head-and-Shoulders bullish technical formation that gets confirmed on the successful break above $13.65.
Should that happen, which bears increasing odds due to the bullish MACD, $15.60/65 can offer an intermediate halt to the energy benchmark’s rise to pierce $17.00.
It’s worth mentioning that the 200-bar SMA near $14.65 adds to the upside filters after the bullish formation’s confirmation.
On the contrary, the quote’s pullback moves can take rest near $12.00 while a further downside may aim for Tuesday’s low near $10.00.
If at all the oil price declines below $10.00, the previous week’s low near $6.50 will return to the charts.
· U.S. oil prices gained on Wednesday, trimming some of this week’s losses, after U.S. stockpiles rose less than expected and on expectations demand will improve as some European countries and U.S. cities moved to ease coronavirus lockdowns.
U.S. West Texas Intermediate (WTI) crude CLc1 futures were up 12.6%, or $1.56, at $13.91 at 0643 GMT, paring a 27% plunge over the first two days of this week.
Earlier in the session, WTI futures jumped by more than 15% to a session high of $14.40.
Brent crude LCOc1 futures rose 3.1%, or 64 cents, to $21.10 a barrel, adding to a 2.3% gain on Tuesday.
U.S. crude inventories rose by 10 million barrels to 510 million barrels in the week to April 24, data from industry group the American Petroleum Institute showed on Tuesday, compared with analysts’ expectations for a build of 10.6 million barrels.
“It’s a little bit of good news that maybe storages aren’t filling quite as quickly in the U.S. as you would have thought,” said Lachlan Shaw, head of commodity research at National Australia Bank in Melbourne.
Reference: Reuters, Worldometers, FX Street, Market Watch
Thai
Eng