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CORONAVIRUS CRISIS:

Ø  Total confirmed cases: More than 3,918,678

Ø  Total deaths: At least 270,765

Ø  The coronavirus COVID-19 is affecting 212 countries and territories around the world and 2 international conveyances: the Diamond Princess cruise ship harbored in Yokohama, Japan, and the Holland America's MS Zaandam cruise ship.

Ø  US cases: At least 1,292,850 (+227) and deaths: 76,938 (+10)

Ø  Thailand cases: At least 3,000 (+8) and deaths: 55

 

·       The dollar slipped on Friday as investors defied a broader sense of doom around upcoming U.S. employment data and found reasons to buy riskier currencies with more governments slowly reopening their economies for business.

The mood got a lift after China and the United States said their top trade negotiators had held a phone call and agreed to strengthen economic and public health cooperation.

“Broadly speaking, the market is looking to how the economies will normalise and is being driven by news headlines. No one still has a clear picture on how much growth we can recover in 2020,” said Kazushige Kaida, head of currencies at State Street Bank.

 

·       The dollar’s index against a basket of six other major currencies slipped 0.2% to 99.673 from Thursday’s high of 100.40.

The euro edged up 0.1% to $1.0847 , bouncing back from Thursday’s near two-week low of $1.07665 though it was down about 1.2% on the week.

The Australian dollar gained 0.6% to $0.6534, nearing a seven-week high of $0.6570 marked on April 30.

Against the safe-haven yen, the dollar bounced back to 106.38 yen, above a seven-week low of 105.985 touched on Wednesday.

 

·       EUR/USD Forecast: EUR unable to take advantage of dollar’s weakness

EUR/USD short-term technical outlook

The EUR/USD trimmed daily losses and posted a modest intraday gain, although it holds within familiar levels around the 1.0800 figure. The bullish potential remains well limited, as, in the 4-hour chart, the pair is developing below all of its moving averages, with the 20 SMA heading south below the larger ones. Technical indicators in the meantime, have corrected oversold conditions, but detained their recoveries below their midlines and turned flat.

Support levels:  1.0790 1.0755 1.0710

Resistance levels: 1.0865 1.0900 1.0940

 

·       Nonfarm Payrolls Preview: Outrageous employment collapse priced in?

Employment data has been in the eye of the storm ever since shutdowns began in the US, compliments to the coronavirus pandemic. Weekly jobless claims have been in the millions since mid-March when the preventive measures were launched. 

The US will publish this Friday the employment figures for April, a full month of quarantine in several US states. The country is expected to have lost 22 million jobs throughout the month, while the unemployment rate is seen jumping to 14% from 4.4%. Nevertheless, there is speculation that such a rate could be closer to 20%.

 

Focus remains on pandemic

Market players are rather focused on COVID-19 developments, hoping that economic reopenings would be the beginning of the end of terrible macroeconomic numbers. Investors are mostly optimistic, ignoring the sour employment figures, but also unaware of the high chances of a second wave of contagions. In the US, the curves are only flattening in the New York state, but keep increasing elsewhere.  

Economic reopenings have started. If there’s no second wave, unemployment numbers will continue to be irrelevant for a couple more months, probably until Q3. A second wave that means a new round of lockdowns would mean not only a steeper decline in employment but also a longer path toward economic recovery, hence, becoming more relevant for traders.

 

·       Top trade representatives of China and the United States held a phone call on Friday and agreed to strengthen macroeconomic and public health cooperation, China’s commerce ministry said in a statement.

Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin also agreed during the call that the two countries will work together to create a favourable environment for implementing the Phase 1 trade deal reached early this year, the ministry said.

The two sides agreed to maintain communication going forward, the Chinese commerce ministry said in its statement.

 

·       As US-China rivalry heightens, the pandemic could tilt global power in Beijing’s favor

The coronavirus pandemic will fuel the already-bad rivalry between the U.S. and China, and could even tilt the balance of global power in Beijing’s favor, analysts say.

Tensions have already flared on a few fronts since the pandemic started. Washington and Beijing are sniping at one another about the true extent and origin of the coronavirus outbreak. U.S. President Donald Trump threatened tariffs again. The two countries have even squabbled about the South China Sea issue.

The pandemic will “increase US-China strategic rivalry,” says global political risk consultancy Verisk Maplecroft.

 

·       ‘There is no point’ in the Fed going to negative interest rates, argues JPMorgan

As markets begin pricing in the possibility of the Federal Reserve bringing interest rates into negative territory, JPMorgan Asset Management’s David Kelly argues that such a policy move makes little sense.

“There is no point ... at all in going to negative rates,” Kelly, who is chief global strategist at JPMorgan Asset Management, told CNBC’s “Squawk Box Asia” on Friday.

“Negative rates have not helped the Japanese economy, they haven’t helped the European economy,” Kelly said, in reference to the well-documented economic challenges in those places despite the adoption of such policies.  “All they do is clog up the banking system, make it more difficult for everybody to operate.”

“If you want to stimulate the economy directly, just put more money into the hands of consumers and businesses, Congress doesn’t seem to have any shyness about doing that,” Kelly said, adding that he expected an additional $2 trillion of stimulus “before this is over.”

 

·       World GDP to remain far below pre-virus projections – Deutsche Bank

Economists at Deutsche Bank have updated their prospects for the global economy and look gloomier.

“We see world GDP falling 11% below its end-2019 level in Q2, and recovering to about the end-2019 level by the end of next year.”

“The projected drop this year is 6%, compared with the consensus projections of half that amount or less and a previous record decline of 0.1% during the GFC.”

“This economic shock, while falling well short of the Great Depression thanks to massive monetary and fiscal policy intervention, nevertheless results in immense increases in unemployment that will put a major strain on national treasuries for some time to come.”

 

·       Japan’s household spending fell in March at the fastest pace in five years as the coronavirus outbreak kept shoppers at home, underscoring the deepening pain the health crisis has had on the world’s third-largest economy.

Household spending slumped 6.0% in March from a year earlier following a 0.3% fall in February, marking the biggest drop since March 2015, government data showed on Friday.

The spending data will likely drag on preliminary first-quarter gross domestic product (GDP) data due on May 18.

 

·       There are areas with no new coronavirus cases; lifting the state of emergency is within sight, noted Japanese Economy Minister Yasutoshi Nishimura on Friday.

 

·       Australia will ease social distancing restrictions implemented to slow the spread of the coronavirus in a three-step process, Prime Minister Scott Morrison said on Friday, with the aim of removing all curbs by July.

 

·       Oil prices climbed on Friday as countries including Australia moved ahead with plans to relax economic and social lockdowns put in place to halt the coronavirus pandemic, kindling market hopes for a boost in demand for crude and its products.

Brent crude LCOc1 was up by 87 cents, or 3%, at $30.33 a barrel by 0630 GMT, having fallen nearly 1% on Thursday.

U.S. oil CLc1 gained $1.12, or 4.8%, to $24.67 a barrel, after a decline of nearly 2% in the previous session.

 

·       The number of oil and gas rigs operating in the United States is expected to hit an all-time low this week - reflecting data going back 80 years - as the energy industry slashes output and spending to deal with the coronavirus-led crash in fuel demand.

Last week, the U.S. rig count was just four units above the record low of 404 set in May 2016, according to energy service provider Baker Hughes Co (BKR.N), which has been tracking rig counts since 1940. Its data for this week is due after 1 p.m. (1700 GMT). RIG-OL-USA-BHI RIG-GS-USA-BHI

Drillers have cut an average of 55 rigs per week since mid March after crude prices started to plunge due to the coronavirus and a brief oil price war between Saudi Arabia and Russia.

 

·       WTI Price Analysis: Snaps two-day losing streak, but still below $24.00

WTI Future on NYMEX takes the bids near $23.80, up 1.0% on a day, ahead of Friday’s Tokyo open. In doing so, the black gold defies the previous two-day downside.

Considering the gradually recovering RSI, the energy benchmark could extend the latest recoveries towards a 50-hour EMA level of $24.00. Though, a break of which will help buyers challenge Wednesday’s top near $26.10.

It should also be noted that the quote’s sustained run-up past-$26.10 can refresh the monthly high beyond $26.70 to aim for April month top around $29.20.

On the flip side, a confluence of 100-hour EMA and multiple levels since the week’s start offer strong support around $22.60/55.

If sellers manage to dominate past-$22.55, $20.00 will be the next target for them.

·       Oil going to $100 within two years – JP Morgan

Following the recent recoveries in oil prices, analysts at JP Morgan anticipate oil prices to surge to $100 in two years. However, the report also cites short-term fears in the report.

“We see oil going to $100 within two years.

The near term, clearly, it's very tough.

Oil prices should sit somewhere between $35 and $40 by the end of the year.

Two to three-year view, we see a huge supply response, a lot of oil coming off the market, and we are very bullish on the long term viewpoint.

Expect as we go to the second half of this year, as we see demand bottom, and we see the OPEC cuts coming into play and potentially deeper cuts.”