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CORONAVIRUS CRISIS:

Ø  Total confirmed cases: More than 4,268,496

Ø  Total deaths: At least 287,463

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 1,385,834 and deaths: 81,795

Ø  Thailand cases: At least 3,017 (+2) and deaths: 56

 

-Dr. Fauci to warn about the risks if the US reopens too quickly – NY Times

The NY Times is out with a breaking news, citing that Dr. Anthony Fauci, the director of the US National Institute of Allergy and Infectious Diseases and a leading member of the task force, is likely to warn the Senate on Tuesday that if the US reopens too quickly, Americans will face “needless suffering and death.”

Dr. Fauci is due to testify before a Senate committee through video conferencing on Tuesday.

 

- The Philippines on Tuesday announced an extension of a lockdown of its capital, Manila, to 11 weeks, stretching one of the world's strictest and longest community quarantines to June to try to contain coronavirus outbreaks.

 

·       The dollar hung on to gains on Tuesday as growing fears about a second wave of coronavirus infections denting a global recovery and fresh signs of trade tensions made investors cautious.

U.S. Federal Reserve officials downplaying the likelihood of negative interest rates gave a boost to the dollar’s yield attraction, while worries about new virus infections in China, Germany and South Korea drove safe-haven demand, analysts said.

Governments’ tentative steps toward bringing their countries out of lockdown were also a source of uncertainty, due to the medical and financial risks.

 

·       The Aussie dollar AUD=D3 slipped as far as 0.8% to a one-week low of $0.6432 after China banned some Australian meat imports, but pared losses as Australia's trade minister downplayed the issue as a technicality.

Other majors nursed losses, except the yen which firmed a fraction following an almost 1% drop on Monday that had pushed it to the bottom end of a range it has traded in for a month.

The euro EUR= dipped below $1.08 for the first time in nearly a week, before recovering to $1.0802. The New Zealand dollar NZD=D3 also pared early losses to steady at $0.6083.

The dollar slipped about 0.3% to 107.36 yen JPY=.

Against a basket of currencies =USD the greenback touched a two-week high in Asia, before falling back to flat at a week-high 100.27.

 

·       EUR/USD: Focus on three-week-old support line, below 1.0800, amid risk aversion

EUR/USD remains on the back foot around 1.0795, down 0.13% on a day, amid the early Tuesday’s trading session. While the tension between the German and European policymakers weighed on the pair earlier, fresh fears of the US-China trade war and the coronavirus (COVID-19) resurgence seems to have weighed on the pair off-late.

EUR/USD four-hour chart

The pair nears a three-week-old rising support line, at 1.0775 now, while also staying below 100-bar SMA level of 1.0850. Considering the repeated bounces off the trend line support, coupled with the weak conditions of RSI, the pair could take another U-turn towards 1.0850 immediate resistance. If the quote fails to reverse from 1.0770, April month low near 1.0730 will be on the bear’s radar.

It should additionally be noted that a falling trend line from March 30, at 1.0985, acts as the key upside barrier during the pair’s rise past-1.0850.

 

·       Treasury yields fall as concerns surface over second wave of coronavirus infections

U.S. government debt prices were higher Tuesday morning amid growing investor concerns over the possibility of a second wave of coronavirus infections.

At around 2 a.m. ET, the yield on the benchmark 10-year Treasury note was down at 0.6938% and the yield on the 30-year Treasury bond was lower at 1.4011%. Yields move inversely to prices.

Market optimism over efforts to reopen the economy was dampened Monday after the Chinese city of Wuhan, the original epicenter of the Covid-19 pandemic, reported its first new cases since lifting lockdown measures.

States across the U.S. and countries around the world have begun easing lockdown measures implemented to contain the coronavirus pandemic, which has ravaged the global economy.

President Donald Trump also said on Monday that he opposed renegotiating the “Phase One” trade agreement signed between Washington and Beijing in January, after China’s state run newspaper reported discontent among government advisers.

On the economic data front, April’s U.S. inflation figures are due for release at 8:30 a.m. ET. on Tuesday.

 

·       Trump 'not interested' in reopening U.S.-China trade deal after report of Beijing discontent

U.S. President Donald Trump said on Monday he opposed renegotiating the U.S.-China “Phase 1” trade deal after a Chinese state-run newspaper reported some government advisers in Beijing were urging fresh talks and possibly invalidating the agreement.

Trump, who himself has considered abandoning the pact signed in January, told a White House press briefing he wanted to see if Beijing lived up to the deal to massively increase purchases of U.S. goods.

“No, not at all. Not even a little bit,” Trump said when asked if he would entertain the idea of reworking Phase 1. “I’m not interested. We signed a deal. I had heard that too, they’d like to reopen the trade talk, to make it a better deal for them.”

The Global Times tabloid reported on Monday that unidentified advisers close to the talks have suggested that Chinese officials revive the possibility of invalidating the trade pact and negotiate a new one to tilt the scales more to the Chinese side.

 

·       Germany’s shock court ruling against the ECB challenges the stability of the euro zone

The stability of the euro zone is once again under scrutiny after the German Constitutional Court issued a decision last week that surprised financial markets and policymakers in Europe.

The highest court in Germany said last Tuesday that parts of the European Central Bank’s (ECB) actions were illegal under German law. The court said one of the ECB’s tools — its quantitative easing program — did not respect “the principle of proportionality” and that the German central bank and government should have challenged the central bank in this regard.

The ECB was quick to react, arguing that it follows decisions taken by the European Court of Justice — not national courts. However, the German ruling has sparked an unprecedented legal minefield and has led to new questions about the future of the euro zone.

“People will ask: ‘Will this increase the risk of a (euro zone) breakup?’” Marchel Alexandrovich, senior European economist at Jefferies, told CNBC Monday during a phone call.

He said the German court decision was unlikely to directly drive the 19 countries which use the euro apart, but argued it will support more hawkish views when it comes to monetary policy.

“It does strengthen the ammunition of more hawkish countries,” Alexandrovich said, referring to nations such as Austria and Finland, where policymakers generally have a more aggressive stance and are in favor of higher interest rates. This contrasts with the ECB over the last decade, where the governing council has learned towards looser monetary policy.

 

·       China announces new tariff waivers for some U.S. imports

China announced on Tuesday a new list of 79 U.S. products eligible for waivers from retaliatory tariffs imposed at the height of the bilateral trade war, amid continued pressure on Beijing to boost imports from the United States.

China’s finance ministry said in a statement the new waivers will take effect on May 19 and expire on May 18, 2021. The latest list waives tariffs on products including ores of rare earth metals, gold ores, silver ores and concentrates.

The ministry did not disclose the imports value of the products. Beijing in February said it will grant exemptions for 696 U.S. goods including key products such as soybeans and pork based on applications from companies.

·       Britain, EU start penultimate round of talks before key deadline

Britain and the European Union start their penultimate scheduled round of trade talks on Monday with little progress on major sticking points before a June deadline to agree on any extension of negotiations.

This week’s round is due to cover trade in goods and services, fisheries, transport and aviation, energy and other matters, and another one is planned for the week of June 1.

The end of that month marks a deadline for both sides to assess progress so far and agree on any extension of talks.

 

·       The Bank of Japan will do ‘whatever it can’ to beat pandemic fallout, governor says

Bank of Japan Governor Haruhiko Kuroda said on Tuesday the central bank would do “whatever it can” to combat the growing fallout from the coronavirus pandemic, warning that a collapse in global activity would hamstring the economy.

In a semi-annual testimony to parliament, Kuroda said the raft of monetary easing steps the central bank has taken so far is helping ease corporate funding strains and market jitters.

But he warned the outlook for Japan’s economy was “highly uncertain” and dependent on when the pandemic is contained, with risks skewed to the downside.

 

·       Oil prices climb as Saudi Arabia pledges further production cut

Oil futures rose on Tuesday, boosted by an unexpected commitment from Saudi Arabia to deepen production cuts in June to help drain the glut in the global market that has grown as the coronavirus pandemic crushed fuel demand.

Brent crude futures climbed to a high of $30.11 a barrel and were up 0.8%, or 24 cents, at $29.87 at 0206 GMT, reversing some of the previous session’s losses. The benchmark fell $1.34 on Monday.

U.S. West Texas Intermediate (WTI) crude futures were up 1.6%, or 38 cents, at $24.52 after touching a high of $24.77.

Saudi Arabia said overnight it would cut production by a further 1 million barrels per day (bpd) in June, slashing its total production to 7.5 million bpd, down nearly 40% from April.

 

·       Oil Price Forecast: WTI stays above $24.00 within a short-term trading range

WTI June futures register over 2.0% gains to $24.70 on NYMEX amid the early Asian session on Tuesday.

The black gold recently bounced off $23.73 while keeping its move above a short-term support trend line, currently around $23.45.

However, a horizontal resistance since early last week, near $25.30/40, keeps the buyers in check.

As a result, the energy benchmark needs to break the nearby trading range between $23.45 and $25.40 for a decisive move.

In doing so, a 200-bar SMA level of $20.52 and an ascending trend line since May 05, at $27.80, could be the key levels to watch.