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·       Global coronavirus deaths passed 300,000 on Thursday as infections approached 4.5 million, according to a Reuters tally, with the United States responsible for more than a quarter of all fatalities.

The United Kingdom and Italy accounted for another 10-11% each, while France and Spain accounted for 9% each.

 

·       The dollar eased from a three-week high on Friday but looked set for a modest weekly gain as rising Sino-U.S. tensions and worries about a second wave of coronavirus infections rattled investors.

As hopes wavered for a quick global recovery from the pandemic, the trade-sensitive Australian dollar was poised to snap five weeks of gains with a 1% drop, its first weekly loss since early April.

The Aussie AUD=D3 was soft in the Asia session at $0.6462, just below the middle of the range it has kept all month.

The yen JPY= was steady at 107.18 per dollar, but has ground lower this week as U.S. Federal Reserve officials talked down the prospect of negative rates, also buoying the greenback.

The dollar is up about half a percent on the yen this week and half a percent against a basket of currencies =USD.

Elsewhere the British pound GBP= remained under pressure at $1.2212, after touching a five-week low of $1.2161 overnight after the British government reiterated its refusal to extend the Brexit transition deadline beyond December.

The euro also hit an almost five-year low against the Swiss franc of 1.502 francs EURCHF= as the crisis puts pressure on the single currency. It last held at $1.0804 EUR=.

 

·       EUR/USD Forecast: Investors willing to keep buying the greenback

The EUR/USD is trading at the lower end of its latest range, slowly grinding higher. Nevertheless, the pair remains within familiar levels and with no clear sign of an imminent breakout. The 4-hour chart shows that it is trading below all of its moving averages, while the Momentum indicator heads firmly lower within negative levels. The RSI, in the meantime, consolidates around 38, all of which maintains the risk skewed to the downside. Further declines are to be expected on a break below 1.0760, the immediate support.

Support levels:  1.0760 1.0720 1.0680.

Resistance levels: 1.0830 1.0865 1.0890

 

·       Coronavirus likely hammered U.S. retail sales again in April

U.S. retail sales likely endured a second straight month of record declines in April as the novel coronavirus pandemic kept Americans at home, putting the economy on track for its biggest contraction in the second quarter since the Great Depression.

According to a Reuters survey of economists, retail sales probably collapsed 12.0% last month, which would be the second biggest decline since the government started tracking the series in 1992. Retail sales plunged 8.7% in March.

Excluding automobiles, gasoline, building materials and food services, retail sales are forecast dropping 4.6% in April after a surprise 1.7% jump in March. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, tumbled at a 7.6% annualized rate in the first quarter, the sharpest drop since the second quarter of 1980. The plunge in consumer spending occurred in the last two months of March, setting it on a sharply lower path heading into the second quarter.

 

·       Near-term U.S. economic outlook darkens, slow recovery to follow: Reuters poll

An already-dismal near-term U.S. economic outlook has darkened further in the latest Reuters poll of economists, and while a recovery is still forecast for the second half, the economy won’t come close to regaining the ground it lost this year.

U.S. gross domestic product was forecast to shrink an unprecedented 35.0% this quarter after contracting 4.8% last quarter, on a seasonally-adjusted annualized basis, according to the May 11-14 poll.

“The fate of the economy in Q2 and beyond is at the whim of the virus,” economists at JP Morgan noted.

“While the removal of restrictions is important to re-start activity, any economic recovery also will depend on how willing people are to participate in economic activity and also how these reopenings affect the virus spread.”

The economy is forecast to grow 16.0% in the third quarter and 9.0% in the fourth quarter, compared with 12.0% and 9.0% in the previous poll. Under a worst-case scenario, however, it will contract 2.5% and 1.0% respectively.

The median 2020 GDP forecast showed a further downgrade to -5.7% from -4.1% predicted a month ago but was a touch better than the International Monetary Fund’s -5.9% prediction.

 

·       Growing tensions over China’s handling of coronavirus could lead to a ‘much worse’ trade war, investor says

Escalating tensions over China’s handling of the coronavirus pandemic could be a “major risk” to economic recovery —and may even lead to a trade war worse than the one between Beijing and Washington, one investor told CNBC.

From the U.S. to Europe to Australia, more and more world leaders are calling for China to be investigated over the origins of the outbreak, which was first reported in the Chinese city of Wuhan in late December.

As economies prepare to reopen again after weeks of lockdown to stem the virus’ spread, recovery could be derailed by political tensions, said David Sokulsky, CEO and chief investment officer of Concentrated Leaders Fund.

“That’s a major risk which isn’t being priced in at the moment,” he told CNBC’s “Capital Connection” on Thursday.

“As we pass peak infection rates, the politicians are going to want to blame somebody, and the obvious target for that blame is China,” he added.

Some countries have blamed China for mishandling the virus outbreak and are calling for compensation for the paralyzing impact on their economies. Others are calling for an inquiry and want to know if China could have prevented the outbreak from spreading so widely.

But Beijing has repeatedly rejected claims it mishandled the situation.

“China is a victim, not an accomplice to it,” said Chinese Vice Minister Le Yucheng, according to an official transcript of his interview with NBC News. “It is not a time for accusation and political manipulation,” he added.

·       German GDP (gross domestic product) shrank by 2.2% in the first quarter compared to the final three months of 2019, official statistics revealed Friday.

The contraction, fueled by the early stages of nationwide lockdowns implemented in March to curtail the coronavirus pandemic, was in line with analyst expectations.

 

·       China's factory output posts first increase for 2020 but consumption still weak

China’s industrial output rose 3.9% in April from a year earlier, data showed on Friday, expanding for the first time this year as the world’s second-largest economy slowly emerged from its coronavirus lockdown.

That was faster than the 1.5% increase forecast in a Reuters poll on analysts and followed a 1.1% fall in March.

After months of lockdowns, China is slowly reopening its economy as the coronavirus outbreak on the mainland has come under control.

However, it continues to face major challenges in recovery as the pandemic has now swept the globe, affecting other major economies and trading partners.

The National Bureau of Statistics said China’s economy was recovering but still faced many challenges as the coronavirus spread globally.

Louis Kuijs, Head of Asia Economics at Oxford Economics, expects a global recession will weigh on China’s recovery.

“But China’s growth now relies largely on domestic demand,” he said. “We expect the improvement in consumption momentum to continue, albeit from a weak starting point and gradually, while we see investment outperforming consumption, benefiting from more significant policy support.”

 

·       Wuhan, the original epicentre of the new coronavirus outbreak in China, has tested over 3 million residents for the pathogen since April, and will now focus its testing efforts on the rest of its 11 million population, according to state media.

Wuhan will conduct tests on everyone in the city, with the goal of getting a clear number of asymptomatic cases as businesses and schools reopen, the official Xinhua News Agency reported late Thursday.

 

·       Mexico appears to delay auto industry restart to June 1 amid confusion

 Mexico on Thursday pushed back by two weeks the reopening of automotive plants and the mining sector after the coronavirus lockdown, creating confusion among companies about how soon they can reconnect supply chains tied to U.S. manufacturing.

The government on Wednesday had indicated the auto sector would resume operations on Monday and published advice to that effect in its official gazette. It later withdrew the page from the gazette and on Thursday published fresh instructions in the gazette indicating the industry would not reopen until June 1.

 

·       Oil prices jumped more than 3% on Friday, touching more than one-month highs amid signs that demand for crude was picking up with China reporting increased refinery runs, and rounding out a week of bullish news on the supply front.

Brent crude LCOc1 was up $1.21 cents, or 3.9% at $32.34 a barrel by 0707 GMT, after touching $32.44 the highest since April 14. Brent rose nearly 7% on Thursday and is heading for a 3% gain for the week after rising the previous two weeks.

West Texas Intermediate (WTI) oil was up 92 cents, or 3.3%, at $28.48 a barrel after reaching $28.54, the highest since early April. WTI jumped 9% in the previous session and is also heading for a third weekly increase, up about 15%.

 

·       Oil Price Analysis: WTI challenging one-week highs near $27.50 per barrel

The crude oil recovery is picking up steam as the market is trading near 5-week highs and nearing the 28.00 resistance while trading above the main SMAs on the four-hour chart. As WTI is in a dominant bear trend the mentioned resistance can be hard to surpass in the medium-term. Conversely, sellers need a daily close below the 24.00/22.00 support zone in order to reclaim the 2020 lows.

Resistance: 28.00, 32.00

Support: 24.00, 22.00

 

·       WTI Price Analysis: 4H chart retains bull bias despite rejection at $28.24

Reference: CNBC, Reuters, Worldometers, FX Street