Apr 8, 2020, 3:49:52 PM
United States of America
USD is moderately strengthening against EUR and JPY but weakening against GBP.
Yesterday’s February JOLTs Job Openings data were better than market expectations. The indicator fell from 7.012 million to 6.882 million instead of the expected 6.600 million. However, the March statistics can be much worse, since it will take into account the restriction of the work of enterprises due to quarantine. Meanwhile, the US government plans to partially open some regions of the country, despite the growth in the number of cases, which has already exceeded 400K. Economic adviser Larry Kudlow previously stated that the resumption of enterprises in several states will be possible in 4–8 weeks but it is not known whether it will be possible to obtain the consent of local governors. In the evening, investors are waiting for the publication of the Fed protocols, which may contain an assessment of the current situation in the US economy in connection with the spread of coronavirus, as well as hints of further steps of the regulator. In March, the interest rate was reduced twice, reaching the level of 0.25%. Some measures to support the economy have also been put in place, among which is a program of unlimited QE.
EUR is weakening against its main competitors – USD, JPY, and GBP.
EUR is under pressure since, during the 16-hour television meeting, the EU finance ministers could not agree on common measures to support the European economy and mitigate the negative effects of the coronavirus epidemic. The problem is that Italy, Spain, and France (the countries most affected by the virus) offer a joint issue of debt instruments (the so-called “coronabonds”), which Germany is opposed to. Further consultations are scheduled for Thursday but so far the parties are far from a compromise. Most experts are convinced of the need for measures to support the EU economy since, soon, it will face a serious recession.
GBP is strengthening against its main competitors – JPY, USD, and EUR.
Due to a lack of significant economic releases, the situation with the coronavirus epidemic remains in the spotlight of investors. The number of patients in the country exceeded 55K, deaths – more than 3K. Prime Minister Boris Johnson continues to remain in the intensive care unit, although he can be contacted if necessary, and he does not need to be connected to the ventilator. British Minister of Health Edward Argar said that a review of quarantine measures introduced on March 23 is not planned soon since the peak of the epidemic has not yet been passed.
JPY is weakening against GBP and USD but is strengthening against EUR.
Today’s Japanese Core Machinery Orders data were positive. In February, instead of the expected decline, the volume of orders increased by 2.3%. On an annualized basis, the volume of orders decreased less than the market expected – by 2.4%. The volume of orders for computers and construction equipment increased the most but the volume of orders for chemicals and metallurgical products decreased. Now, experts are waiting for the March data, which will show the true extent of the impact of the pandemic on the Japanese industry.
AUD is moderately strengthening against its main competitors – JPY, EUR, GBP, and USD.
Due to a lack of significant economic releases, the movement of AUD is generally driven by technical factors. Today, S&P affirmed Australia's sovereign rating at AAA but changed its outlook to negative. Representatives of the agency noted that they were expecting a recession of the Australian economy for the first time in 30 years, which would lead to a significant deterioration in the financial sector.
Oil prices today had ambiguous dynamics: morning growth was replaced by a decline.
Investors continue to wait for Thursday when OPEC+ will negotiate. The market hopes that the parties will be able to agree to reduce production by 10 million barrels per day. However, much will depend on the position of the United States. Yesterday, the US Department of Energy said that the volume of production in the country is already declining without any action by the government. Local pressure on prices is exerted by an increase in US oil reserves, according to API data, by 11.938 million barrels. Today, investors are waiting for a report from the EIA: it is predicted that US oil reserves could grow by 9.271 million barrels, which will put additional pressure on prices.