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Five factors are all playing against the EUR/USD pair, in the opinion of FXStreet’s analyst.

Key quotes

“COVID-19 cases and deaths continue rising in the old continent, the epicenter of the disease. France and Spain both announced record numbers of mortalities on Wednesday.”

“The eurozone remains split between the camp demanding to mutualize the debt and show solidarity, and the one opposing it, led by Germany. The potential political crisis is weighing on the common currency.”

“After skyrocketing to 3.283 million in the week ending on March 14,  jobless claims Thursday’s report for the week that ended on March 21 could be even higher. Goldman Sachs foresees 5.25 million claims. Devastating figures could be positive for the safe-haven US dollar.”

“Republicans are not enthusiastic about President Donald Trump’s calls for infrastructure spending. If they change their mind, the dollar could fall but until then, the market mood could stay downbeat.”

“Bloomberg reported that US intelligence agencies suspect that Chinese confirmed cases and deaths are far higher. The news implies a worse trajectory and protracted economic suffering, weighing on sentiment and benefiting the US dollar.”

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Source: fxstreet

EUR/USD Wednesday’s four-hour chart is painting a mixed picture, according to FXStreet’s analyst

Key quotes

“Momentum on the four-hour chart has turned negative after several positive days – a bearish sing. On the other hand, EUR/USD has topped the 100 and 200 Simple Moving Averages, but only just.”

“Resistance awaits at 1.1050, which has separated ranges in mid-March. It is followed by 1.1090, a temporary cap on the way up.”

“Some support awaits at 1.10, the confluence of the 100 and 200 SMA. The next cushion is at 1.0930, Tuesday’s low.”

Source: fxstreet

The US-based ratings agency S&P Global said in its latest report on Wednesday, credit ratings of most Australian banks are not at risk of a downgrade, in the face of the coronavirus crisis.

Key takeaways

“Expect credit losses at banks in 2020 to more than triple from 2019 levels as the pandemic disrupts business.

Our forecast that the Australian economy will strongly rebound toward the end of the current calendar year following a significant downturn underpins our analysis.

Warned of a more severe and longer-lasting downturn, potentially due to a sharp fall in property prices and materially weaker economic outlook, would trigger downgrades for banks.”

AUD/USD breaches 0.6100

AUD/USD has come under fresh supply and drops back below the 0.6100 level amid a renewed risk-aversion wave that boosts the haven demand for the greenback across the board.

At the press time, the Aussie trades at 0.6080, down 0.86% on the day.

Source: fxstreet

Here is what you need to know on Wednesday, April 1:

Investors are not tricked on April Fool’s Day and are in a gloomy mood. Asian stocks and S&P futures are down at the beginning of the second quarter after the first quarter was the worst since 2008.

The US dollar is gaining some ground across the board after a volatile close to the quarter. President Donald Trump has issued a grim warning, talking a painful two weeks, while his advisors discussed various estimates of mortalities. Nearly 190,000 people have been infected in the US, with the death toll topping 4,000. The White House is considering cutting tariffs as another easing step.

EUR/USD is under pressure as the death tolls in Spain and France continue rising, while infections in Italy seem to level off. Final manufacturing Purchasing Managers’ Indexes for March are projected to confirm only moderate contraction – yet this is due to a quirk in the methodology that counts delays as a positive factor. Eurozone countries remain at odds over corona-bonds. France, Italy, and Spain want a debt sharing scheme, while Germany and the Netherlands oppose it.

GBP/USD is trading below 1.24 after a volatile Tuesday, as the UK continues suffering rapid contagion. Final UK Manufacturing PMI is forecast to show a minor downgrade.

US data stand out later in the day. ADP’s private-sector jobs report is set to show a loss of around 150,000 jobs, in a precursor to the official Non-Farm Payrolls report.

Later on, economists expect a considerable fall in March. The Employment Component serves as another hint towards the NFP.

In China, the Caixin Manufacturing PMI came out at 50.1, indicating minimal growth and in line with the government’s figures. The statistics failed to cheer markets.

Oil prices are hovering around the lows, with WTI trading at the $20 handle. Saudi Arabia and Russia are considering a meeting to discuss petrol prices after launching a price war earlier this year. Trump spoke with Russian President Vladimir Putin earlier this week.

Cryptocurrencies have been on the back foot, with Bitcoin trading around $6,300.

Source: fxstreet

Late-2008/2009 offers a highly relevant historical analogue for the near term USD outlook, Richard Franulovich from Westpac Institutional Bank reports.

Key quotes

“The parallels with recent USD price action are obvious; the DXY squeezed 9% higher over a more compressed two week period by 20th March, only to give back roughly half those gains by month’s end, reflecting broad global policy relief and an easing in USD-funding scarcity.”

“But if late 2008/2009 is any guide the USD is likely to stabilise soon and resume a broadly strong tone. Back in 2008/09, once the initial USD squeeze and partial reversal were complete, the USD subsequently regained its footing and held solid well into mid-2009.”

“If that scenario plays out again in 2020 that would imply currencies are on the cusp of once again broadly track in line with their sensitivity to risk aversion.”

Source: fxstreet

U.S. oil prices rebounded sharply on Tuesday, after falling to the lowest level since 2002 amid a demand slump due to the coronavirus pandemic and a glut of supply thanks to a Russia-Saudi oil-price war.

West Texas Intermediate crude CLK20, +5.62%  jumped over 5%, or $1, to $21.17 a barrel, after briefly dipping below the psychologically important $20-a-barrel level on Monday. The May contract tumbled 6.6% to settle at $20.09 a barrel on the New York Mercantile Exchange.

The global benchmark, May Brent crude BRNK20, +2.64%  rose 42 cents, or 1.5%, to $26.82 a barrel, after an 8.7% slump to $22.76 a barrel on ICE Futures Europe, ahead of the front-month contract’s expiration at Tuesday’s settlement. WTI marked its lowest finish since February 2002, while Brent saw its lowest settlement since November of that year, according to Dow Jones Market Data.

The rebound Tuesday came as U.S. stock futures and European equities also, rose after China’s official purchasing managers’ indexes both beat expectations, and slowing new coronavirus cases in places like Italy. Wall Street equities saw another upbeat session on Monday, driven by health-care stocks and hopes for a vaccine.

“A joint action from oil producer countries to lower production could encourage a certain recovery in oil prices,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank, in a note to clients. “But any supply-side intervention should be sizable to match the historical decline in demand, with an estimated 5 million barrels decline in daily oil demand only due to grounded planes globally.”

Source: marketwatch

EUR/USD has been on the back foot as a turbulent quarter is drawing to an end. How is the world's most popular currency pair positioned on the charts?  

The Technical Confluences Indicator is showing that euro/dollar has robust support at 1.0972, which is the convergence of the Fibonacci 61.8% one-month, the Simp[le Moving Average 5-one-day, and the Fibonacci 38.2% one-week.

Further down, the next significant cushion is at 1.0880, where the previous yearly, the SMA 50-4h, the SMA 200-1h, and the SMA 10-one-day meet up.

Resistance levels are spread out, with one hurdle awaiting at 1.1046, which is the confluence of the Fibonacci 23.6% one-day, the previous 4h-high, and the 100-day SMA.

Further up, 1.1091, is where the Fibonacci 61.8% one-day and the previous monthly high converge.

Source: Fxstreet

Coronavirus crisis extended some support to the USD’s safe-haven status on the first day of the week, Haresh Menghani, an analyst at FXStreet reports.

Key quotes  

“As coronavirus lockdowns tightened across the world, a prolonged period of uncertainty extended some support to the greenback's and helped ease the recent bearish pressure.”

“The pair witnessed a modest pullback during the Asian session on Monday and for now, seems to have snapped six consecutive days of the winning streak.”

“Hovering around the 200-DMA, below the 1.1100 round-figure mark, developments surrounding the coronavirus saga might continue to play a key role in influencing the pair's momentum amid absent relevant market-moving economic releases.”

Source: fxstreet

Here is what you need to know on Monday, March 30:

The haven demand for the US dollar is back in play starting out a fresh week, allowing the greenback to recover some ground after last week’s plunge, although S&P 500 futures are rebounding and therefore, suggesting limited upside.

The optimism spurred by the US $2 trillion stimulus and global relief measures deployed to fight the coronavirus pandemic fades, as investors remain worried about the intensifying virus spread and mounting global recession fears, with lockdowns announced by most governments.

USD/JPY fell sharply towards 107.00, as the safe-haven yen drew bids amid falling Asian stocks and Treasury yields, although the losses were capped broad US dollar rebound. However, EUR/USD and the cable suffered the most, correcting last week’s surge. EUR/USD dropped back below 1.1100 ahead of the German Preliminary CPI report while GBP/USD surrendered the 1.24 handle.

Meanwhile, the Australian and New Zealand dollars also slipped against the greenback, despite the Chinese central bank’s surprise Repo rate cut. The Canadian dollar traded with sizeable losses, as oil prices slumped, with pandemic fears denting the oil demand outlook.

Coronavirus spread intensifies so does the economic risk around the world, with nearly 34,000 deaths reported. The US has emerged as the latest epicenter, with more than 137,000 cases and 2,400 deaths and lockdowns are toughening worldwide. US President Trump backtracked on its plans to re-open the economy by Easter, instead, he extended the social distancing guidelines until April 30. Across the Atlantic, Italy’s death toll is now the highest in the world at 10,023, Spain’s fatalities continue to climb while the UK warned of a six-month lockdown as New York state death toll tops 1,000.

Gold has come under heavy selling pressure and now heads back towards $1600 mark.

Cryptocurrencies are attempting a minor recovery after the weekend slump, with Bitcoin trading around $6,200.

Source: fxstreet

Thanks to swift action worldwide by central banks, global equities avoided a disastrous place, a possible combination of a 1930’s like depression and the 2008 financial crisis.  In just a matter of weeks, massive monetary and fiscal stimulus was injected into the global economy, showing financial markets central banks and government leaders were not taking any chances with the shock that was about to hit consumption and production, also providing key relief to funding markets.

The unprecedented actions by the Fed has put a tentative top for the dollar, however the flight to safety could return if the duration and severity of the economical and financial disruptions worsen over the next couple weeks.

The focus next week will remain on the spread of the virus in Europe and the US.  Unfortunately, it seems that stringent mitigation measures have not helped the curve as much as many have hoped for in the US, Italy and Spain.

A good amount of attention will also fall on the US labor market.  Following the meteoric rise in last week’s jobless claims, traders will look to see if the number of unemployment filings continues to surge.  Friday’s non-farm payroll report will also be closely watched as the US economy is about to have its first negative reading since October 2010.

US Politics

Congress got the job done getting a $2 trillion stimulus package and now markets will try to figure out all the details.  The calls for the fourth phase of stimulus will start to pick up as the virus spread intensifies across the US, but the passing of the massive economic support package has bought Congress some time for now.

The next few months will be key for the Presidential election and if the virus starts to test the healthcare systems of several red states, expectations could shift for a Biden upset in November.

UK

The UK is in lockdown, unfortunately the measures weren’t implemented in time to save the Prime Minister and his Health Secretary, both of whom have tested positive. If only there was something they could have done. The pound fell 1% on the news – for some reason – but has since rebounded to trade 2% higher on the day. I’m not sure that’s even particularly irregular in these bizarre times.

The number of cases and fatalities is rapidly rising in the UK now and the hospitals are already overwhelmed, with emergency facilities now being set up in various cities and former NHS staff coming out of retirement to assist with the crisis. This is likely to get much worse before it gets better but now that the country is in lockdown and taking it seriously, the peak may not be too far away.

Italy

This was looking like a turnaround week for Italy until Friday when the country recorded 919 more deaths, taking the total to 9,134. There were positive signs this week though but the fear is that the virus has taken hold in the south – with many of the cases until now in the north – which is poorer and potentially less able to deal with the spread. This could be a very worrying phase two for Italy which has already suffered considerably.

Spain

Spain is still some way behind Italy in terms of fatalities but the numbers are rising at an alarming rate. The country reported 769 deaths on Friday, taking the total to 4,858. Spain has the fourth highest number of cases and has threatened to become the European epicentre but recent efforts may bear fruit.

Eurozone

Once again, the eurozone is showing why it’s years away from being anything resembling the United States of Europe. In times of need, rather than being decisive, countries are squabbling over whether to collectively raise funds to support the regions economy with “coronabonds”, as other countries are doing, or use a bailout mechanism which typically imposes strict conditions on a country. This is not going to help any anti-euro feeling within these countries as the block shows that, once again, in times of desperation, it can’t be relied upon.

China

While the rest of the world grapples with the spread of the coronavirus, China is looking to see signs that their economy is bouncing back.  On Tuesday, China’s March official PMI reading could rebound strongly as many parts of the economy in March have resumed production.

The yuan will closely be watched following its worst week against a basket of its major trading partners since August.  The PBOC may remain active in defending the yuan in order to keep markets calm.

Hong Kong

The focus in Hong Kong will primarily remain on the coronavirus and the increased efforts on thwarting its spread.  While Mainland China is having much progress with the virus, Hong Kong just saw its biggest daily increase.  On Tuesday, Hong Kong’s February retail sales readings will show how bad of a hit tourism and domestic demand had due to the coronavirus. February and March data are expected to be terrible for Hong Kong and most of that is already priced in.

Singapore

On Monday, the Monetary Authority of Singapore is widely expected to act aggressively and ease poliy further by both re-centering and reducing the slope of its currency band.

India

India could not wait to cut rates and boost liquidity.  In what is becoming a recurring theme for central banks, the RBI acted on Friday, a full week in advance of their regularly scheduled policy meeting.  The RBI is making sure markets know that they are being aggressive and that they still have tools they can use if the outlook deteriorates further.

India’s current lockdown measures will likely see the data get terrible in April, with hopes that a rebound will start in May.    

Australia

Australia is in wait-and-see mode.  They are preparing for several months of social distancing and anticipate further fiscal and monetary stimulus will be needed shortly.  Traders may not put much weight with the upcoming retail trade and housing prices data.  On Wednesday, some focus will fall on the minutes to the RBA’s emergency meeting.

New Zealand

The spotlight for New Zealand will primarily remain on the spread of coronavirus cases.  The country has raised their lockdown level to four and incremental updates on the escalation of cases will likely be met with calls for further action by the RBNZ.

On Tuesday, the ANZ Bank New Zealand will release the business confidence index that will show a sharp decline in confidence and with the outlook.

Japan

Now that the Olympics have finally been postponed, investors are going to anticipate that the upcoming economic data and surveys will be a very high baseline that are not yet reflecting the coronavirus impact and minimal boost the Olympic games were to provide the economy.

The release of the BOJ Q1 Tankan Survey and February industrial production data will probably not move the needle.

Market

Oil

This week has provided some welcome reprieve for oil prices, although even now they’re not trading too far off the lows. Even stabilization is welcome after an extraordinary period, with the impending global recession being compounded by the oil price war to smash prices to bits. The sell-off may have slowed but there’s still a lot of vulnerability to the downside and while $20 may have provided support so far for WTI, I wonder whether that will continue to be the case in the coming weeks.

Gold

Gold is holding onto its recent gains after rebounding strongly earlier this week as the Federal Reserve announced its unlimited, open-ended, quantitative easing program. That, combined with other measures, eased the upside pressure on the dollar and saw it pull back around 4%, aiding the rally in gold back to levels you would expect to see in times like this. It’s still seeing resistance around $1,640 but as long as we don’t see any more sharp shocks in equity markets, this will likely come under much more pressure.

Bitcoin

Not a lot has changed as far as bitcoin is concerned over the last few days. It is continuing to trend higher but momentum has been dropping as it faces difficulty around $7,000. The improvement in general sentiment in the market appears to be supporting moves in cryptos but that may change. A break of $7,000 could be the catalyst for more sharp rallies but it could still see some resistance around $7,500.

Source: marketpulse

The US dollar remains on the back foot after plunging on Thursday alongside the third consecutive rise in stocks, yet S&P futures are pointing to a downside correction. Investors are cheering the Federal Reserve's unlimited Quantitative Easing program announced early this week, backed up by Chair Jerome Powell's commitment to supporting the economy. He said the Fed would "not run out of ammunition."

The Fed's previous efforts to ease the distressed demand for the dollar are bearing fruit as well. Another factor is the Senate's  $2 trillion fiscal package which will likely be approved by the House later on Friday. T

US jobless claims leaped to 3.283 million, an increase of 1,053% and far above expectations, as companies let workers go, temporarily or permanently. The devastating figure seemed to add pressure on the dollar but did not deter the market.

• Three million is only the beginning, three reasons why the dollar may rise
• US labor market reels as initial jobless claims soar far beyond the previous record

GBP/USD was one of the primary beneficiaries of the dollar's sell-off, rising above 1.22 after trading at the 1.14 handle earlier in the week. The Bank of England left its policy unchanged in its third rate decision this month and after slashing rates and expanding its QE program. Chancellor of the Exchequer Rishi Sunak unveiled a plan to support almost all those who are self-employed.

While the Australian and New Zealand dollars also surged against the greenback, the Canadian dollar lagged as oil prices remain under pressure.

Coronavirus continues spreading around the world, with over 530,000 infected and more than 24,000 deaths. The US has surpassed China with the number of cases with yet another surge in New York state. Italy and Spain have seen some stabilization in mortalities, yet hospitals in these countries are overwhelmed, and the number of cases remains elevated. Additional figures will be followed by markets. Data from these Spain early in the day, New York, and finally Italy, are all set to rock markets.

EU leaders are split on the need for common bonds, dubbed "corona-bonds" as Germany remains opposed to sharing debt, opposing demands from France, Italy, and Spain. Negotiations are set to continue. The European Central Bank continues buying bonds, easing its capital key rules, and ready to dust off the Outright Monetary Transmissions (OMT) program from 2012. EUR/USD has also gained, trading well above 1.10.

Chinese Industrial Profits year-to-date through February are down 38.3% yearly, the worst on record.

The University of Michigan's final Consumer Sentiment measure for March may show a downgrade, reflecting shoppers' concerns.

Gold has been consolidating its gains trading above $1,600 but below the highs.

Cryptocurrencies are holding up in familiar ranges, with Bitcoin trading around $6,600.
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Source: fxstreet

GOLD AND CRUDE OIL TALKING POINTS:

• Gold prices didn’t move far in Asia but remain close to recent highs
• The market is like all others fixed on Congress and its $2 trillion coronavirus package
• Oil bulls remain timid, with demand in doubt as rarely before

Gold prices were steady close to two-week highs in Asia on Friday. The coronavirus’ horrible impact on the global economy was underlined by truly horrific US employment data in the previous session but hopes for more, major governmental rescue action seems to be cushioning the blow.

A US package worth an estimated $2.2. trillion has passed the Senate and is reportedly expected by Speaker Nancy Pelosi to get through the House of Representatives later on Friday. That’s despite some market-rocking rumors that it might have been difficult to form a quorum there.

Leaders from the Group of 20 leading industrial powers pledged on Thursday to inject more than $5 trillion to the global economy to fight the pandemic and shield populations from its worst economic effects. Those effects have been on especially brutal display in the last 24 hours, notably in news that more than three million Americans signed up for joblessness-related benefits last week.

No wonder gold looks perky then. Admittedly the market remains beset by the impulse among some investors to cash out in order to cover losses elsewhere. However the febrile economic atmosphere engendered by the contagion, to say nothing of rampant money-printing, seems set to underwrite a strong underlying bid for the asset this year.

Focus in the market and indeed all others will remain on Congress as the week winds down. President Donald Trump took a call with his Chinese counterpart Xi Jinping Friday which was apparently cordial, constructive but neither side gave much more away.

Crude oil prices rose at the start of the session but pared their gains as it went on.

They are finding some support in the same state-aid hopes which have listed other markets. However, staggering Global Positioning data, which reportedly suggest an 82% drop in major US cities’ congestion, along with the ongoing price war between major oil exporters Russia and Saudi Arabia, are likely to make this fleeting.

Prices have left the lows of mid-March far behind but the market doesn’t look terribly confident at its current, two week highs. Daily trading ranges have narrowed. This doesn’t seem likely to last however and the direction of any break in the current narrow daily-close trading range could be instructive. Should consolidation be seen around the $1600/ounce handle, that could be a sign that the bulls are preparing themselves for another try at this month’s near-18-year highs. A slide back below that point could be a sign that the recent lows are back in play but, given the clear levels of fundamental uncertainty now dogging markets, prolonged weakness for gold seems highly unlikely.
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Buffeted by headwinds both general to all markets and specific to its own, crude oil is having far more trouble than gold in leaving behind this month’s notable lows. Once again smaller daily trading ranges testify to heightened uncertainty, understandable though that may be. That said, the bulls have failed to regain even the $27.70 area from last week which forms the first obvious resistance point for this market.

If they can’t into this week’s close then it will hard to avoid the conclusion that the path lower is open once more, even if the $20/barrel point is likely to remain a formidably psychological barrier,

Source: dailyfx

The Asian equities tracked the Wall Street rally on Friday, induced by the US $2 trillion stimulus package. The market mood, however, remained cautious amid no stopping in the coronavirus spread globally. The US outstripped China with the most infections while there is no signs of a slowdown in the number of cases across Europe.

Most major Asian markets rallied over 1%, barring the Australian stocks, which sank over 5% amid rising concerns over the virus impact on the economy following stricter measures announced by the Australian PM Scott Morrison. The tepid risk tone was well reflected by the losses in the US equity futures while broad US dollar sell-off extended on the US fiscal stimulus-led easing funding pressures

Amongst the G10 fx space, USD/JPY lost over 1% and fell back on the 108 handle while the Aussie rallied to a nine-day high above 0.6100, as markets cheered the upbeat telephonic conversation between US President Donald Trump and his Chinese counterpart Xi Jinping about the virus.  

EUR/USD tested the 200-DMA hurdle on its corrective advance from sub-1.07 levels while the cable briefly regained the 1.2300 level before reverting to 1.2250-70 region amid concerns over the EU-UK post-Brexit trade talks.

Oil prices kept its recovery mode intact above $23 mark and added to the gains in the Canadian dollar, as USD/CAD breached the key 1.4000 level. Meanwhile, gold prices trimmed losses and regain $1640 amid persistent dollar weakness.

Main topics in Asia

USD/MXN Price Analysis: Mexican peso drops from seven-day top as S&P downgrades Mexico

EU lawmakers back aid for virus-hit economy in remote vote – Reuters

Tokyo area March overall CPI +0.4 pct YoY

China reports 55 COVID-19 cases in Mainland

US House of Representatives sets two hours of debate on coronavirus aid bill Friday beginning at 1300 GMT

Planned negotiating rounds on the UK's future relationship with the EU have been abandoned – The Guardian

South Korea reports 91 new coronavirus cases and eight more deaths

US Pres. Trump: Could open up farm belt, parts of the mid-West, 'other places'

House may not vote on the US coronavirus relief bill on Friday - Reuters

New Zealand's Robertson: Wage subsidy may cost NZ $12 billion

Australian PM Morrison: To tighten enforcement on self-isolation for citizens returning from overseas

RBI slashes key repo rate by 75bps to 4.40% to fight coronavirus impact

US Pres. Trump: Discussed in great detail the CoronaVirus with China’s Pres. Xi

China’s Pres. Xi: Willing to offer support to US for coronavirus control

Key focus ahead        

There is nothing of relevance due on the cards from the European session, in terms of the economic data releases. Therefore, the fx markets will continue to remain at the mercy of the US dollar dynamics and broad risk trends amid heavy news flow, as coronavirus-related updates dominate.

The Bank of England (BOE) quarterly bulletin will be eyed ahead of the US data flow, due at 1230 GMT, including the Core Personal Consumption Expenditure (PCE) – Price Index and Personal Spending figures. Next in focus remains the UoM Consumer Sentiment data for March due at 1500 GMT.

The House of Representatives vote on the US Coronavirus Bill will grab some attention later in the American morning, with a two-hour debate set up ahead of the voice voting.

Next of note remains Baker Hughes US Oil Rigs Count data due at 1700 GMT, which will wrap an eventful and hectic week.

EUR/USD probes 200-day MA on US dollar weakness

Dollar sell-off is again fuelling gains in EUR/USD, pushing the pair higher to key average hurdle.  Downside risks persist as the virus outbreak is showing no signs of slowing down in the Eurozone.

GBP/USD fails to hold above 1.2300 amid UK’s coronavirus woes, Brexit pessimism

GBP/USD remains well bid above 1.2200, having pulled back from the highest levels in nine days reached above 1.23. Coronavirus cases in the UK surge. The EU-UK Brexit talks stalled, UK PM Johnson accused to put Brexit over breathing.

US Michigan Consumer Sentiment March Preview: Outlook equals consumption

March sentiment expected to fall upon revision. Widespread job losses will drive overall sentiment down. Weaker consumer sentiment will likely mean lower consumer spending.

Gold risk reversals flip for calls

Gold calls are claiming higher implied volatility premium than puts for the third straight day, indicating investors are adding bets to position for strength in the yellow metal.

Source: fxstreet

The Fed's unlimited QE, $2 trillion US stimulus package weighed on the USD. Thursday's key focus will be on the US macro data, Haresh Menghani from FXStreet informs.

Key quotes

“Persistent offered bias around the US dollar, all against the backdrop of the Fed's unlimited QE, was seen as one of the key factors driving the pair higher. Investors further took comfort from the passage of a massive $2 trillion US stimulus package.”

“On Thursday, the European Central Bank is scheduled to release the monthly Economic Bulletin.”

“The key focus will be on the US initial weekly jobless claims for the week ended March 20. Economists are looking for claims to soar to 1,000K as compared to the previous week's reading of 281K.”

“The US economic docket also features the release of the final GDP print, which is expected to confirm that the economic growth stood at 2.1% annualized pace during the final quarter of 2019 and might fail to provide any meaningful impetus.”

Source: fxstreet

CRUDE OIL AND GOLD TALKING POINTS:

• Crude oil markets are like all others fixated on US jobless claim numbers
• A multi-million rise in claimant numbers is now widely feared
• Gold prices retreated, with investors again reportedly preferring cash

Crude oil prices were back close to where they began Thursday’s Asia Pacific session as it began to wind down. Early gains were pared into the afternoon’s proceedings as investors nervously awaited key US labour market data.

In US hours markets will learn how many Americans signed on for unemployment benefits for the first time in the week to March 21, with millions of new claimants now expected to be added to the roster thanks to the coronavirus’ economic ravages.

This prospect has loomed over the passage of a $2 trillion stimulus and assistance bill through the US Senate, powering it towards a vote in the House or Representatives on Friday. Energy marked participants will be particularly aware that such government action huge as it may be can only help once recovery starts. It can’t of itself bring about the crucial lowering of infection rates.

The price war between major exporters Saudi Arabia and Russia threatens crude oil markets with a massive supply glut at a time when demand is collapsing. Sure enough US crude inventories rose by 1.6 million barrels last week, a ninth consecutive week of gains.

Gold prices fell back, reportedly as investors again rushed into cash to cover losses incurred elsewhere. This pattern has been much seen in the precious metal market this year, with prices falling despite the clear economic uncertainty against which the likes of gold and silver supposedly hedge.

This market can still expect plenty of support should those US labor market numbers come in anything like as weakly as investors now fear.

That price clash may be one fundamental reason why US crude oil prices have made so little headway even as the hope or reality of various large stimulus programs worldwide has lifted other markets. For now prices remain very close to the seventeen-year lows plumbed earlier this month, with the bulls unable to gird themselves for a serious attempt at even near-term resistance in the $27.22/barrel area.

Multi-million claimant rises in the US labor data could well make another test of those lows unstoppable. A moribund jobs market will clearly destroy near-term energy demand as supply is about to ramp up.

Gold prices have similarly faltered ahead of key resistance, in this case the psychological $1650 level. It must be likely that another upside test will come shortly, but for the moment downside focus is on a broad band of support between the lows of early March and those of February.

In the current environment slips back toward this level may well represent little more than a better opportunity to go long, but those who do so will need to be aware that this market will remain vulnerable to slippage whenever investors need cash to cover losses elsewhere.

Source: dailyfx

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