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MARKET WRAP

• SIGNS OF THE PEAK TO COVID-19 EMERGING • RISK ON SENTIMENT GRINDS THE EQUITIES HIGHER • US DOLLAR RANGE BOUND FOR A MONTH – OIL BACK AT LOWS

COVID-19 continues to ravage the world, but signs of a slowdown in infections are starting to emerge as the city of New York Governor Cuomo says the numbers of deaths in the city are falling on a daily basis now and the start of planning for a reopening of the most badly hit city in America begins. The UK’s welcomes back Prime Minister Johnson from his near-death experience and Sterling rose for the day as the daily death tally for the last couple of days is the lowest since March. The World Health Organization maintains the pandemic is far from over, but the markets today took the more optimistic data readings and rallied in the risk markets, whilst the Japanese yen and Bonds came down a bit.

As we go through this earnings season, we are learning more of how badly affected the economies are going to be, especially the USA which has the highest recorded amounts of the coronavirus infections but also the highest number of tests. The S&P500 hit a 6 week high as it punches towards the 3000 level, even though the Dallas Fed’s general business activity index for manufacturing shows a decline greater than that in March’s data release and with analysts’ expectations being that the next months’ worth of data will be just as bad or worse.

The US dollar is in a range spanning a full month now which has kept the US dollar crosses tied in small ranges and also mean reverting with a propensity to spikes on news. The AUDUSD follows the Risk On sentiment today and posted a new weekly high, the 6th since bottoming out in the middle of March. The Aussie is tied closely to the Chinese economy’s health but still managed to rise even though the Chinese Industrial Profits for March were -34.9% year on year. The Bank of Japans negative interest rate of -0.1%, their unlimited buying of JGB’s and increased buying of Japanese corporate bonds meant the AUDJPY was able to print a 0.75% gain today and looks to still be correlated to the US equities markets.

All of the major indices were green today, while the majority of safe have currency crosses which pair the Swissy or yen reflect the risk-on sentiment in the market currently.  The economic calendar tomorrow is light as it was today, with the major news releases happening from Wednesday onwards.  Traders are keeping their eyes on tweets from President Trump and looking for news to pop this equity rally, as Oil continues to trade lower into the June contract and printed below $14 again.

#Fundamentals #Macro #News

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