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MARKET WRAP

• US JOB DATA SHOWS JOB DECLINES OVER 10 YEARS • WORLDS PMI’S ARE DOWN • EURUSD SUFFERS AS THE EU LEADERS FAIL TO AGREE

US Jobless Claims hit 26million in 5 weeks as the data out today showed worse than expected numbers, with the 4-week average ~5.7million and with 4.4million more US citizens claiming for unemployment last week. Those out of work now total more than the total job creation since 2010, but the initial reaction was for the US dollar to drop and the equities markets to rise. The bad news out today would have seen the risk markets fall but it wasn’t until the news came out that the Gilead Antiviral drug failed in its first set of trials, that we saw the risk-off moves. Showing that recent bullishness in the equities/risk markets has been ignoring the hard data and rising on the hope of some sort of vaccine and a possible re-start to the largest economies.

The IHS Markit US Factory Activity contracted to the lowest readings in 11 years, which is to be expected when the economy is shut down. Unfortunately, the pessimism is beginning to grow as we now know that a recovery is less likely without a fully operational economy and what we will get is a staggered start when restrictions begin to be lifted. It’s the same around the world with Japan’s PMI at the lowest in survey history with demand being hit. USDJPY is trading in an ever-tightening range and tested the upper and lower bound today in just a couple of hours of trading.

The EURUSD has been trending higher in the run up to the US open but following the London fix there was news out 90 minutes later from the EU leaders that they had agreed on a ‘need’ for a COVID-19 support package and a new budget would be proposed but no agreements could be made. Chancellor Merkel was also non-wavering on her stance against the ‘coronabond’ idea as the way to finance the recovery package, with French President Macron calling for grants rather than loans, something that goes against the German ideal of paying for the recovery in a broader longer-term European budget. The weekly momentum is currently bearish for the single currency and the March lows could be tested.

US-Iran tensions push Oil prices higher which will suit America and Iran equally as they build up the rhetoric. The US is proud to be energy independent and is less likely to cut production but is looking to other major producers to cut and lose market share. Something the Russians said was a reason to walk from the original OPEC+ meeting that led to the price crisis oil now finds itself in. Oil finds itself in quite a tight rising trend this last couple of days as it inches higher towards $20.

The economic calendar was busy all day today with the last of the Tier 1 data being the US New Home Sales for March. These figures also came in worse than expected and fell by -15.4% and the lowest reading for 12 months. These figures are set to get worse as the COVID-19 pandemic continues.

#Fundamentals #Macro #News

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