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US Existing Homes Sales for March 2020 came in worse than expected reducing by -8.5% from the previous month. The drop is the largest since late 2015 but due to the data including contracts pre-coronavirus epidemic (January + February) the next batch of monthly sales could be a lot worse. US equities failed to rally beyond the data release and sharply reversed to test toward last week’s lows on the S&P500. US 10-year yields had been on the back foot for the majority of the day and the USDJPY also felt the pressure as the Home Sales data and Oil shock moved traders into a risk-off position. The US dollar index is trading back above the 100 level again as the green back shows no sign of faltering from its current safe haven position.

The Oil futures (May 2020) look to be settling above the zero line, which will offer some relief for those holding next month’s contract, which is teetering above the $12 p/b level. OPEC+ is to have a conference call in which they will attempt to work out a way to stabilise the oil markets. Saudi Arabia and some fellow OPEC members could cut production before the May 10th meeting and maybe before the May 1st, when their original agreement comes into effect. President Trump said today that he would never let the great US Oil and Gas industry down and has asked the Secretaries of Energy and the Treasury to formulate some relief plan, in what now appears to be a situation of who can hold out the longest between the Middle East, Russia and the USA. The US had become energy self-sufficient and will need to offer some help to the shale and heavy oil industries, if they are to stay afloat during this pricing crisis. Yesterday the front month Oil contract went negative as storage facilities ran out of room, supply continued at a massive pace and demand remained minimal. Today we have the May futures WTI expiry and the US API weekly crude data, which last week showed a build of 13.1 million.

Cable is starting to feel the pressure of a country under lock down, a Prime Minister still far from recovered and oil prices at all-time lows. The FTSE like the rest of the risk markets was down following on from poor UK Unemployment and Average earnings data. GBPUSD has traded lower from the London open and the inversely correlated EURGBP has found support at the 61.8% retracement level of the Feb low to March recent high and now trades 1.75% higher. EURGBP could benefit for some time as uncertainty around the Brexit deal becomes more of an issue as we get closer to the first set of deadlines proposed by Prime Minister Johnson, of having something in place to work on, from as early as June this year.

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