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MARKET WRAP

• US ISM MANUFACTURING DATA ABOVE EXPECTATIONS • OIL DEMAND IS STILL WEAK – SUPPLY IS AT EXTREME HIGHS • CORONAVIRUS TOTAL CASES DISTORTED BY CHINA’S DATA

US Factory activity declines but not by as much as the market expected? US ISM Manufacturing PMI for March came in at 49.1 which is a level above the period between August – November 2019. The headline figure does not tell the whole story though and the risk markets sold off on digestion of all the data. One metric surveyed is the supply delivery time, which under normal circumstances should it show a longer delivery time, this would mean factories were unable to keep up with demand. The current situation is that the workers in the factories have been furloughed and economic activity is at a standstill, while China cannot supply parts and materials as well as a drag from domestic suppliers too. The US dollar index has held up well today, trading in a tight range but USDJPY fell to 107.00 and the S&P500 traded below 2470 as of writing and Risk sentiment is fairly low.

Oil has traded in a tight range today between $20 and $21 as reports come out that Oil is being held in storage at sea on an estimated 25 to 40 super tankers. In 2009 traders stored over 100 million barrels on super tankers, of which there are currently 770 which can each carry 2 million barrels. Saudi Arabia and Russia have yet to reduce their capacity for production in their bid for greater market share. Today’s EIA report showed a massive build in Crude Stocks with only Distillates showing signs of economic activity as it is Diesel powering the haulage and vans that are delivering goods. Gasoline saw the biggest build since Jan 2020, but Crudes build levels have not been seen since October 2016. USDCAD had found resistance at the 1.4250 level but with Oil trading lower it has held up inside yesterday’s range.

Bloomberg posted a leaked document from the US intelligence agencies saying that China had under reported the true amount of coronavirus cases, which would go a long way to explain the disproportionate amount in Europe and the US compared to the outbreak’s epicentre. Yesterday saw the largest one day rise in confirmed cases as total cases that have been confirmed heads towards 900,000. USDCNY continues to trade above 7.000 which has translated in a higher DXY over the last few months.

AUDUSD had a 1 minute 100 pip spike which has not so far been confirmed as a fat finger, prices have since drifted back down to levels traded just before the incident.

#Fundamentals #Macro #News

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