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Fundamental Forex Analysis

Coronavirus cure hopes keep risk buoyed despite US-China spat; ECB – key

Fed’s willingness to do ‘whatever it takes’ and hopes over the coronavirus treatment continued to buoy the risk tone in Asia despite fresh US-China tensions brewing up around the trade deal.

The US dollar did find some haven bids on US President Donald Trump’s words of caution. Trump said that the trade deal with China has been “upset very badly” by the virus issue. Also, dismal Japanese macro news heightened global recession fears. However, the risk-on action in the Asian equities and US stock futures was unperturbed while the oil-price recovery gathered further steam, as WTI rose nearly 15% to regain a $17 mark. Gold prices consolidated the dovish FOMC led gains above $1700.  

Within the G10 currency basket, USD/JPY turned south to test 106.50. The Antipodeans recovered ground, as the greenback failed to sustain the recovery gains across its main peers. AUD/USD jumped back on the bids above 0.6550 while the Kiwi bounced to near 0.6150 despite dismal Chinese Official and Caixin Manufacturing PMIs. USD/CAD remains pressured below 1.4000 amid firmer oil prices.

Among the European currencies, EUR/USD returned to the red near 1.0850 while the cable treaded water below 1.2500, as focus shifts to the key macro events due on the cards later today.

Main topics in Asia

US President Trump: Want to reopen country, it is much danger in being confined too much

US Treasury Sec. Mnuchin: Administration exploring ways to store another several hundred million barrels of oil

Norway’s Oil Ministry: The country will cut oil output

UK PM to tell nation not to expect lockdown changes – Telegraph

US Pres Trump: US trade deal with China has been “upset very badly” by the coronavirus

China reported four new coronavirus cases for April 29, down from 22 a day earlier

China official PMI for April Manufacturing 50.8 (expected 51.0)

China’s Caixin Manufacturing PMI contracts to 49.4 in April vs. 50.1 last

Japan PM Abe: Govt to consult experts to decide whether to extend state of emergency beyond May 6

China’s Vice-Foreign Minister: Firmly opposes a “politicized” international investigation

Coronavirus update: Germany’s new cases continue to rise, new deaths drop

Key focus ahead        

Markets brace for a big day ahead, in terms of the macro events, with the European Central Bank (ECB) monetary policy decision to steal the limelight. The ECB decision will be announced at 1145GMT, followed by President Christine Lagarde’s press conference at 1230 GMT. The central bank is widely expected to maintain a status-quo but the main focus will be on the forward guidance, as it seeks to widen its asset purchases amid a lack of fiscal support agreed by the European Union (EU) to fight the virus-led economic fallout.

Also, the UK Prime Minister (PM) Boris Johnson’s first daily briefing after returning to the office will be closely eyed.

Ahead of the ECB decision, the German Retail Sales for March will drop in at 0600 GMT. Next of relevance remains Germany’s Unemployment Rate data at 0755 GMT. At 0900 GMT, the EUR traders will watch out for the bloc’s inflation, GDP and jobless rate numbers.

Across the Atlantic, the US Jobless Claims, PCE Price Index and Personal Spending data will be published at 1230 GMT alongside the Canadian GDP report and ECB presser.

Meanwhile, the coronavirus-related developments and the oil-price action will continue to drive the overall market sentiment.

EUR/USD eyes April loss, focus on Eurozone data and ECB

EUR/USD is likely to end April on a negative note, as the German data is expected to show an uptick in the jobless rate, and the European Central Bank (ECB) has little or no room to sound hawkish. 

GBP/USD: Pressured below 1.2500, focus on UK PM Johnson’s coronavirus briefing

GBP/USD bears the burden of US dollar pullback. UK PM Johnson will chair the first daily briefing after returning to the office. US Jobless Claims, virus updates will be important as well.

ECB Interest Rate Decision Preview: Bank expected to unveil new economic support measures

The European Central Bank is expected to ramp up its bond purchase program when it meets on Thursday to assist governments in defraying the cost of fighting the Coronavirus public health crisis.

US Initial Jobless Claims Preview: When is less more?

Initial unemployment claims expected to be 3.5 million. Filings would be 50% lower than the March 27 peak. Total of 30 million people have been furloughed in six weeks.

 

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