By Deepta Bolaky
US stocks retreated sharply following the hearing before a Senate health committee on Tuesday and posted its worst day since the 1st of May. Dr Anthony Fauci, the US top infectious disease official together with other health representatives warned that early reopening of certain states may set back an economic recovery.
The renewed optimism initially buoyed by the reopening plans was dented as investors reassessed the governments reopening stages following the warnings of the health officials. Wall Street ended in negative territory with all three major benchmarks deep in the red:
In the FX space, major currencies were mixed against the US dollar. Commodity-linked currencies and the British Pound were among the worst performers against the greenback.
The US dollar failed to gain momentum as a safe-haven despite a deterioration in risk sentiment. The greenback was underpinned by dismal CPI figures – the index for All Urban Consumers (CPI-U) declined 0.8 % in April on a seasonally adjusted basis, the largest monthly decline since December 2008. The fall in prices was mostly attributed to lower gasoline, but indexes for apparel, motor vehicle insurance, airline fares also fell sharply.
After falling to the 99 marks, the US dollar index which tracks the performance of a basket of currencies against the greenback clawed back to the 100 level.
Source: GO MT4
The oil market continues to navigate in an uncertain environment. Faced by an oil glut, the productions cuts and the prospects that global activities would gradually resume have cushioned the freefall of crude oil prices. However, after warnings from the US health officials, the sentiment has faltered and traders are reassessing the damage of early reopening plans and the effect on demand.
On the supply side, United States API Weekly Crude Oil Stock report shows that inventory fell to 7.6M in May 8 from the previous 8.44M. As of writing, WTI Crude oil (Nymex) is down by 2.13% and is currently trading at $25.23 while Brent Crude (ICE) is trading at 29.98, up by 1.18%.
We expect oil traders to keep monitoring updates on the virus front and weekly reports to gauge demand and supply dynamics.
The precious metal seesawed between gains and losses as risk sentiment remains fragile. The Senate Health Committee has reiterated the need to move with caution to avoid the risk of a second wave of an outbreak which will set back an economic recovery. Amid volatile trading, the XAUUSD pair managed to claim the $1,700 mark.
Source: GO MT4
By Deepta Bolaky
|Thursday, 14 May 2020
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