Markets down as hopes of quick recovery dashed - 14.5.2020

The Dollar strengthening is intact today ahead of expectations data will show 36 million Americans likely sought unemployment benefits over the last eight weeks. The live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, rose 0.2% Wednesday as Fed chair Powell said not to expect negative interest rates while additional government aid may be “worth it”. President Trump had tweeted on Tuesday that the “ USA should also accept the “GIFT”. Big numbers!” referring to the benefits of negative rates other countries are already receiving. Goldman Sachs says a second wave of coronavirus could make the Fed reconsider negative interest rates. EUR/USD joined GBP/USD’s and continued sliding yesterday with both pairs lower currently. Pound got a headwind after report yesterday UK gross domestic product contracted by 5.8% over month in March, the sharpest monthly decline on record. Both USD/JPY and AUD/USD continue falling even after Australia’s unemployment came in not as high as feared.

Futures on three main US stock indexes are extending losses after a selloff on Wednesday. The earnings season continues with companies including Intel, Ford and Merck scheduled to report quarterly results today. Stock indexes in US ended sharply lower on Wednesday : the three main US stock indexes recorded losses ranging from 1.5% to 2.2% with American Express, Raytheon Technologies and Dow shares leading the retreat with losses exceeding 4%. European stock indexes are down currently after a three-session losing streak Wednesday. Asian indexes are falling today ahead of Japanese government announcement on easing of the nationwide “state of emergency.” NIKKEI is the loss leader currently down 1.7%.

Brent is rebounding today following the US Energy Information Administration report Wednesday that US crude oil inventories fell an unexpected 700 thousand barrels last week, the first weekly decline after 15 consecutive increases. The US oil benchmark West Texas Intermediate (WTI) futures retreated yesterday as the Commodity Futures Trading Commission warned oil futures contracts could end up in negative territory again: June WTI lost 1.9% but is rising currently. July Brent crude closed 2.6% lower at $29.19 a barrel on Wednesday.