Forex news from the European trading session - 17 April 2020
Headlines:
- Kremlin: OPEC+ deal needs time to have full effect on the oil market
- Japan cash handouts to cost more than ¥14 trillion
- ECB's Weidmann: ECB will continue to play its role in helping the economy
- German health minister Spahn: Coronavirus outbreak is controllable as of today
- WTI crude hits the skids in drop below $19
- Tokyo reportedly sees a record of 201 new daily coronavirus cases
- Denmark to reopen some small businesses starting from next week
- Germany sees third straight daily rise in coronavirus cases
Markets:
- NZD leads, USD lags
- European equities higher; E-minis up 3.3%
- US 10-year yields up 1.6 bps to 0.643%
- Gold down 1.8% to $1,687
- WTI down 5.1% to $18.90
- Bitcoin up 0.9% to $7,122
The market seems caught between two minds during the session, with investors appearing to be debating between financial strains and worries - or lack thereof - surrounding the economic outlook amid the ongoing coronavirus pandemic globally.
Risk maintained a steady rally throughout, building from earlier news of Trump reopening the economy and the Gilead drug news (even if it may have been an old one).
The remdesivir talk is what many market participants are pointing to have triggered stops in the upside move in risk, though this is a drug that has been used for quite a while already.
That said, it shows the market appetite for good news and that helped stocks to rally.
European equities opened firmer and never really looked back but the reaction in the currencies market was a bit more difficult to keep track of amid the positive risk mood.
The dollar and yen slowly crept higher in early stages, before the greenback surged ahead against the rest of the major currencies bloc.
EUR/USD fell from 1.0860 to hit a low of 1.0812 before rebounding to 1.0840 levels now. Meanwhile, cable saw a drop from 1.2480 to 1.2407 posting a double bottom at yesterday's low before climbing back to 1.2460-70 levels now.
Elsewhere, USD/CAD surged to a high of 1.4118 as oil prices hit the skids in a drop below $19 but as the dollar weakened, the pair moved back lower to 1.4050 levels currently.
AUD/USD also saw more choppy trading in a drop from 0.6365 to 0.6320 before recovering to 0.6350 levels now amid choppiness in the greenback.
Looking ahead, the market has to try and figure out the flip flop in dollar sentiment and how this all ties to the surge in equities today. It is tough to make sense of it all, especially when dollar flows are this indecisive over the past few days.
Not to mention the drop in gold back under $1,700 and the issue of the oil contango ahead of the expiry next week.
