Forex Today: Oil collapse deepens, spooks market and US dollar stands tall
The oil-price collapse extended into Wednesday’s Asian trading, as Brent got sucked into the US oil futures crash while Asian equities tracked the Wall Street tumble overnight. Investors remained jittery amid looming coronavirus crisis that has now translated into an oil mageddon.
With risk-off at full steam, the US dollar witnessed a revival of the safe-haven demand against its main rivals while US Treasury yields slipped on increased flows into the US bonds. Gold prices traded in a $10 tight range around $1685. WTI stalled its recovery and slipped back on the $10 handle, down 8% while Brent tanked 15% to $16 levels.
investors shrugging off a deal reached by the White House and congressional leaders on fresh spending to combat the impact of the coronavirus pandemic.
Among the G10 currencies, USD/JPY turned south again towards 107.50, as the anti-risk yen picked up bids on risk-off. AUD/USD fell back below 0.63 following a run-up to 0.6350 on the back of sold Australian Retail Sales data. The kiwi wiped out gains and slipped to mid-0.59s after facing rejection just shy of 0.6000. USD/CAD extended the upside above 1.4200 amid oil-price slump and dollar gains.
Heading towards the European open, EUR/USD is pressured below 1.0850 but maintains its recent range trade. The cable trades on the back foot below 1.2300, near two-week lows.
Main topics in Asia
BoE’s Bailey: UK should be cautious of lifting covid-19 lockdown too early – Daily Mail
US Senate passes $484 billion coronavirus relief package
CME to allow listing of negative oil options effective from April 22
US President Trump: 20 states moving along pretty quickly towards reopening
US Treasury Sec. Mnuchin: Looking at all options on energy independence
US coronavirus update: Deaths top 45,000, doubling in little over a week – Reuters tally
Hydroxychloroquine drug championed by Trump for coronavirus shows no benefit, poss. harmful – Reuters
China reports 30 new coronavirus cases in Mainland as of end-April 21 vs 11 a day earlier
Australia Retail Sales (Preliminary) March: +8.2% MoM
BOJ considering lowering its economic and price projections
OPEC+ conference call update: No fresh policy moves agreed to or floated out publicly – Reuters
South Korean Pres. Moon calls for third extra budget amid coronavirus crisis
Bloomberg Commodity Index drops to lowest level since 1974
Key focus ahead
Markets gear up for a busy start to Wednesday’s EUR macro calendar, with the UK March Consumer Price Index (CPI) and Producer Price Index (PPI) dropping in at 0600 GMT. Amid coronavirus-led economic turmoil and oil-price plunge, softer inflation figures seem to be already priced-in by the markets. Therefore, the data could likely fail to have any substantial impact on the pound.
Meanwhile, there is no relevant economic release from the Euro area and hence, the dollar dynamics and oil-price-driven market sentiment will continue to dominate. Brexit headlines will likely take a back seat, with the focus on the risk trends and virus updates.
In the NA session, the Canadian CPI and Housing data will be reported at 1230 GMT, followed by the Eurozone Consumer Confidence gauge at 1400 GMT. For oil and CAD traders, all eyes will remain on the US Energy Information Administration’s (EIA) weekly Crude Oil Stocks Change data due on the cards at 1430 GMT.
EUR/USD stuck in range as EU squabbles over coronavirus package
The EUR/USD pair is trapped in an indecisive trading range defined by Monday's high of 1.0897 and Tuesday's low of 1.0816. No debt-sharing consensus ahead of the Euro area summit could keep the single currency under pressure.
GBP/USD clings to modest losses below 1.2300, UK CPI in focus
GBP/USD stays depressed near two-week lows below 1.2300 ahead of the London open. Experts question the UK’s social distancing guidelines, death toll cross 17,000. UK CPI, Brexit and coronavirus updates will be crucial to follow.
Oil implodes, currencies next?
The big question right now is whether central banks and governments can counteract the demand shock. US coronavirus deaths topped 45k on Tuesday, doubling in a little over a week as total cases exceeded 800k.