10-Apr-2020

1) GBP/USD Registers Modest Gains As Markets Are Inactive On a Good Friday Holiday
2) WTI Slumps after Mexico Rejects OPEC+ Deal, G20 Energy Summit Eyed
3) EUR/USD Gains Extra Ground on Dollar Weakness

1) GBP/USD Registers Modest Gains As Markets Are Inactive On a Good Friday Holiday

With the Good Friday off in major global markets, GBP/USD remains modestly changed around 1.2465 during the early day moves. In doing so, the pair seems to cheer the UK PM Johnson’s exit from the Intensive Care Unit (ICU) amid a lack of major data/catalysts ahead of the US Consumer Price Index (CPI) figures.

During late-Thursday in the UK, the Tory leader was shifted from the ICU but kept in the hospital. No 10 said he “has been moved this evening from intensive care back to the ward, where he will receive close monitoring during the early phase of his recovery,” as per the BBC.

On the broader scale, Reuters said that total UK hospital deaths from COVID-19 rose by 881 to 7,978 as of 1600 GMT on April 8, the government said on Thursday.

As a result, the risk tone struggles between smile and cry as the UK jostles with the coronavirus (COVID-19) virus.

Also affecting the Cable were the pessimism surrounding Brexit date as the new Labour Party shadow Chancellor Anneliese Dodds urged ministers to beware putting “ideology over the national interest”. On the other hand, the UK Express conveyed the headlines suggesting the Transition period delay could cost UK taxpayer £26 billion a year.

Elsewhere, the US Federal Reserve (Fed) Chair Jerome Powell anticipated downbeat economics during the second quarter (Q2) of 2020 before expecting the recovery in the second half of the year.

While portraying the risk-tone, Japan’s TOPIX recently recovered to 1,424, up 0.56%, whereas stocks in China remain mixed by the press time.

Given the lack of major data/catalysts ahead of the US data, investors may search for the coronavirus updates for intermediate direction. However, the expectedly downbeat US inflation figures for March could keep the pair strong.

2) WTI Slumps after Mexico Rejects OPEC+ Deal, G20 Energy Summit Eyed

After witnessing a solid recovery in the final week of March, WTI (oil futures on NYMEX) resumed its bearish trend and lost nearly 18% this Easter holiday-shortened week.

The black gold had a wild ride over the past week, having hit a weekly high at 28.36 while the lowest level in the week was reached at 22.60. The speculations surrounding a likely OPEC and non-OPEC producers (OPEC+) output cuts deal and Russia’s participation in the global oil pact drove the sentiment around oil.

Meanwhile, concerns over the coronavirus spread intensifying globally and its impact on the economic growth also remained one of the main catalysts behind the oil-price action over this week. As it stands, the virus spread in the global hotspots shows no signs of slowing down.

On the day of the highly anticipated OPEC+ meeting, i.e., Thursday, the US oil enjoyed a massive intraday move of $5. The sharp spike to the multi-day high above 28.00 was eventually reversed and the price tumbled nearly 8% to hit a new five-day low at 22.60.

The sell-off accelerated after it was reported Mexico maintained its opposition to the OPEC+ deal before initially agreeing to it. The OPEC+ sources said:  “Mexico is not happy with it a new quota of 1.353 million b/d, as the country plans to unveil a $13.5 billion energy investment package to help state oil company Pemex raise its production to 2 million b/d by the end of the year.”

The OPEC+ reached a deal to cut output by 10 million barrels per day (bpd) while it expected the US and other producers to join in their effort to bolster prices.

Meanwhile, markets are in a holiday mood this Good Friday, however, the G20 energy ministers extraordinary meeting, due later at 1400 GMT, “to ensure energy market stability” and the Day 2 of the OPEC+ meeting will be closely eyed.

3) EUR/USD Gains Extra Ground on Dollar Weakness

EUR/USD manages well to keep business in the upper end of the weekly range at the end of the week, always in a context of the renewed and moderate selling pressure in the buck and the positive outcome from the Euro-group meetings.

In fact, the recent deal clinched by the Euro group has mitigated political concerns that have re-surfaced following the effervescence between Holland-Germany and France-Italy-Spain, all regarding the joint efforts to fund the effects of the COVID-19 on some economies.

Later in the day, the focus of attention is expected to be on the publication of US March’s inflation figures, although marginal volatility and flat trade conditions due to the Easter holidays could remove some significance from the release.

EUR/USD faces the next key up barrier at the January’s low at 1.0992 ahead of the psychological 1.10 mark. Further up, the pair needs to surpass the critical 200-day SMA, today at 1.1060, in order to allow for a visit to recent peaks in the mid-1.1100s (March 27/30). In case sellers step in, the monthly/weekly low at 1.0768 (April 6) should emerge as an interim support ahead of the 2020 low at 1.0635 recorded in mid-March.