A warning from the World Health Organization that the coronavirus may never go away stoked investor recovery fears regarding the global economy.
Disappointing U.S. jobs data and signals that central banks may have hit the bottom with interest rates nudged traders to shelter in safe-havens. All major central banks – Fed, BOJ and BoE – say rates aren’t going any lower.
Bonds and the dollar had both rallied after Fed Chief Powell talked down the prospect of negative interest rates in the United States. Powell also said the recovery could take some time as he warned of a recession worse than any since WWII.
In the United States, the Trump Administration is pressing on with re-opening plans despite urgings of caution from medical experts. Further, the US President said he supported a strong dollar, a day Jerome Powell rejected the idea of using negative interest rates.
In the commodity markets, a surprise drawdown of U.S. inventories helped oil prices make around 2%, but the broader caution capped rises. The International Energy Agency (IEA) estimated oil demand will see a record fall in 2020, keeping Brent just below $30 a barrel.
START TRADINGForex – Recovery fears move the markets
Investors are now focused on data from the United States and Europe in the next two days for more clues. U.S. initial jobless claims data is due on Thursday while the Eurozone reports first-quarter GDP data on Friday.
The US dollar strengthened towards a three-week high. Against a basket of its rivals, the dollar edged 0.2% higher to 100.37.
The Canadian dollar weakened to a one-week low against the U.S. dollar. Domestic data showed a bigger-than-expected drop in manufacturing sales. The loonie was trading 0.1% lower at 1.4105 to the greenback.
Australian jobless data bought the latest sign of trouble. A record plunge in employment dragged the Australian dollar to a one-week low of $0.6420. Data showed unemployment increased by 594,300 in April.
Also,the pound also tumbled below the $1.22 line for the first time in more than five weeks. Wednesday’s data showed Britain’s economy shrank by a record 5.8% in March as the coronavirus crisis escalated.
Versus the euro, the pound hit a six-week low and held close to 88.44 pence per euro. Against the dollar, it was last at $1.2206, down 0.2% since New York’s close.
Oil prices rise on dip in U.S. crude stockpiles and IEA data. Brent crude futures were up 93 cents, or 3.2%, at $30.12 per barrel at 1349 GMT. U.S. WTI crude futures were 74 cents, or 2.9%, higher at $26.03 per barrel.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money