A resurgence of COVID-19 cases fuelled markets doubts that the V-shaped economic recovery expected by the market has a long way to go.
Coronavirus surge knocked traders’ recovery hopes. Florida, Oklahoma and South Carolina reported record increases in new cases on Wednesday. Seven other states had record highs earlier in the week. Australia posted its biggest daily rise in infections in two months.
The White House economic adviser said he expects some U.S. shutdowns in certain areas. However, he added that he still expects to see a “strong v-shaped economic recovery.
Also, the International Monetary Fund downgrade to economic projections knocked confidence in a recovery. The IMF slashed its 2020 global output forecasts further, predicting more damage from the pandemic than it had previously expected. The global fund expects a deeper global recession, with output to shrink 4.9% this year instead of 3%.
On top of virus concerns, worrying signals on the trade front and political uncertainty have unnerved investors. Washington is considering changing tariff rates for various European products as part of the trading partners’ aircraft dispute. The United States has added items valued at $3.1 billion to a list of European goods eligible to be hit with import duties.
Traders will be watching U.S. durable goods and initial jobless claims data at 1230 GMT. Both are projected to come in weaker than the previous readings. Job Data is expected to show about 1.3 million Americans signed up for unemployment benefits in the latest week.
Bank of England chief economist Andy Haldane is also due to speak about the future of society at 1700 GMT. Haldane argued against last week’s increase to the bank’s bond-buying programme.START TRADING
Forex – V-shaped Economic recovery still far away
Markets re-assess the chances of a V-shaped Economic recovery and a rapid return to ‘normal’ economic activity. Fears of a second wave of the coronavirus fueled demand for safe-haven currencies.
The dollar index advanced 0.1% to 97.35 but remained below a 2020 high of near 103 in late March.
The Canadian dollar weakened to a 10-day low of $1.3666. Canada became the first country to lose its AAA rating as a result of coronavirus-fueled government spending.
The safe-haven Japanese yen slipped The Japanese yen fell 0.2% to 107.21.
Fresh Sino-U.S. tension stalled a rally in riskier currencies and pushed the Australian dollar under 69 cents.
The euro retreated 0.3% to $1.1222, disregarding a fall in France’s jobless total in May after it reached record levels in April.
Sterling gained on Thursday as traders bought back into the currency following its recent run lower. The British currency was last up 0.3% at $1.2454 against a dollar broadly flat on the session. Before a sharp drop on Wednesday, the pound had traded around $1.254.
Against the euro, sterling increased 0.3% to 90.28 pence.
In commodity markets, gold steadied at $1,761.85 an ounce.
U.S. crude futures fell by 26 cents a barrel or 0.7% to $37.75. Brent crude futures fell 0.8% to $39.99.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money