It was another risk-off day in global financial markets as renewed COVID-19 concerns and horrid financial data from the Eurozone weighed on investor sentiment in Asian and early European session.

Singapore which has been hailed as an exemplar state in handling the coronavirus pandemic suddenly announced a near full closure of all activity as case count spiked despite extensive test and trace controls that have been in effect since February. The news showed just how intractable the pandemic problem has become even for the most efficient and effective state actors to handle. COVID-19 case count has now reached the 1 million mark with more than 50,000 deaths and shows few signs of abating.

The near cessation of all economic activity was acutely visible in the Eurozone numbers which saw the composite PMI print at 29.7 vs. 31.4 eyed. The Europeans still can’t come to terms on a joint fiscal response to the crisis with Germany reportedly opposed to the issue of “corona bonds” which would expose them to sovereign risk. The tensions in the region show no signs of abating and EURUSD is feeling the pain as it dropped below the 1.0800 figure in early European dealing. For now, the economic state of global affairs is in such disarray that the EURUSD may tread water at current levels in an uneasy sense of equilibrium. But as soon as pandemic conditions improve, the much more forceful US fiscal response will likely send the euro much lower as the economic disparity between the two regions becomes evident.

Meanwhile, all eyes today will focus on US NFP data which is forecast to print negative for the first time in more than 100 months. The March reading is unlikely to catch the full extent of job losses due to COVID-19 so the market may take the data with a grain of salt, but if the number it less than 200K it could provide some room for a relief rally. On the other hand, a truly gargantuan print of -500K job losses or more could drive risk assets sharply lower as the day proceeds with both S&P and Nasdaq falling 5% or more.

Author

Boris Schlossberg

BKTraders and Prop Traders Edge

Boris Schlossberg was key speaker at the FXstreet.com International Traders Conferences 2010. Mr. Boris Schlossberg is a leading foreign exchange expert with more than 20 years of financial market experience.

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