Equities and oil rebound as efforts to contain the virus strengthen

Danske Research Team Danske Bank A/S

Market movers today

In the absence of major economic releases, focus will continue to be on the coronavirus and how fast it is spreading. In the US, we get the weekly consumer comfort survey, which could be affected by some consumer anxiety, though most likely not, as the virus has not really spread to the US.

In Europe, the ECB's President Lagarde will address the European Parliament. While we don't expect it to be a near-term market mover, she may reflect on the strategic review, the Green new deal and the ECB's role in climate change.

As expected, US President Trump was acquitted by the US Senate yesterday evening.

Selected market news

The positive sentiment in global equity markets continued this morning as China cut tariffs on some US goods. Furthermore, efforts continue to halt the spread of the coronavirus. Hence, we are seeing further reversal in global fixed income markets and currencies, where yields are rising, while the yuan is strengthening and the yen is weakening.

Oil is rebounding on the back of the efforts to contain the virus and on the back of OPEC+ meeting in Vienna to reach a consensus to deal with virus. The discussion is to keep the production cuts for longer or make deeper ones.

US president Trump was cleared in the impeachment trial. This was expected, as the republicans hold the majority in the Senate. Only one Republican senator voted against Trump.

Download The Full Daily FX Market Commentary

Author

Danske Research Team

Danske Bank A/S

Research is part of Danske Bank Markets and operate as Danske Bank's research department. The department monitors financial markets and economic trends of relevance to Danske Bank Markets and its clients.

GBP/USD loses momentum, flirts with 1.3200

GBP/USD is struggling to maintain its positive bias on Thursday, retreating toward the 1.3200 region in response to the pick in the buying interest around the Greenback. That said, Cable remains under scrutiny as cautious market sentiment keeps investors focused on the US-Iran conflict and political effervescence in the UK.

EUR/USD trims gains, challenges 1.1400

EUR/USD now gives away part of its earlier advance, receding toward the 1.1400 contention zone on Thursday. Meanwhile, the pair’s recovery comes amid extra losses in the US Dollar, at the time when while investors continue to monitor developments in the Middle East and sentiment surrounding global technology stocks.

Gold remains bid and close to $4,100

Gold accelerates its recovery and approaches the key $4,000 mark per troy ounce at the end of the week, adding to Thursday’s advance. However, expectations for a hawkish Fed remain steady and keep the yellow metal’s potential upside contained.

Crypto Today: Bitcoin at $60,000, Ethereum at $1,500, and XRP at $1 face a make-or-break test

Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) are trading in the red on Friday after three consecutive days of losses, testing their respective make-or-break support levels.

Week ahead – NFP report to challenge Dollar strength and the hawkish Fed

Dollar strength dominates markets, as the hawkish Fed overshadows geopolitics and lower oil prices. NFP week could drive September Fed hike expectations and boost market volatility. The euro lacks fresh bullish catalysts, all eyes on the preliminary inflation report and the ECB Forum.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.