Here is what you need to know on Friday, June 12:
Markets are trying to stabilize after a massive sell-off risk-off Thursday, which saw stocks and oil crashing and the dollar surging. Fears of a second US coronavirus wave, Fed pessimism, and profit-taking are behind the move. COVID-19 figures and Consumer Sentiment are eyed.
The disease is spreading in around two dozen US states, with the most pronounced outbreaks in California, Florida, and Texas – the latter considering reopening a special hospital in Houston. A local official said the city is on the "precipice of disaster" and reinstating stay-at-home orders is on the cards.
US Treasury Secretary Steve Mnuchin said the US will not shut down the economy, as it may cause more damage. He also insisted that tracing and testing capacity has been beefed up. President Donald Trump's campaign announced a rally in Oklahoma, where participants are asked to waive liability for potentially contracting coronavirus.
The University of Michigan's preliminary Consumer Sentiment Index for June will show if shoppers feel confident to spend. Starbucks recently reported that consumption in May, including in the last week, remained subdued despite looser restrictions.
Consumer Sentiment Preview: Optimism and how to get it
Another reason for the market misery – at least the temporary rout – stems from the Federal Reserve's pessimism. The world's most powerful central bank pledged low rates and ongoing bond-buying as it foresaw a return to pre-pandemic output not before 2022.
Market participants also cite profit-taking as a reason for the sell-off after a quick recovery. The reluctance of Asian markets to follow the magnitude of the fall in Wall Street seems to strengthen the theory of a correction rather than an outright change of course, yet the next moves in the US are critical.
Gold prices have been relatively stable, holding onto gains made after the Fed decision. XAU/USD is around $1,730.
EUR/USD is struggling to hold onto 1.13, showing relative resilience. European countries are working on plans to reopen borders and countries are discussing the fiscal stimulus plan. Eurozone industrial output figures are due out.
GBP/USD tumbled below 1.26 after topping 1.28, partially due to deadlocked Brexit talks and despite the announcement of intensifying talks on post-Brexit relations. Britain said it would not impose strict border checks in 2021, when the transition period expires, due to the struggles with coronavirus.
UK Gross Domestic Product figures for April are forecast to show a plunge of over 18% in the first full month of a lockdown. The economy squeezed by 5.8% in March. The shuttering began late in the month.
See UK GDP Preview: A 20% plunge could serve as a third blow to sterling, three scenarios
USD/CAD has surged to 1.26 amid falling oil prices. WTI slipped below $36, reversing its gains related to the extended OPEC+ agreement.
AUD/USD and NZD/USD have been among the biggest losers and despite their successes with the disease. Tensions between Australia and China persist over Canberra's demand to investigate Beijing's initial cover-up of COVID-19.
Cryptocurrencies have exited their narrow ranges, falling to lower levels. Bitcoin is trading around $9,300.
More: Fed fallout: Back to risk-off mood? Explaining what went down and what's next
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