Here is what you need to know on Thursday, April 30:
April is ending with a bang with markets digesting comments from US President Donald Trump and the Federal Reserve's decision. Events are coming thick and fast with top eurozone data, the European Central Bank's decision, and weekly jobless claims.
The safe-haven US dollar has been recovering after Trump harshly criticized China for its implementation of the trade deal and for handling coronavirus. He added that Beijing will do anything to prevent him from being reelected. These fresh tensions between the world's largest economies have soured the previously upbeat sentiment. Chinese Purchasing Managers' Indexes for April reflected stability, reflecting minor growth, yet evidence independent research suggests most factories are probably far from full capacity.
The Fed reiterated its commitment to supporting the economy and vowed to keep interest rates low and buy bonds "at the amount needed." The unequivocal pledge boosted stocks and weighed on the dollar. Jerome Powell, Chairman of the Federal Reserve, said he is ready to more if needed and called the government to do more.
See:
- Fed Analysis: Sober crisis management
- Fed Analysis: Supporting stocks and downing the dollar, as long as necessary
Coronavirus cure?: Gilead's Remdesivir medicine proved successful in shortening the recovery of COVID-19 patients. Dr. Anthony Fauci, the head of the NIH, detailed the success in the White House, and his stamp of approval also boosted sentiment. The study has yet to be scrutinized by medics and academics, once the full details are out. The Trump administration is reportedly working to accelerate production of a vaccine – operation "Warp Time" – once one becomes available
Bitcoin has been extending its gains, breaking above $9,000 in quick succession to previously surging above $8,000 on Wednesday. Ethereum and XRP had previously topped $200 and $0.20 respectively, in sharp moves.
See Crypto market plays on the scoreline for fresh highs
European coronavirus cases continue trending lower, especially in Italy and Spain. A big bulk of eurozone figures are due. Economists expect the Gross Domestic Product to have dropped by 3.5% in the first quarter and the Consumer Price Index to haven fallen to nearly 0% in April. French GDP disappointed with a fall of 5.8%.
See: Eurozone GDP and CPI Preview: How bad news could be good news for EUR/USD
The figures are released ahead of the all-important ECB decision. Will the Frankfurt-based institution enlarge its emergency bond-buying program? It currently stands at €750 billion but the funds are deployed at a rapid pace. Christine Lagarde, President of the European Central Bank, previously urged governments to do more, including controversial coronabonds.
See:
- ECB Preview: Bank expected to unveil new economic support measures
- ECB Preview: The only game in town could be in lockdown, three mostly negative EUR/USD scenarios
UK deaths have surpassed 26,000 after the government included mortalities outside hospitals. The government is set to leave lockdown measures unchanged, citing Germany's experience with seeing its infection rate rise after easing restrictions. GBP/USD has failed to take advantage of the dollar's weakness as the shuttering continues.
US jobless claims are forecast to increase by around 3.5 million, thus falling for the fourth consecutive week, yet still reflecting some 30 million job losses since mid-March. Personal Spending likely plunged in March. On Wednesday, the US reported an annualized plunge of 4.8% in GDP, with personal consumption plummeting by 7.6%. The second quarter will likely be worse.
See US Initial Jobless Claims Preview: When is less more?
Oil: Norway has announced it would reduce oil output in the second half of the year, adding an extra oomph to recovering crude prices. WTI has surpassed $17 and Brent is above $24. The Canadian dollar has been benefiting from oil's upward move and now faces a domestic test with GDP figures for February, predating the crisis.
Overall, action is set to continue at full speed.
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