The US equity markets had a good day yesterday, rallying over 775 points and there was also some hope that the coronavirus outbreak may be peaking. However, the euphoria seen yesterday could easily dissipate this morning as weeks U.S. jobless claims total 6.6 million unemployed Americans. This number not only includes restaurant and travel-related industries but also includes retail workers. DOW Futures are pointing towards a flat opening later this morning. The jobless claim release will no doubt affect the opening. FOMC minutes released yesterday noted that “All participants viewed the near-term U.S. economic outlook as having deteriorated sharply in recent weeks and as having become profoundly uncertain." Besides jobless claims, US Consumer Confidence is due out later today and that number is due to drop from 89.1 in March to 75.0 in April. Fed Chairman Jerome Powell will be speaking about the economy at the Brookings Institute. The USD is trading lower against the GBP and JPY, and trading pretty much flat against the EUR and CAD. US Treasury yields are lower this morning, as investors await the jobless claim number. The yield on 10-year notes was lower at 0.7460%, while the 30-year bond was slightly lower at 1.3611%.
EUR/USD is trading near the top side of its overnight trading range. Traders will be watching the resumption of talks of European Finance ministers. They are attempting to come up with a joint economic response to the Coronavirus disease. The main point of debt-sharing has been the major bone of contention in previous talks. Italy is leading the group demanding the issue of common debt, while Germany and the Netherlands lead the opposition. There has been a slowdown of new cases throughout Europe as countries are still contemplating extending lockdowns. Later this morning, the ECB will release meeting minutes from their latest meeting, but these will be overshadowed by the Eurogroup meetings. The outcome of this meeting will determine the direction of the EUR in the show term.
GBP/USD also trading near the top of its overnight range this morning as there is good news regarding PM Boris Johnson’s condition. While remaining in critical condition, the PM has been reported as sitting up in bed and this improvement has helped move the GBP higher. UK Foreign Secretary Raab, who is filling in for the PM will lead the discussion and decision to extend Britain’s lockdown. The Bank of England will be lending money directly to the government, and the government will be withdrawal these funds for immediate use to help citizens combat the virus. The amount has not yet been disclosed and when it does, it will impact the pound.
USD/JPY is testing overnight lows, with traders seeking safe-haven trades ahead of US jobless claims release. BOJ Governor Kuroda stated yesterday that “the spread of the coronavirus is having a severe impact on Japan’s economy...” Declines in exports, output, tourism, and private consumption have weighed on the Japanese economy making the economic outlook extremely uncertain. Kuroda did rule out taking additional monetary steps if they are needed.
USD/CAD is trading in the middle of its overnight range, rising a bit in the early morning Thursday trade ahead of the release of Canada’s job report later this morning as well as the OPEC+ oil conference. To no one’s surprise, Canada is expected to record a record loss of jobs and the unemployment rate could top 10%. The jobs report is coming out a day early due to Good Friday and it is expected to negatively affect the CAD. Canada remains under lockdown, the economy has been pressured because of that. Most analysts are pessimistic about this economic release, and the outcome of the OPEC+ oil talks. Oil prices have moved higher as traders are somewhat optimistic that the oil talks will result in a supply cut. Brent crude is trading $0.41 higher at $33.25 a barrel, while U.S. West Texas crude was trading $0.82 higher at $25.91 a barrel.
The Fitch Rating group released its economic assessment of the Chinese economy and “full year” growth is expected to fall now 2.0% in 2020, after reaching 6.1% in 2019. The group projects that China’s fiscal deficit will rise to 8% of GDP in 2020 from 5.8% in 2019. China’s Hubei province reported no cases yesterday or the day before. Chinese officials are continuing to warn the population not to become careless as the newspaper China Daily was warning it is too early to “throw caution to the winds”.