After seven weeks of lockdown UK gradually lifts lockdown & returns to work. As of Wednesday, the UK recorded 33,186 deaths from COVID-19. Recently a new antibody test has been approved in the UK – the government expects this could be the key to easing the complete lockdown. On Wednesday, the UK government announced 600 million pounds ($735 million) in funding to stop coronavirus infections in nursing homes.
US stocks plunge on Wednesday after Federal Reserve chairman Jerome Powell warning of the long-lasting economic consequences of the coronavirus lockdowns. The Dow Jones Industrial Average dropped 2.2%, to 23,247.97, and the NASDAQ composite lost 1.5%, to 8,863.17. US Energy sector fell -4.39% as large caps such as Exxon Mobil Corporation and ConocoPhillips took a hammering in the session down -4.96% and -4.06%.
Oil price trading slightly unchanged after the US Energy Information Administration (EIA) reported a 745,000-barrel decrease in inventories, compared to forecasts of a 4.147 million rise. Meanwhile, OPEC on Wednesday said it expects 2020 global oil demand to contract by 9.07 million barrel per day, compared with its earlier contraction forecast of 6.85 million barrel per day.
The Australian dollar trading weaker against the Dollar and Euro after Australia’s unemployment rate spiked to 6.2% in April 2020, the highest reading since September 2015. The GBP/USD is in its fourth consecutive day of losses and is the worst-performing G10 currency so far this month, having fallen more than 3% since the end of April.
Gold climbed higher after Fed chair Powell warned that the US could experience the worst ever recession as a result of the coronavirus pandemic.
On Wednesday, the Fed Chair Jerome Powell rejected the idea of negative interest rates. Powell also said that the economic path remains uncertain and was subject to downside risks. On the other hand, the US core Producer Price Index from the United States showed a decline by -0.3% against the forecast decline by -0.1% in the month of April and weighed on the US dollar.
Moving ahead to the US session the focus shifts back to economic data releases, with US weekly jobless claims data and Bank of Canada Governor Poloz Speech.
The number of confirmed cases of coronavirus around the world surpassed 4.3 million, of which more than 290k died and over 1.5 million recovered. On Wednesday WHO said it is against any attempt to predict how long the virus would keep circulating and call for a massive effort to counter it. The New Zealand Government announced an additional $50bn of support and recovery measures to deal with the Covid-19 pandemic, a much larger stimulus than expected.
GOLD: The yellow metal price trading close to one week high $1720 ahead of US weekly job claims report.
The important levels to watch for today: Support- $1708 and $1700 Resistance- $1735 and $1745.
EUR/USD: The pair breaks the short term support of 1.0830 on Wednesday and currently trading above the psychological level 1.0800.
The important levels to watch for today: Support- 1.0770 and 1.0750 Resistance- 1.0870 and 1.0910.
Quote of the day: The stock market is the story of cycles and the human behaviour that is responsible for overreactions in both directions- Seth Klarman.