News

Bolstered Risk Sentiment Drives Stocks Higher and Dollar Lower

Equities

Major US stock index futures extended upside rally amid optimism over the coronavirus outlook. The growth rate of new cases is falling, and Gilead published a positive report on the effectiveness of Remdesivir. Moreover, the White House advisor Dr. Anthony Fauci stated that the drug was able to shorten the patients' recovery period. On the other hand, market participants are weighing the prospects of reopening the economy, and the Fed's willingness and commitment to do whatever it takes to support the economy. The Dow Jones Industrial Average futures rose to 24790, the S&P500 futures advanced to 2965, and Nasdaq futures rallied to 9143.

USD

The dollar index, which measures the greenback against a basket of major currencies, settled lower for the fourth consecutive day, closing at 99.48 weighed down by risk appetite. The positive developments regarding the coronavirus treatment and growth drove investors towards riskier assets. On the other hand, the Federal Open Market Committee concluded its two-day policy meeting and left monetary policy unchanged. However, the Fed stated that interest rates would remain low until the economy recovers properly. Moreover, in his presser, Chairman Powell reaffirmed the Fed's commitment towards supporting the US economy using all available tools, which could include further easing. The first reading of the first-quarter GDP showed that the US economy contracted by 4.8%, the worst contraction since the financial crisis in 2008. Market participants are looking forward today to the European Central Bank policy meeting where the bank is widely expected to keep interest rates unchanged but could hint for expanding the Pandemic Emergency Purchase Programme (PEPP). The EURUSD rallied to a ten-day high of $1.0891, the risk-sensitive AUDUSD climbed to a fresh seven-week high of $0.6569, while the USDJPY tumbled to 106.40.

Gold

Precious metal prices edged higher despite improved risk sentiment. The fact that the Federal Reserve will keep interest rates at their current low level until the economy recovers fully, and remains ready to further easing, boosted the demand for gold. The price of a gold ounce rose to $1722, the price of a silver ounce inched higher to $15.51, and palladium futures ascended to $1981.

Oil

Oil prices raced higher as lower-than-expected inventories hinted for improving demand. The US Energy Information Administration reported a buildup of 8.991 million barrels, well below last week's reading of 15+ million. Market participants are also considering the reopening of business in Europe and the United States, which could boost demand, as OPEC+ deal gets in play. The West Texas Intermediate crude June delivery rose to $17.73, and Brent blend July contract climbed to $26.65.

Major Economic Events

GMT Country Event Expectation Previous

9:00

EZ

 CPI (YoY) (Apr) 

0.1%

0.7%

9:00

EZ

 GDP (QoQ) 

-3.2%

0.1%

9:00

EZ

 Unemployment Rate (Mar)

7.7%

7.3%

11:45

EZ

 Deposit Facility Rate (Apr)

-0.50%

-0.50%

11:45

EZ

Main Refinancing Rate (Apr)

0.00%

0.00%

12:30

EZ

ECB Press Conference

-

-

12:30

US

 Core PCE Price Index (MoM) (Mar)

-0.1%

0.2%

12:30

US

 Initial Jobless Claims

3.5

4.427

12:30

US

 Personal Spending (MoM) (Mar)

-5.0%

0.2%

12:30

CA

 GDP (MoM) (Feb)

0.1%

0.1%

13:45

US

 Chicago PMI (Apr)

37.9

47.8

Disclaimer 

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