EUROPEAN SHARES-Today’s market sentiment is likely to be shaken

Shares mainly opened higher on Wednesday ahead of what is expected to be a very busy day for investors despite an uncertain mood following mixed earnings yesterday. Today’s market sentiment is likely to be shaken as traders struggle to find any fresh bullish drivers to the current rally amid a slew of major US economic data due this afternoon (Q1 GDP, Pending Home Sales and FOMC meeting). In addition to the macro environment, stock investors will also keep an eye on corporate results with big names like Airbus, Boeing, Facebook and Tesla all reporting today. 

The FTSE-100 is the best performing European index so far with the price driven up by the real estate and communication & services sectors. The market continues to register fresh highs and is currently trading above 6,000pts having cleared a notable zone when it climbed above 5,895pts. The moving averages are showing an upside reversal while the RSI indicator returned to its buy zone, climbing above 50%. The next target is 6,235pts which will constitute a 50% retracement of the entire bearish move that began at the beginning of this year.

OIL-A risk on scenario has dominated markets in the last few days

A risk on scenario has dominated markets in the last few days. Central banks' huge easing decisions and growing expectations for a relatively quick solution to coronavirus - or at least for ending the lockdown – are giving some relief to oil with the June contract of WTI recovering to $14. The modest gains have been achieved despite ETFs rolling over their contracts well in advance of the actual expiry of the front-month contract order to avoid a similar situation to what happened last week when the May expiry turned negative in its final day.

FOREX-Optimism triggered by several countries

Support for risk related currencies is dominating the FX narrative in the early part of Wednesday’s European session, with the euro the star performer in gaining almost 0.5% versus the dollar. The single currency’s resurgence is remarkable, considering that Italy had its credit rating downgraded by Fitch yesterday and now sits just one notch above junk. Optimism triggered by several countries entering a less stringent phase of their lockdowns and further enhanced by a recovery in oil prices is driving the resurgence of risk appetite in the markets, appearing to indicate that investors also feel positively towards the upcoming Fed and ECB announcements. 

EUROPEAN SHARES-Elsewhere traders welcomed lower trends of coronavirus cases

European stock markets opened lower on Tuesday as energy shares led benchmarks down following yesterday’s historic rout on oil. Analysts and traders clearly didn’t expect black gold to go below zero and this has unsurprisingly had a negative impact on European oil majors like Total and Eni, which are currently trading 5% lower and in such a bearish environment their bottom may still be considerably lower still. 

Elsewhere traders welcomed lower trends of coronavirus cases from many of the worst-affected areas, which helped sustain positive market sentiment for non-energy sectors. However, all eyes will be on today’s earning reports with many large caps such as Procter and Gamble, Texas Instrument, Netflix and Lockheed Martin publishing their Q1 results and this could significantly increase market volatility in the afternoon. 

The Stoxx-50 Index is trading lower, just above the lower band of its bullish wedge pattern and this usually indicates a continuation of the underlying trend, which is currently bearish. Even if the price remains inside its current chart pattern, the RSI indicator showed a break-out of its bullish trendline and currently challenges its 50% neutral line and a break-out of the market below 2,800pts could quickly lead the market much lower towards 2,300pts.

OIL-Sinking to levels not seen in this millennium

The price of crude oil has plunged, sinking to levels not seen in this millennium. For the first time ever, we have seen the price of WTI (expiry of May) fall into negative territory.

The mix of two black swans, namely the tragic spread of coronavirus and the missed agreement between OPEC+ has been the trigger for this dramatic collapse. Even though the producers’ alliance did finally reach an agreement earlier this month for a cut of 9.7 million of barrels a day of production, the oil price has crashed further still. The deal was simply not enough with analysts estimating a fall on the demand side of close to 30 million barrels per day, three times the cut reached by OPEC+.

Although Brent has fallen noticeably, the collapse has been even more dramatic for WTI, the benchmark for US oil, with the May contract dropping below $0 a barrel, plummeting to an incredible -$40.32 at its most extreme. Oil has become so unwanted that traders were simply paying to not receive physical delivery of crude.

However, with the May contract having now expired, the sharp contango in the market has seen the price to increase again. On CME, the June WTI contract is already trading at $21.22, while July it is just below $27. If we look further out to September, the price is even higher and is above the psychological threshold of $30. 

This huge contango is driven by the enormous oversupply that is drowning prices in the short term. Some of this surplus should start receding in the medium to long term once the global lockdown, which has effectively turned the tap off on demand, eases. Another factor to add into the mix are storage costs, which are particularly high in this scenario with the majority of tanks already full.

Therefore, any investor seeking to take a position on oil, be that on futures, CFDs or EFTs, must factor in all these considerations and fully understand the implications of contango on prices before taking the plunge in these dramatic times.

FOREX-The plight of crude oil yesterday painted the most vivid illustration

The plight of crude oil yesterday painted the most vivid illustration so far of the havoc being reeked in financial markets by the economic fallout from the coronavirus. The US dollar emerged as one of the ‘winners’ in this unprecedented situation, becoming the clear choice for investors when turbulence and uncertainty take over. The Dollar Index climbed more than 0.3% during the early part of Tuesday’s session, gaining ground against other currencies in a clear safe-haven trade by concerned investors, as market sentiment turned bearish following the plunge of the May contract of WTI crude oil to negative prices. In the current environment more greenback gains are likely.

EUROPEAN SHARES-Trading stance remains uncertain

Stocks opened mixed in Europe on Monday with most benchmarks little changed as the trading stance remains uncertain for the beginning of the week. There were no important announcements or developments to disturb market sentiment this weekend and with no significant economic data release today, there is a high chance investors will keep their focus on both corporate results as well as on any sign of improvement in the struggle against the pandemic. Market participants were happy to notice fewer daily deaths in New York, Italy, Spain and the UK even though we aren’t out of the woods yet. Despite those reassuring numbers coming from the most impacted areas, there is still a lingering fear that economies may reopen too hastily. Investors will then pay close attention to how the situation is going to evolve in the next few days in Germany after the country reopens stores today, a first step to the end of the virus crisis and a real experiment for other nations, especially in Europe. On the corporate side, most investors will be waiting for quarterly results from companies like IBM, Vivendi and Virbac in order to have a clearer idea on how business has been impacted so far. 

The Euro Stoxx-50 Index is trading sideways while the German DAX-30 is the eurozone’s best performer. The market is still trading above 10,650pts, its first available support before 10,620pts, but has slowed down since testing the 10,775pts level. A break-out of its first support could quickly lead prices lower, towards 10,620pts and 10,545pts by extension, where a wide gap of more than 200pts remains open.

OIL-The oil war combined with the devastating effect of the coronavirus

The oil war combined with the devastating effect of the coronavirus-induced lockdown on economies has triggered a dramatic fall in the price of oil with WTI plunging to its lowest level in more than 20 years with the May contract sinking below $15. On top of that, there is a wide contango across contracts, demonstrating both the huge oversupply currently as well expectations that some of this surplus will reduce in coming months as the producers’ cuts start to take effect and the peak of the global lockdown passes. 

This huge contango and wide difference between the prices of various futures contracts are making it very complicated to put long-term trading strategies together as it remains expensive to keep positions open for any length of time, due to the enormous contango effect.

BOND-Crucial week for European bond markets

This is a crucial week for European bond markets, with the EU called upon to find a solution for a recovery fund as well as other solutions to help countries endure this acute economic crisis caused by the coronavirus. Overall there is uncertainty about bonds markets with the potential for the number of companies struggling to repay their debts to grow sharply over the next few months.

A cash crisis in some sectors, such as airlines and restaurants, is almost inevitable due to the lack of income in March and April and it will be crucial to see if there are any effects on bond markets as a result. Investors will be more cautious before lending money to the companies in the worst affected sectors. 

These extreme times present a scenario in which on the one hand central banks are injecting liquidity to markets, while on the other hand, the increased risk to lending would normally see interest rates rise. So far investors have kept their faith in central banks, both in the EU and in the US, but it will be crucial that markets retain their confidence in the next few weeks.

FOREX-Failing to prepare an adequate response to the coronavirus crisis

The pound is down versus other major currencies at the start of the European session on Monday. Sterling’s losses to the euro and the dollar, of 0.35% and 0.25% respectively, come at a time of heightened political tension in the UK as the government is accused of failing to prepare an adequate response to the coronavirus crisis, with the spotlight pointing at Boris Johnson. Michael Gove, one of the highest profile cabinet members, confirmed the Prime Minister failed to attend five emergency meetings in the run-up to the acute phase of the pandemic. Also worrying investors is the fact that, unlike several other countries, the UK authorities haven’t given any indication of having a lockdown exit strategy at a time when the burden of the country’s economic paralysis starts to weigh heavily on market sentiment.

EUROPEAN SHARES-Stocks in Europe opened higher on Friday

Stocks in Europe opened higher on Friday, extending gains from Asian shares as investors remain optimistic ahead of the weekend. The risk-on mood is holding sway despite yesterday’s negative US unemployment figures as well as last night’s disappointing GDP release from China, which led to increased volatility. This optimistic wind has been triggered after President Trump outlined a structured plan, welcomed by investors, regarding the re-opening of the US economy. Investors particularly liked the fact the country will reopen in stages, in a state by state manner, instead of ending lockdowns measures everywhere at the same time as this is seen as the best way to get the economy back to normal and avoid the likelihood of a second peak of COVID-19. However, this risk-on trading stance remains fragile and strongly depends on each day’s news with corporate earnings likely to play a big role in determining sentiment. The earning season continues with more large European companies publishing their Q1 results next week with investors still struggling to evaluate the hit of the virus crisis to corporate results. As a result, this could lead to profit-taking moves before today’s closing bell. 

The DAX-30 Index of Frankfurt is the best performer so far after the market opened with a solid 200-point bullish gap this morning. The 21-day moving average is going up, acting as a support for the price in the process, while the RSI indicator is showing significant bullish pressure with room to progress further. The market is now trading above 10,600pts and is likely to head towards the 10,790pts-10,880pts zone today (50% Fibonacci) but bearish corrections may take place below that level ahead of the weekend.

OIL-Oil remains in a bearish phase with the WTI price falling to a 18-year low

Oil remains in a bearish phase with the WTI price falling to a 18-year low. The spread between WTI and Brent is also widening with Brent proving to be much more resilient currently. This is a clear indicator of how much this oil crisis directly affects the United States and their producers, with the shale oil sector likely to be one of the casualties from the huge oversupply.

FOREX- European trading warms up on Friday

The pound is down versus all other major currencies as European trading warms up on Friday. Despite the slight drift in market sentiment towards a greater appetite for risk, sterling appears to have missed that train, on concerns about the country’s economic prospects. Yesterday the UK government extended the lockdown for another three weeks, as the coronavirus infection and fatality rates haven’t yet reached their peak while the Office for Budget Responsibility warned of a drop in GDP in the order of 35% during the second quarter of 2020. Then there is the ‘small matter’ of Brexit which, with time running out, is still there to be dealt with. All in all, today’s drop may just be the forerunner to more testing times ahead for the pound.

OIL-The collapse of the oil price is not yet over

The collapse of the oil price is not yet over. As mentioned in previous comments, the new agreement seems to be massive but in reality it is simply not enough in the face of the collapse in oil demand, leaving producers in serious crisis. In just a few days we have seen the price slow down to test the support zone at $19.50. A clear break down of these levels could open space for a new low with the bearish sentiment far from finished.

GOLD is back in green

Gold is back in green today to continue its unusual direct correlation with stocks, which are also gaining amid a positive environment for shares. This follows both asset classes, which typically are inversely correlated, falling yesterday. Technically we are still in a bullish scenario, with the gold price not being boosted by the risk scenario but from the awareness that central banks are going to be forced to print a huge quantity of liquidity in the next months, and probably years too.

For the spot price, the zone $1,700-$1,710 has now become a first support area, while a climb above $1,730 could open space for further rallies and new records.

FOREX-US dollar continues to strengthen

The US dollar continues to strengthen during the morning trading session in Europe, as the flight to safety intensifies with a cascade of sobering numbers from around the globe illustrating the scale of the economic recession triggered by the coronavirus crisis. The greenback is gaining ground against all other major currencies pushing the Dollar Index to the vicinity of 100. Interestingly, the dollar is recording gains against both the Japanese yen and the Swiss franc, outperforming the two refuge currencies par excellence in terms of safe-haven appeal.

OIL-Cut of 9.7 million barrels per day

Despite the world’s oil producers agreeing to a massive cut of 9.7 million barrels per day, the oil price was unable to hold onto its initial gains as investors are still expecting there to be a global oversupply for the next few months. After a positive gap when markets opened, WTI has fallen again below $23, confirming the bearish trend seen in the first few months of 2020. Almost 70% of the recovery seen after Donald Trump’s tweet about the possibility of an agreement has been lost, confirming the maxim of “buy the rumour, sell the fact”. On a separate note, it is worth noting that Brent is once again performing better than WTI, with a growing spread between the two benchmarks.

FOREX-Investors aren’t entirely satisfied

On a Monday marked by lower than usual trading activity, due to the holiday in Britain, Hong Kong and Australia, the focus so far has been on the performance of currencies of oil exporting countries, such as Canada, Mexico and Norway, all of which are recording losses against the US dollar. It appears that investors aren’t entirely satisfied by the compromise reached between OPEC and other major oil producers on Sunday. The agreement to a record cut in oil output failed to reassure the markets, with the prevailing sentiment being one of aversion to risk due to fears that the newly reduced production quotas will fail to offset the damage inflicted by the drop in demand caused by the coronavirus crisis. This scenario is punishing not only to the oil price but also to the value of oil producing countries’ currencies versus the dollar.

Gold is shining with the spot price closing in on its 7-year-high at $1,700

Gold is shining with the spot price closing in on its 7-year-high at $1,700. Bullion rallied after the announcement of the Federal Reserve’s new coronavirus stimulus. Another $2.3 trillion of lending will be in the system to soften the impact of the pandemic emergency. As mentioned in previous comments, markets are understanding and pricing in every day that central banks will be forced to create a huge amount of new liquidity. The amount of cash in circulation is growing much quicker than the gold, which of course cannot be printed. Gold production is increasing the amount of gold in circulation by less than 2% per year, while the monetary mass is dramatically increasing week by week to mitigate against the impact of the virus.

FOREX-Royal Bank of Australia decided to keep rates on hold

It has been a good week for the Australian dollar, gaining more than 5% to the US dollar since the opening of the market on Monday. The Aussie’s vitality comes from all the stars aligning in support of the currency. On Monday the Royal Bank of Australia decided to keep rates on hold at a time when other central banks are cutting while the recovery in oil prices also helped as the Australian dollar’s performance is closely linked to that of commodities in general. Finally, the improvement in market sentiment, with investors glass half-full stance is also offering support to the risk-related Aussie following signs that the number of coronavirus infections is declining in Europe and the US, the current epicentres of the disease, as well as the reopening of Wuhan for business after three months of quarantine.

EUROPEAN SHARES-Мarket is being pushed

Shares are trading higher in Europe on Thursday despite a shy market open and modest rises overnight by most Asian stocks. The appetite towards riskier assets seems to be back on track on what’s set to be a busy day before the Easter weekend. Even if uncertainty remains on the timeframe for economies to re-open and on how hard it will be for them to recover, investors seem to be willing to extend this week’s rally with fresh highs likely today. Volatility is also likely to be on the rise today as many market participants will be cautiously monitoring a batch of important data releases coming from both Europe and the US. 

The Stoxx-50 Index is approaching strong technical resistance levels and the fact that the current short-term bullish trend is slowing down as the market nears these levels is a cause for concern. Although markets may still initially climb higher, the temptation for investors will be to take their profits and reduce their exposure to risk markets, as long as there doesn’t seem to be any significant improvements in the struggle against the pandemic.

Currently, the market is being pushed by financial and discretionary consumer shares with companies like BNP Paribas, ING, Adidas and Daimler among the largest movers. The DAX-30 of Frankfurt is the best performer in the eurozone with the market trading close to 10,600pts. Technically, the market has opened the way for an extended rally towards the gap between 11,000pts and11,540pts zone after the prices cleared its last Speedline. However, the MACD indicator also shows a trend slowdown with a bearish divergence and this should be taken seriously as the DAX, like the Stoxx-50, is also approaching strong technical levels.

OIL- Investors are in a wait and see mode

After yesterday’s oil price rally, investors are in a wait and see mode as the OPEC+’s key virtual meeting approaches. It will be crucial for the group to reach a quick agreement to mitigate against the worst-case scenario of an enduring global glut, which was the result of the failure of the previous OPEC agreement. Technically, the WTI price is moving laterally after the huge spike of volatility seen last Friday and earlier this week. A first positive signal will arrive with a clear climb above $27, even if the technical scenario is secondary today with the news from OPEC+ the real market driver.

GOLD-1% away from the one-month peak

Gold’s spot price rebounded on the support level of $1,640, thereby confirming the recent positive mode. The bullion price soared to $1,660 and we are just 1% away from the one-month peak achieved earlier this week. Despite the risk-on approach on stock markets of the last few days, investors are still confident that gold can shine further. This is particularly the case in a scenario where central banks are going to be forced to add a tremendous quantity of liquidity into the monetary system while keeping rates close to zero for a long time, as long as inflation doesn’t start to soar. Moreover, gold is also seen as an insurance in the event of further collapses on stock markets due to coronavirus.

FOREX-Positivity continues to be the prevailing sentiment

Positivity continues to be the prevailing sentiment in the financial markets, with the S&P 500 Index once again in a bull market. In the FX space however, activity has been subdued with this lack of dynamism stemming from investors being on standby ahead of important risk events later today. Chief among these is the publication of weekly American unemployment figures with the last two weeks revealing record-busting numbers of new claims. As a result, investors are buckled up in anticipation and this explains the relative steadiness in the correlation between the dollar and its peers, with the Index that measures the performance of the greenback almost flat on the day. We should expect more activity and fluctuation later in the day once these unemployment figures are published.

EUROPEAN SHARES -All European benchmarks are trading significantly higher

All European benchmarks are trading significantly higher on Tuesday, extending yesterday’s gains, as market sentiment strengthened towards risk assets such as stocks and corporate bonds. This revived risk appetite, mainly built on hopes of an easing of the COVID-19 spread, is getting stronger and stronger as new reassuring data confirm the progress we saw during the weekend. In addition, investors around the world still have in mind the unprecedented global monetary response to this crisis and know that it could significantly sustain an extended rally if the virus starts to be brought under control in most impacted economies. While the current situation may tempt some investors to “catch the rebound” by buying the dip, others may want to remain cautious and wait for more accurate corporate reports to get a better idea of the extent of the economic damage before increasing their exposure to these markets. 

The Stoxx-50 Index is being driven higher by financial shares with ING and Société Générale some of the best performers in Europe so far. The technical landscape of the Stoxx-50 Index is becoming really interesting as the price is now challenging its double resistance level (Speedline + 38.20% Fibonacci) following on from a bullish runaway gap opened up at the beginning of this week, which led to the validation of a bullish flag pattern (see attached chart). A clearing of the zone at 2,880pts is likely to extend the current rally towards 2,975pts and 3,075pts on a short-term basis.

FOREX-Hope grows that the spread of the coronavirus is slowing

The early part of Tuesday’s session is so far marked by across-the-board gains on risk-related assets, such as stock futures but also currencies like the euro and the pound. Investors are taking a glass half-full stance as hope grows that the spread of the coronavirus is slowing. As the mood in the markets improves, the US dollar is losing some of the ground gained over the last few days, with the Dollar Index down by almost 0.7%. During the darkest moments of the crisis the greenback took over the role of safe haven and with the improvement in sentiment some of those gains are being eroded, as the latest figures from the US and Europe point at slower rates of infection in the main epicentres of the disease. This good news is generating some hope that the pandemic is being brought under control, which supports the growth of risk appetite.

EUROPEAN SHARES-Investors welcomed reassuring news on the evolution of Covid-19 over the weekend

Stocks in Europe are trading significantly higher at the beginning of a new week after investors welcomed reassuring news on the evolution of Covid-19 over the weekend. The fact that nations like Italy, Spain and the US, who have been the most impacted by the deadly virus so far, have reported a slowing in both death toll and new daily cases on Sunday is reviving market sentiment this week. In addition to the reactions of governments and central banks to the crisis, many investors desperately wanted to see some progress on the actual spread of the virus to lift the uncertainty surrounding most markets. However, it is still too soon to say the bottom is behind us now as this weekend’s reassuring numbers will have to be confirmed over the next few days with volatility on most stock markets likely to increase. All benchmarks are performing strongly in Europe today, led by the industrial and financial sectors this morning. Today’s best performers are the German DAX-30 Index and Paris’ CAC-40. Technically speaking, the French benchmark opened up a bullish gap of 150 points at the market open today and this has pushed the price above their bearish trendline, invalidating the short-term bearish correction started at the end of March. This bullish signal has also been confirmed by the RSI indicator which has returned above the 50% level. The market cleared the 4,250pts-4,285pts zone and this level will now play a support role to the price while 4,335pts presents major resistance before fresh highs towards 4,470pts, 4,585pts and 4,700pts can be reached.

OIL-Spectacular rebound of 50% in just two trading sessions

Even the best Hollywood movie director would have struggled to imagine the last few days for oil. The dramatic scenario seen last week, with WTI falling below $20 has been followed by a spectacular rebound of 50% in just two trading sessions. This happened when markets realized that the lower price, in conjunction with coronavirus, was becoming a huge problem for the US as well. Donald Trump’s tweet was seen by markets as an admission of sorts, making clear the US’ intention to try and achieve a higher price. It now faces the most difficult part as it is very complicated to find an equilibrium between cuts that are strong enough to have the necessary impact yet not too stringent so that other members of the alliance do actually adhere to them.

Technically, we have seen a jump from the bottom of $19.50 up to $29, followed by a drop at the start of the new week to see oil trading at $26. Given the price movement of the last few hours, it is clear that investors are still believing that some agreement will be reached, despite the unclear scenario. This helped the price to rebound to $27.5, while the situation remains strongly volatile as even a deal being agreed won’t sort out all the problems oil faces.

FOREX-GBP is up by more than 0.5% against the USD due to a recovery in risk appetite

Despite some weakness against both the dollar and the euro during Asian trading hours, the pound is back on the front foot during early trading in Europe. Sterling’s volatility stems from the admission into hospital of Prime Minister Boris Johnson and also by a timid global resurgence in risk appetite. Unless his condition worsens, news regarding the Prime Minister’s health is unlikely to have a long-lasting effect on the behaviour of the pound, as illustrated by the sudden change of direction that followed the start of trading in Europe. Sterling is up by more than 0.5% against the dollar due to a recovery in risk appetite, which is also reflected in other risk-related assets such as stocks. It appears that the draconian measures to contain the spreading of the coronavirus are starting to pay off, with the main European epicentres for the disease recording lower numbers in infections and fatalities. Amidst the doom and gloom of the last few weeks these may be feeble rays of hope, but are good news nevertheless with investors quickly grabbing hold of them.

EUROPEAN SHARES-Investor sentiment continues to be dominated

Early declines on European stocks erased the advance registered during pre-market trading with uncertainty reigning everywhere this morning. Despite a new stimulus plan announced by Beijing overnight, investor sentiment continues to be dominated by the recent disappointing developments in the struggle to stem the spread of the coronavirus. The death toll continues to climb in the worst affected countries and the total number of COVID-19 cases gets ever closer to the million mark and this is putting a lot of downward pressure on markets. China also surprised oil markets with its decision to pile up crude oil stocks following the black gold crash. This had an obvious effect on the barrel price but also a significant impact on energy shares like Total and Eni, which are currently helping the Stoxx-50 Index to offer some resistance against today’s selling pressure. The most resilient index can be found in Milan this morning where the FTSE-MIB Index registered a solid rebound above 16,000pts, however it remains inside its bearish continuation channel and the market will have to clear short-term resistance 16,655pts to reach 17,070pts .

GOLD-price is languishing just below $1,600

The gold price is languishing just below $1,600 in a market where volatility seems to be decreasing, at least temporarily. There are no clear directional signals in this phase as gold is facing a mixed set of fundamentals. Investors are worried by the possibility that central banks will reduce their purchases, while also jewellery and industrial demand could decline. They are unsure that investment demand will grow enough to offset this loss. As mentioned in previous reports, one factor that doesn’t yet seem to be fully priced into the markets is the huge liquidity input that central banks are preparing and this could be a supportive element for the bullion price in the next few months.

FOREX-Fear is likely to once again take over and offer further support to the dollar.

The US Dollar Index, which measures the performance of the greenback versus a basket of other currencies, was pretty much flat during early Thursday trading. Recently investors had sought refuge in the dollar, with the fallout from the coronavirus creating a very risky trading environment with losses across nearly all sectors. Today however that move towards the dollar is on hold, with all eyes and ears on the US jobless claims due to be published later. Should the numbers mark an improvement on the record 3.3 million new claims released last week, we will probably see a growth in risk appetite which, in the current context, could incite greenback losses. On the other hand, if the new jobless claims number is within last week’s ballpark, fear is likely to once again take over and offer further support to the dollar.

GOLD-challenging the psychological threshold of $1,600

The gold price fell yesterday as low as $1,570, breaking down the first support level of $1,590 in the process, on growing fears that central banks will buy much less gold and other precious metals in the next few years. Despite this quick descent and despite the strength of greenback seen in the last few hours, bullion has managed to recover and is once again challenging the psychological threshold of $1,600, in a situation which remains volatile and dominated by uncertainty. In the next few hours bullion will be called to hold on around $1,590-$1,595 with any failure to do so confirming the weakness seen yesterday.

FOREX-Many investors are flocking to the greenback

The dollar is strengthening versus a basket of other major currencies, with the Dollar Index gaining just over 0.5% during the early part of Wednesday’s session. Many investors are flocking to the greenback due to its safe haven status as bleak data continues to gather and point towards an unprecedented contraction for the world’s economy. It is interesting to note this dollar strength comes barely a day after the Fed announced robust liquidity measures in response to the surge in demand for the currency and illustrates the scale of the global appetite for greenbacks.