Here is what you need to know on Wednesday, April 29:
The US dollar is on the back foot across the board, losing to the commodity currencies and the yen alike, even as stocks have not gone too far and oil is stabilizing at low ground. Two top-tier US events await markets.
The initial estimate of US Gross Domestic Product for the first quarter is projected to show an annualized contraction of around 4%. That would be the worst since the crisis but only the tip of the iceberg in comparison to the downfall expected in the second quarter. The consumption component is among the closely watched components.
See: US GDP Preview: Prelude to catastrophe or singularity?
The Federal Reserve will probably leave its interest rates unchanged in the first scheduled meeting since January, yet after non-stop announcements of stimulus to combat coronavirus. Investors will be looking for hints about the next steps by the bank, which has recently expanded its municipal bond-buying scheme.
New forecasts for growth, inflation, employment, and interest rates are eyed, as well as the tone by Jerome Powell, Chairman of the Federal Reserve. Gold prices, which have stabilized above $1,700, are set to respond to the Fed decision.
- Fed Preview: Taking a break after two months of madness? Addicted markets may fall, dollar rise
- Fed Preview: It’s all about the Projection Materials
US states are moving toward lifting restrictions as the curve is flattened in the country as a whole and in New York state, the epicenter. The number of coronavirus cases topped one million and the death toll surpassed 58,000, more than in the Vietnam war.
Oil prices have been on the rise, albeit from low levels. Uncertainty about WTI contracts continues as S&P moved to the July contract. The American standard trades above $13 while Brent is above $21. Oversupply continues weighing on the black gold and on Saudi foreign exchange coffers, which have significantly squeezed.
The Australian and New Zeland dollar have been extending their gains as both countries enjoy their successes in combating COVID-19. The Assie has also benefited from better-than-expected inflation figures, as Trimmed Mean Consumer Price Index rose by 0.5% in the first quarter. Healthy trade figures in New Zealand kept the kiwi bid.
Eurozone: France and Spain laid down plans to gradually exit the lockdowns throughout May and June, following Italy. An increase in Germany’s infection rate has raised alarms and Berlin is not ruling out re-tightening restrictions it already imposed. EUR/USD has been clinging to its range.
Fitch downgraded Italy’s credit rating to one level above junk but set a “stable outlook” providing some relief. The European Central Bank will likely leave its policies unchanged on Thursday, yet growing needs from governments – especially in Rome – may cause the bank to increase its bond-buying scheme. German inflation figures are of interest ahead of the ECB.
See ECB Preview: EUR/USD to be depressed in most cases
UK Britain’s lockdown will likely continue through late May as the track and trace systems to allow the exit is still not ready. Prime Minister Boris Johnson has been hesitant. Reports about political interference in scientific committees have dogged Prime Minister Boris Johnson. Brexit talks remain at an impasse.
Cryptocurrencies are on the rise with Bitcoin eyeing the $8,000 level, Ethereum hovering around $200, and XRP extending its gains after topping $0.20.
More Market drivers in times of disease, and why bulls should have fear of the dark – Interview with Mário Blaščák
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