(02 April 2020)DAILY MARKET BRIEF 2:Oil inventories shoot up
But despite the increasing global glut, WTI crude held support at $20 per barrel. First, because the Saudi’s increased production is
certainly countered by lower production elsewhere due to the very low oil prices. Canada, for example, shut in the oil sand refineries to
survive the unsustainable market conditions. Second, the huge jump in US inventories fueled expectations of a deal between Saudi and the
US.
In the currency markets, the market reaction was a swift move to safety. The US dollar regained strength on the back of a renewed
sell-off across equities and risk currencies. The US 10-year yield slipped below the 0.50% mark.
Gold showed no sympathy to those
seeking protection and traded below $1600 per oz.
The EURUSD extended losses to 1.09. The risk-off sentiment should continue
weighing on the pair by giving support to the US dollar. At this point, even bad US data should result in a stronger US dollar, as the greenback
offers the ultimate refuge to investors and the Fed has already stretched its monetary support to its limits.
Cable, on the other hand,
continues seeing decent resistance below the 1.25 mark.
By Ipek Ozkardeskaya
