WTI crude slumped below $15 a barrel and pulled the energy-heavy ASX 200 more than 1% lower in Sydney, as the week kicked off on a mixed note elsewhere in Asia.
Gold legged down to $1670 an ounce despite mixed sentiment in Asia.
In the FX, the oil currencies were under the pressure of
falling oil. The USDCAD extended gains above the 1.40 mark. Price retreats could be interesting dip-buying opportunities for a further
advance toward the 1.4250/1.4350 area.
The USDJPY rebounded from 107.40 as Japanese exports slumped 11.7% y-o-y in March, more than
10.1% expected by analysts.
The euro was little changed against the US dollar. The single currency will likely remain under pressure
below the 1.10 mark on political uncertainties amid last week’s Eurogroup compromise failed to convince the market. But the latest CFTC
data shows that euro bulls continued buying the single currency last week, the net long speculative positions increased more than the
previous weeks, hinting that investors are piling into the euro at the current price levels.
On the other hand, higher volume of debt
issuance in Europe to cover the increased government spending weigh on European bonds, while Italy and France should continue pushing for
issuing the joint corona bond at Thursday’s EU summit. An agreement on the corona bond seems little likely, European leaders are however
expected to find a common ground on easy access credit line to the European Stability Mechanism (ESM), prolonged funding for the European
Investment Bank (EIB) and on the founding of a temporary unemployment benefit scheme (SURE) to help EU nations to shoulder the disastrous
consequences of the coronavirus-led economic shutdown.
The pound remains offered below the 1.25 mark against a softer US dollar. The
death cross formation (50-day moving average crossing below 200-day moving average) should weigh on Sterling in the run-up to this week’s
unemployment, inflation and sales data. Appetite should remain limited as Britain announced the extension of containment measures for
three more weeks and showed teeth to the EU regarding its firm stance on the year-end Brexit deadline.
By Ipek Ozkardeskaya
