The US dollar came under a strong selling pressure on the back of dire economic data and further easing from the Fed. The US 10-year yield was
little changed near 0.62%.
Elsewhere, the European Central Bank (ECB) maintained its key interest rates unchanged at Thursday’s meeting,
but pulled the interest rate on TLTRO III operations down by 50 basis points and announced that it could expand its Pandemic Emergency
Purchase Program (PEPP) if needed. The latest data suggested that at the current pace of buying, the program should reach its limits by
October this year. Hence, we could expect an announcement of up to 500-billion-euro expansion this summer.
The EURUSD saw support
near the 1.0830 mark, as investors were pleased with the ECB’s commitment to boost the economy, which it expects to shrink between 5% to 12%
this year. The ECB is again filling the gaps that the fiscal policies leave open.
The euro is stronger on prospects that the ECB aid would
temper the coronavirus-induced economic shock. But what really boosted the EURUSD was the sharp sell-off in the US dollar. The EURUSD
rallied to 1.0972. Next week could see an enhanced battle between the bulls and the bears near the 1.10 mark.
Today Europe is closed due to
bank holiday. Investors will be watching the final manufacturing PMI figures in the UK, US and Canada, which could hardly better the
investor appetite before the weekly closing bell.
Most Asian stocks didn’t trade today. Where the trading was on, the bears were
clearly in charge of the market. The Nikkei fell 2.65% and the ASX 200 tumbled 3.80% as Australian AIG manufacturing index dipped from 53.7 to
35.8 and the Korean exports plunged 25% in April.
FTSE futures (-1.41%) are poised for a bearish start in London.
Gold
tests the $1680 per oz to the downside, while WTI is forcing the $20 a barrel resistance.
By Ipek Ozkardeskaya
