(14 MAY 2020)DAILY MARKET BRIEF 2:AUDUSD remains offered below its 100-day moving average

The US dollar demand remains firm as investors sell risky assets and pile into the greenback and US treasuries in a swift move to the safety.

The USDJPY remains offered above the 107 mark, and gold is timidly bid past $1700 per oz. Investors remain hesitant on gold’s limited capacity to give protection against an accelerated risk sell-off, but rising market anxiety could unlock the gold’s upside potential and encourage a rise toward the $1800 mark.

The EURUSD remains offered near the 1.0820 level and is poised to extend losses on the back of mounting worries that the European Central Bank (ECB) could see its scope of action limited by German opposition to its massive bond purchases. If Germany trips the ECB up in such a critical stimulus marathon, the euro could lose the support of investors and slide toward parity against the US dollar in the coming months.

Elsewhere, appetite for oil seems to have topped near the $25 per barrel, as even a surprise contraction in US oil inventories last week couldn’t give a boost to oil prices on Wednesday. Revived pessimism on global recovery emphasizes the existing problem of a drying global demand and dissuades oil bulls from buying more in the run up to the June contract expiry. The current price consolidation in oil could be the calm before the storm. If the sell-off in global equities intensify, oil could give in shortly.

Finally, the AUDUSD remains offered below its 100-day moving average as the seasonally adjusted unemployment jumped to the highest since September 2015, 6.2%, although the figure remained well below the consensus of analyst expectations of 8.3%. In Kiwi, sellers have the upper hand near the 0.60 mark.

By Ipek Ozkardeskaya