News / Analysis
Finance Update – A Time for War and a Time for OilApril 6, 2020
Putting just one more nail in its lid of relevance, the NFP hardly moved the dollar on Friday, coming in at 7-fold the expected drop: it hit analysts, who were expecting a 100K reduction (the first since 2008) with a gruesome -701K, this from data collated BEFORE US lock-down began.
The USDX lost 30 pips on the announcement, which it then swiftly regained before Friday stepped out. Analysts expect the next report to take account of about 10 mn people who applied for unemployment benefits in the past fortnight.
Meanwhile, the Federal Reserve announced on Friday it was slowing the pace of its QE measures by reducing its weekly debt purchases from $75 bn to $50 bn. Reuters reports that the NY Fed will be following suit. Despite the news, index futures were up in the Asian session, the Dow regaining the 21500 stronghold, after US President Donald Trump said that “hospital levels in NY” had started to decrease.
Chinese markets were closed on Friday, appropriately celebrating the Ching Ming Festival and Tomb Sweeping Day.
This week opened with a 2.3% increase in the Nikkei and 1.33% in Japan, but red throughout the Mainland, where a 2nd wave of coronavirus could be developing.
On Saturday, the Chinese government donated 1000 ventilators to the State of New York – compliments of the Tsai Foundation and Jack Ma.
Traders are looking ahead to tonight’s Australian central bank decision on interest rates. Most analysts agree that there is not much lower to go and expect other forms of QE and bank support to be announced.
Service and composite PMIs as the week ended in Europe were all – as expected – in the red, more than halving from their post-52 expansion in Italy and Spain to 23 and 17.4, respectively. Germany lost 3 points and Britain, 1. The pound slipped 60 pips on Friday, continuing to be hit by PM Johnson’s hospitalization as futures began flowing again Sunday night.
Oil had a good Friday, following its surge the day before on an announcement of Saudi-Russia talks, as the Baker Hughes Rig Count showed a significant closure of 62 wells.
The week saw the commodity rising strongly to $29 a barrel, with no signs of weakening. The only hitch – the reported postponement of those talks; Russia and Saudi Arabia were meant to iron out their differences vis-à-vis output cuts.
Bitcoin seems to have finally taken a stance on world affairs and has been showing a series of higher highs and lows over the past week. Hailed by many in the past as an alternate safe-haven asset, the crypto shot up from 7K to nearly 11 in the early days of the Corona crisis, then dropped down to 5 before steadying out in the 6-7K range, where it has spent much of the season.
Amazon on Friday announced it would be postponing its Prime Day event from July by at least a month. Zoom has hit another snag, as calls and server access seem to have leaked through towards China. Walmart and Royal Caribbean will be paying dividends today. Air-France/KLM announce their 4th quarter results
|6:00 AM GMT||Germany||Factory Orders|
|8:30 AM GMT||UK||Construction PMI|
|8:30 AM GMT||EU||Sentix Investor Confidence|
|2:30 PM GMT||Canada||Business Outlook|
|10:00 PM GMT||NZ||Business Confidence|
|10:30 PM GMT||Australia||Service Performance Index. Trade Balance at 1:30 AM (+1). And RBA Interest Rates & Statement at 4:30.|
|11:30 PM GMT||Japan||Household Spending. Leading Economic Index at 5 AM (+1)|