A new quarter begins and a new turmoil in the markets is likely. Huge losses among the population of Europe and the U.S. are gradually beginning to erase the positive of investors, as well as all the growth in the U.S. markets last week. Investors are likely to be obsessed with the COVID-19 pandemic data at this difficult time, because almost all the statistics that will be released soon will be very poor and unlikely to contribute to market growth.
European markets closed at minus on Wednesday. DAX lost almost 4% and closed at 9544. However, investors are not ready to take any risks in the middle of the epidemic. Indexes of business activity in Spain and Germany came out below expectations, while in Italy the index fell to a record low of 40.3 points. In spite of negative news from all sides, we do not see such sharp movements as in early March. Apparently, the market has come to terms with the current situation and is waiting. The next two weeks will be key for assessing the global economy, whether we have reached the bottom and whether the recovery will begin.
For several weeks now, the US dollar has been bought on all fronts of the market. Investors believe that in the current situation the U.S. economy will still recover the fastest, as it has always been a driver for other markets. Today’s data on primary US unemployment claims will be indicative. With these values it will be possible to see how bad the situation in the US is. In the nearest future the Fed is obliged to take actions to weaken the dollar and limit the possibility to buy it. We wait for the beginning of the bearish trend for the dollar in the next week.
The yen is the only currency other than the US dollar that has resisted the pandemic and is in great demand among investors. USD/JPY has been fluctuating at the average level of 106 for several weeks. In general, there are all chances that the Yen will strengthen to 105 and then 104. Investors are buying this currency more and more to save their funds.
Our projections are beginning to come true. Already on Tuesday gold finished its downward correction and on Wednesday it was restoring its positions. In the coming days, gold will try to go above $1600 per ounce again. There are all the prerequisites for that. In the current situation with the pandemic, investors are ready to buy the shelter assets.
What’s waiting for us today?
09.00 Change in the number of unemployed in Spain
10.30 UK Construction Business Index
14.30 USD Initial Jobless Claims for March
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