On Wednesday the markets were even more filled with negativity. In Europe, they can’t agree on assistance to the affected companies. Every member of the European Union wants a tasty piece of this money pie. The U.S. is fighting the fears of an economy getting out of quarantine prematurely.
Wednesday is filled with statements of monetary policy decision makers in Europe and the USA. George Powell criticized Donald Trump’s proposal for negative interest rates. In his opinion, the Fed has good tools for further action. Apparently, the rally in the US market is over and the indices will correct further. The S&P500 is losing significant 2% and is even further away from the beloved 3000. However, ECB Vice President Luis de Gindos believes that the worst in Europe is over, but the consequences of the epidemic will have to be addressed for at least two years. However, European traders do not really believe such statements. DAX index is losing 2.56% on Wednesday. The banking and automobile sector is in the lead of the decline. So far, all views are on the U.S., which is where the trend for growth or decline is coming from. So far, the growth is not visible.
The UK GDP data was slightly better than forecast, but it had almost no impact on the price of GPB/USD pair. On the background of the strengthening dollar, the pound has no strength to fight at all, given the falling British economy. Now the risks for the pound are increasing. If the U.S. Federal Reserve still decides on negative rates, then most likely other banks will have to do the same. In this situation, the fall will continue, given that many investors already now consider the pound overvalued. Level at 1.22 remains the last support before the move to 1.14. In the current situation, it is better to observe the development of the situation on the sidelines.
OPEC on Wednesday lowered its forecast of global oil demand. According to the organization, it should drop by 9m barrels per day, which is about 9% of total production. For oil, the bad sign and even the data on oil reserves, which turned out to be slightly better than the forecasts, were not enough to try the hike to $30 per barrel. So far, the demand and price for oil at the current stage depends only on the lifting of quarantine restrictions and economic recovery.
Gold can only grow now if there are some serious statements from the highest authorities. It seems that investors are expecting a serious impulse, perhaps very negative news or data, which will send gold above $1730 per ounce.
What’s waiting for us today?
08.00 Consumer price index in Germany for April
10.00 ECB monthly report
14.30 Number of initial applications for unemployment in the United States
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