The two-day global market rally has eased on Thursday, ahead of the release of the U.S. initial jobless claims data later today. The weekly unemployment rate would provide signs of the economic impact of the pandemic on the US labour market.

Market participants expect that the US jobless claims figures for the week ending 21 March would be around 1.5 million, almost five times bigger than last week’s claims of 281k.

The US futures fell by 1% this morning while the Asian markets followed lower after a 2-days massive rally. The market lost the risk momentum sentiment even after the Senate passed the historic $2 trillion coronavirus relief package for the US economy.

 

Coronavirus Update:

Global cases: At least 416,686.

Global deaths: At least 18,589.

Top six countries with the highest number of reported cases: China (81,869), Italy (69,176), U.S. (51,914), Spain (39,673), Germany (31,554), Iran (27,017).

The number of deaths in the U.S. have reached 1,041, according to the latest data from Johns Hopkins University. New York City has the highest number of fatalities at 280. The total number of cases in the U.S. was at 68,960, according to the data

 

Market Reaction:

The US stock markets surged by 2% on Wednesday after the White House and Senate agreed on a $2 trillion coronavirus stimulus bill to support the US economy. The Dow Jones index gained 500 points to close at 21,200 while the S&P 500 settled 1.1% higher at 2,475. The Nasdaq Composite, however fell by 0.5% to close at 7,384. The Dow futures fell 1% this morning, indicating an opening near 21.000 points.

Fig 1: Dow Jones index, 2-hour chart

Asian markets were mostly lower this morning after a 2-days massive rally. The Japanese index Nikkei led the losses by 4%, while the Chinese indices and Kospi index followed lower by 1%.

 

Crude Oil:

Crude oil prices lost 1.5% during Asian session amid the ongoing spreading of the coronavirus in major oil consumer countries such as India, USA, Spain, Italy, Germany and UK. The latest lockdown in India could remove another significant amount of oi barrels from the global demand.
WTI price traded below $24 per barrel, currently near $23.70 while Brent crude price broke below $27 per barrel. The energy prices haven’t got support yet from the Senate agreement which could improve the falling oil demand.

 

Precious Metals:

Gold and Silver prices fell by 1% this morning after the US Senate approved the massive rescue bill of $2 trillion for the US economy.

Fig 2: Gold price, 2-hour chart

Gold price struggled to hold the key support level of $1.600/oz while Silver’s price traded near 14.30/oz. Both metals had surged by more than 10% during the beginning of the week supported from the Fed’s stimulus package and zero interest rates.

 

Forex Market:

The US dollar has been weaker against major currencies as investors expect over 1 million US jobless claims. The U.S. dollar index DXY, which tracks the greenback against a basket of its peers, has broken below 101 level, currently trading at 100.80. The index hit 3-years high last week on strong demand for the dollar after the market sell-off.

Fig 3: DXY-dollar index, 2-hour chart

The EUR/USD rose above the 1.09 level while the USD/JPY traded at 110.90 after touching an earlier low of 110.50. Commodity currencies such as the Australian, New Zealand and Canadian dollars led the losses across the board this morning on risk aversion sentiment and lower crude oil and metal prices.

 

Economic Calendar for March 26, 2020 (GMT+ 2:00):

 

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Vrasidas Neofytou

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