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US dollar plummeted gold rose

27 Mar, 2020

Initial applications for unemployment benefits reached a record high

Data and news released yesterday:

The number of people applying for unemployment benefits in the United States due to the coronavirus crisis has reached a record high. Initial applications for unemployment benefits surged to 3.28 million from 282,000 in the previous week, the Labor Department reported Thursday.

Federal Reserve Chairman Powell reassured the market that he was trying to provide support. The Federal Reserve still has policy space and action will not cause long-term inflation risk.

The Federal Reserve has conducted a total value of US $206 billion currency swap with the Bank of England, the Bank of Japan, the European Central Bank and the Swiss central bank.

The G20 leaders held a video Summit for the first time. In addition, representatives of the United Nations, the world bank, the World Health Organization, the World Trade Organization and other international agencies also attended the meeting.

The G20 will launch an economic plan with a total value of US $5 trillion to cope with the negative impact of the epidemic on global society, economy and finance.

The IMF expects global economic output to shrink in 2020 and recover in 2021.

 

Market Volatility:

The US dollar is heading for its biggest decline since December 2015, with the US dollar index down 1.52% to around 99.41.

The euro rose 1.38% to close at 1.1032, its fourth straight day of gains.

USD/JPY fell 1.8% to around 109.22, falling for the second day in a row.

The pound rose 2.74% to near 1.2203, its biggest three-day gain since 2008. The Bank of England stabilizes interest rates.

The spot gold rose 1.7% to 1,645.02 USD / oz in the past two weeks. It has stabilized above 1,620 USD and the market liquidity has improved.

WTI may crude oil futures fell $1.89, or 7.72%, to $22.60/barrel. Brent may crude oil futures fell $1.05, or 3.83%, to $26.34/barrel.

 

CWG future forecast:

In terms of data on this trading day, the focus is on U.S. personal spending, core PCE price index and University of Michigan consumer confidence index. In addition, G20 + leaders hold the first video summit, and the central banks' confidence in taking measures to promote financial stability and enhance the liquidity of global markets will undoubtedly affect the market trend.

Institutional Analysis: according to Bank of America analysis, the dollar may appreciate due to economic and financial market shocks and the demand for the dollar still exists. The euro is expected to fall to 1.02 against the dollar in the second and third quarters, currently at 1.10. The euro is expected to rebound slightly later, reaching 1.05 by the end of the year. The analysis also lowered expectations for the pound and Canadian dollar. However, the yen is expected to rise against the US dollar by the end of the year.

 

Financial calendar:

16: 30 number of BBA home purchase mortgage permits in February in the UK

20: 30 monthly rate of personal expenditure in February in the United States

Core PCE price index monthly rate in February

21:00 the house of representatives will consider the stimulus bill

22:00 U.S. University of Michigan consumer confidence index in March

Total number of oil wells drilled in the week from 01:00 a.m. to March 27 the next day

 

CWG financial knowledge:

U.S. personal consumption expenditure (monthly rate): Bureau of economic analysis, personal consumption expenditure is a measure of the total market value of personal consumption of goods or services. Consumption level is often used as an indicator of consumer optimism. It is also considered to be an indicator of economic growth: when the increase of personal spending is accompanied by the increase of inflation pressure, it will increase the expectation of the Federal Reserve to raise interest rates. If the data released is better than expected, it will be good for the US dollar. If the data is lower than expected, it will be bad for the US dollar.

 

CWG Markets, as a fully authorized and regulated trading service provider of FCA, the contents and opinions contained in this article are only general information and do not take your investment objectives, financial situation and investment needs into account. Any reference to historical price fluctuations or price levels is based on our analysis and does not indicate or prove that such fluctuations or price levels are likely to recur in the future. CFD is a complex instrument, and there is a risk of rapid loss due to leverage. You should consider whether you understand how CFD works and whether you are able to take the risk of losing money. If you have any questions, please seek advice from an independent consultant. For more details, please visit www.cwgsvg.com to obtain and refer to the company's risk disclosure summary.