Daily Market Commentary
Markets continued to rise as certainty returns. The course of the coronavirus looks to be more predictable and all the models forecasting infection and death rates, have been overestimated. The increase in infection rates are falling in Europe and the US, suggesting that viral spread has peaked, giving markets some confidence. Control and containment seem to have been achieved and authorities are now working the return to work scenarios. There are many risks out there, but markets have an improving risk appetite, allowing the USD to settle. The Yen traded 108.85, while the GBP charged back above 1.2400, boosted by the improving medical situation of PM Johnson.
The EUR struggled to gain upward momentum, despite the flagging reserve, probably due to the impact of the crises and the actions of the ECB in response. The ECB have launched huge stimulus programs, as most Central Banks have, but the inclusion of sub-investment grade bonds (including Greek) may have struck a note of fear in many. Oil prices showed further signs of life ahead of the OPEC PLUS meeting tonight, the day before the G20 Finance Ministers meet. FOMC minutes reflected the resolution of the Fed and how the times were 'profoundly uncertain'.
Commodity currencies were major beneficiaries of the rise in risk appetite, with the AUD jumping to 0.6235, while the NZD regained 0.6000. These commodity, trade exposed currencies, are enjoying the fall in the reserve currency plus the improved export situation. US markets lead the way overnight, as the withdrawal of Bernie Sanders overnight, provided some political certainty in a rising sentiment environment.