The news from the media that the American pharmaceutical company Gilead conducted successful clinical trials for 125 patients in Chicago of its medicine Remdesivir, caused a strong wave of optimism in the global markets.
The message came after the closing of trading in the United States, which caused a sharp increase in futures for US stock indexes. And with the opening of Asian trading session, local stock indices began to show good positive dynamics. Taiwan and South Korea's major stock indexes were the growth leaders, but China's indices also tried to keep up with them, despite the publication of expectedly weak preliminary GDP data for the 1st quarter, which showed a 6.8% fall year on year against a 6.0 year earlier growth %, while the quarterly value slightly declined below the forecast, dropping by 9.8% versus 9.9% and the growth for the previous reporting period by 1.5%.
Despite this negative news, the Chinese stock market has revived and significantly increased, which indicates that the attention of the market is currently focused on resolving the coronavirus pandemic, although investors understand that the failed reporting of companies for the 1st quarter is a consequence of COVID-19.
The currency market reacted to the news about the medicine from Gilead by the weakening of the dollar, which has recently received support due to its function of the global reserve currency-refuge, which is brought against the background of high economic risks and catastrophic events.
Assessing the current situation, it can be noted that until it becomes completely clear to the markets that an effective medicine is already ready, and even if it has not yet been widely sold, high volatility will be observed in the markets, at which positivity will be replaced by negativity. But, again, we believe that the situation will slowly improve. Therefore, we still believe that the growth of the US dollar will be limited, and the market's attention will be shifted more and more to high-yielding commodity currencies.
The "American" pair is expected to continue to grow steadily today with the Canadian, New Zealand and Australian dollars, as well as with the Norwegian krone. The overall positive mood in the market will also push up oil prices, as the market's focus will shift from the current problems of excess supply over demand for "black gold" to the prospects for its growth as economic activity in North America and Europe recovers after China.
Forecast of the day:
The AUD/USD pair is likely to continue to rise to a recent local maximum of 0.6445.
The USD/CAD pair is declining. We expect it to continue to decline to the level of 1.3860.
