The events of the previous week have shown that the focus of the markets is now on two topics. The first is waiting for an effective medication from COVID-19. The second is the expectation of the resumption of economic activity in Europe and the USA by the end of the month after reaching the so-called plateau in the coronavirus pandemic.
Against the background of these events, the currency market remains at some distance, and all the main events occur on the crude oil market and in the shares of companies, which, in turn, are experiencing the publication of quarterly reports.
The main negative factor for oil price is still the situation around the demand for it due to the strongest decline in the world's economic activity under the influence of the coronavirus pandemic. Today, during the Asian trading session, the May futures of the American oil brand WTI fell by 18.61%, to 14.87 dollars per barrel, at the time of writing. In addition to the main reason for the impact on oil quotes described above, it is believed that such a drop is due to the expiration of the contract in the near future.
As for the expected dynamics of oil prices, we believe that they will generally remain under pressure until demand starts to recover after the resumption of business and production activity in the world. China is now actively using low prices, increasing purchases, but it alone is not able to stimulate their marked growth even against the backdrop of OPEC ++ decision to reduce the production of "black gold" in the coming months. We believe that it will be possible to buy oil before the May futures expiration, as this will cause a local increase in prices, which can draw the bottom in the future and turn up against the background of the beginning of the restoration of wide demand in the World.
In contrast to the oil market, major global stock indices continue to pull up. We have repeatedly pointed out earlier that the main stimulus supporting interest in these assets is the expectation of a relaxation of quarantine measures in Europe and the United States by May. For example, the S&P 500 wide market index has already won back half of the losses in February and March. The index is still below the key mark of SMA 200, but has already begun to test the SMA 50, the intersection of which, from a technical point of view, will open the way for it further up. We still believe that the worst in the effect of coronavirus on stock indices has already happened, and they have drawn a technical "bottom", showing a reversal. We believe that any positive news, for example,
With regard to the development of the situation in the currency market, it can be noted that the weakening of the US currency is expected to continue after a period of consolidation, which has been noted approximately since the beginning of April. First of all, against commodity and raw materials. We believe that this dynamic will already resume this week.
Forecast of the day:
The USD/CAD is trading below the level of 1.4080. If it still does not break through it, we expect it to resume falling to the level of 1.3860.
The USD/JPY pair is below the level of 108.00, breaking through which will lead to its growth to the level of 109.30.
