Tiomarkets Daily Commentary 9 April 2020

Wednesday finally saw a move in equity markets that wasn’t related to Coronavirus. Bernie Sanders decision to ‘suspend’ his Presidential campaign gave US stock markets some reason for cheer. FX would be somewhat sidelined as various rumors of OPEC oil production cuts made the rounds as well as the daily analysis of global coronavirus cases, new infections and deaths. All rather morbid but sadly part and parcel of current trading conditions. Thursday’s focus would be on data. The US initial jobless claims number is fast becoming the markets focal point on the data front. Throw in some Canadian employment numbers for good measure and the market has plenty to digest early.

So what would the data bring? Bad news or worse news? Well there certainly wasn’t anything good no matter which side of the border you were on. US Initial Jobless claims rose by 6.6 million while Canadian Employment dropped by a little over 1 million. That would be enough to get equity markets concerned, but the data releases also coincided with the Fed announcing a $2.3 trillion program to help support the economy. Was the timing designed to deflect the bad data? Who knows, but it was enough for equity markets to rally and even FX to find a pulse. Fed Chairman Powell even added the economic recovery can be ‘robust’ after coronavirus is contained. By midday NY time the DJ is up over 500 points or 2.2% approaching the 24,000 level. At one point Oil rallied as much as 12% as traders awaited details on OPEC supply cuts. And Gold would rally from 1,645 to 1,690 fueled by the Fed’s stimulus measures. For FX it would be a story of USD weakness. EURUSD would rally to 1.0945 and GBPUSD to 1.2480. AUD would hit a high of 0.6316 while USDJPY dropped to 108.33. Even USDCAD moved lower despite the terrible jobs data north of the border, touching 1.3930. Most of this move would have been fueled by the rally in Oil. As the day progresses Oil gives up all its earlier gains. Stocks fail to hold on to their best levels but still close higher, the DJ up 1.2% at 23,719. For FX, the closing levels were little changed from those mentioned above as we head into the long Easter weekend. Where once families around the world would have relished the chance to meet, now we are told by our governments to stay home and save lives. How quickly it all changed. For equity markets the week belonged to those who found the positives in even the biggest negatives. For FX traders the first semblance of some trends has activity increasing. Maybe there is a very dim light at the end of the tunnel.

For today’s chart let’s take a look at the Dow Jones Industrial Average. In the space of a little over a month, we saw a whopping 11,400 point fall in the DJ. Since then we have made some erratic progress higher culminating in today’s high print around 24,000, before closing the session near 23,750. Looking at this hourly chart we can see the 50% retracement of the whole move comes in around 23,880, a level we breached but have failed to close above. This is a psychologically important landmark with an inconclusive result going into the weekend. Will this prove to be as far as the rally extends or will we see further gains next week? We shall see.