Forex news for New York trading on April 2, 2020:
- Trump expects Saudis/Russia to cut 10-15 mbpd - CNBC
- US initial jobless claims surge again by 6648K vs 3700K estimate
- US February trade balance -$39.9B vs -$40.0B expected
- Texas oil regulator says discussed 10 mbpd global oil production cut
- France reports 471 new hospital deaths
- Italy death toll from virus up 760 to 13,915
- New York coronavirus cases rise to 92,381 vs 83,712 yesterday
- Saudis want US, Canada, Mexico and others to join cuts - report
- Saudi Arabia calls for emergency OPEC+ meeting - state news agency
- US February factory orders 0.0% vs +0.2% expected
- ISM New York business conditions 12.9 vs 51.9 prior
- UK coronavirus deaths rise to 2,921 from 2,352
- Canada Feb international merchandise trade -$0.98B vs -$2.3B expected
Markets:
- CAD leads, EUR lags
- Gold up $25 to $1617
- WTI crude oil up $4.70 to $25.00
- S&P 500 up 2.3% to 2625
- US 10-year yields up 3 bps to 0.61%
Crude was about 10% higher in early European trade and near $22 but that was nothing compared to what was in store. At one point, Brent was up 46.7% and eventually closed up 20.9% in the largest one-day rally since 1991.
The President called CNBC's Joe Kernan to tell him he was about to tweet about a 10-15 mbpd Saudi and Russian oil cut. Kernan reported it on the air and crude started a wild run higher to $27.39 in minutes. Trump tweeted about it minutes later.
The second reaction was skepticism. Why would Russian and Saudi Arabia cut half their production? Oil as quickly back to $24.50 as Russia denied even talking to the Saudis.
The Saudi Arabia called for an emergency OPEC+ summit but said they were prepared to cut if everyone cut. So the plan now is to get all major oil producing nations on board. That's a tough task and crude continued to fall to $23.50 on reports that there is no real plan for anything. Yet it caught another bid into the settlement when one of the 3 Texas oil commissioners said he had talked with Russia.
Through all that, CAD was bouncing around with crude but probably not to the level you would think. The range was 1.4080 to 1.4300 and we're slated to finish down 40 pips on the day to 1.4150.
The more-directional trade as in EUR/USD. It was pressured early in US trade as it fell below yesterday's low of 1.1905 and steadily declined down to 1.0825 before a late 40-pip bounce.
Cable tried to make a break higher in early London trade but stalled ahead of 1.25 and then the sellers took over. It eventually found support at 1.2350 after two tests and rebounded to 1.2411 to finish up 40 pips on the day.
USD/JPY had its best day in two weeks with a 70-piip rally to 107.87. It sank down to 107.00 early but held yesterday's low and the jump in oil sparked a broader bounce in sentiment that halted the recent selling pressure.
All this to barely mention +6.5m jobless claims. The report put some pressure on the US dollar initially but it was forgotten by midday.
How's this for a factor:
That's $90 billion per day compared to $40 billion a month in QE3.
