Here is what you need to know on Tuesday, April 21:
Markets are back to a risk-off mood amid that is keeping the US dollar, Japanese yen, and gold in the lead. Concerns about North Korea, oil, and coronavirus are weighing on the mood.
North Korea: Reports about leader Kim Jong-un is reportedly in a critical situation following heart surgery raises concerns about succession in the nuclear rogue nation.
Paying to sell oil: Contracts of WTI oil for May tumbled down to negative territory for the first time, reaching -$40, a drop of over 300%. Contracts for June have begun representing WTI as a whole and are above $21. Apart from technical issues with rolling over from May to June and oddities related to the USO Exchange Traded Fund (ETF), oil has tumbled due to oversupply.
Lack of demand due to coronavirus lockdowns caused storage in Cushing and other places to fill and various physical prices in the US turned negative. Russia and Saudi Arabia have been mulling bringing forward production cuts from early May to now.
US: President Donald Trump announced he would suspend incoming immigration, without offering details. New York State reported ongoing improvement – the sixth day in a row. House Speaker Nancy Pelosi said that a new economic relief deal is coming down to the fine print. A broad agreement could boost sentiment. US Existing Home Sales for March may show a significant drop.
See Existing Home Sales: Unemployment strikes the housing market
Europe: Encouraging drops in coronavirus cases and deaths have been reported in Spain, Italy, and France, yet all three countries have over 20,000 mortalities from the disease. The figures may be skewed by the weekend effect and Tuesday's statistics may see a jump.
Ahead of the EU leaders conference on Thursday, Spain suggested creating an aid package worth €1.5 trillion and received support from several European officials. The Bank of Spain forecasts a plunge of 12% in the economy this year. A north-south gap around coronabonds is weighing on the euro. The German ZEW Economic Sentiment will likely move the common currency:
See German ZEW Preview: Less bad doesn’t mean good, no chances for EUR
UK: Parliament is back and will scrutinize the government's handling of COVID-19. Despite a drop in cases reported on Monday, Prime Minister Boris Johnson is reportedly reluctant to ease the lockdown, which is set to remain in place at least until early May. UK jobless claims are set to leap tenfold. Around a million employers have asked to participate in the government's furlough scheme and around 80% have been approved.
Antipodeans: The New Zealand dollar has been on the back foot after Adrian Orr, Governor of the Reserve Bank of New Zealand said he is open-minded on directly monetizing the government's debt. Phillip Lower, Governor of the Reserve Bank of Australia, stressed that Quantitative Easing should not be confused with financing the government. The Aussie is down as well despite the RBA's minutes stating that QE will likely smaller and less frequent.
COVID-19 cases are nearing 2.5 million and over 170,000 deaths have been confirmed. The US infections are nearing 800000, followed by Spain at just over 200,000, then Italy, France, Germany and the UK. The US reported over 42,000 losses of life, followed by Italy at over 24,000.
Cryptocurrencies have been edging higher after losing ground earlier, with Bitcoin trading around $6,900.
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