Here’s what you need to know on Thursday, May 14:
Market sentiment deteriorated after Jerome Powell, chairman of the Federal Reserve, dismissed calls for negative interest rates. Persistent Sino-US tensions, gloomy forecasts and disappointing Australian employment figures weigh on mood.
Powell painted a dark picture of the economy and promised to add additional policy measures to avoid long-term damage to the economy, also calling on the government to do more.
But OK rejected the idea of setting negative rates and said that the position of his colleagues is also unchanged. This pushed stocks down and the dollar rose.
See Powell analysis: Doom, gloom, and no negative rate set on tank stocks, boosting the dollar
Bond market prices were flirting with borrowing costs below zero and President Donald Trump also wanted this “gift.” While the president called Powell “the best improving player,” he also criticized the president for not setting negative rates.
Trump also maintained the pressure on china saying that the impact of the coronavirus is 100 times stronger than the commercial agreement with the second largest economy in the world. Global cases of COVID-19 have exceeded 4.3 million and deaths are close to 300,000. Deaths in the United States are more than 84,000 according to Johns Hopkins.
Anthony Fauci, the White House chief coronavirus doctor, has reiterated his warnings that the overly rapid reopening of the economy could trigger spurts. Trump said the comments were unacceptable and that the expert was “on both sides of the equation”. Firing Fauci could add another drag to the economy.
American economy: Goldman Sachs has updated its forecasts, warning that the unemployment rate could jump to 25%. Secretary of the Treasury, Steven Mnuchin, expressed his optimism with the safe opening of the economy, a rebound is on the cards. Weekly jobless claims for the week ending May 8 are expected to increase by 2.5 million, less than the previous week, but still staggering figures.
See Overview of initial jobless claims: Marking time at the bottom
GBP / USD has been one of the biggest losers in a foreclosure environment in the UK and as the nation prepares for a long recession. Chancellor of the Exchequer Rishi Sunak extended the leave plan and Andrew Bailey, Governor of the Bank of England, opened the door to continued purchase of bonds. In addition, Bailey did not rule out direct government funding. He will speak again later Thursday.
EUR / USD has dropped in range but has not yet tested the lowest. Italy has approved a new stimulus budget of 55 billion euros and the bond markets seem to accept it, despite tensions between the German Constitutional Court and the European Central Bank, which supports the government.
Australia reported 594,300 job losses in April, worse than expected. While the Unemployment rate increased to just 6.2%, turnout fell to 63.5%. Both the Aussie and the kiwi fell in response.
Oil prices have remained stable after the stock data showed a surprising drop and amid speculation that other countries will follow Saudi Arabia with additional voluntary cuts. Demand from China is increasing.
Cryptocurrencies progress slightly with Bitcoin trading around $ 9,300, several days after the event by half.