On Friday night Germany reported an 11.8% fall in exports and the US recorded a loss of 20.5 million jobs in April. Markets shrugged off these depression level readings to lift shares, industrial metals and oil. Increasing optimism that lifting lockdown measures will see a snap back in economic activity is the driving factor.
The higher market sentiment reduced US dollar support. Commodity currencies are the focus for forex traders, as the Australian, Canadian and New Zealand dollars resumed their recent uptrends. Stable oil prices and rising agricultural commodities added to momentum created by the weakening greenback.
Not all investors are convinced. Gold held higher ground and short dated bonds continued their rally, suggesting some investors are seeking higher levels of capital protection. US two-year bonds closed at 0.157%, just above the low at 0.139%. Short dated paper from all major issuing nations is well bid.
Asia Pacific markets are set for a mildly positive start. The People’s Bank of China quarterly monetary policy statement promised more measures to counteract the drag of virus containment measures, which could add to any positive momentum today. The week ahead sees earnings from Tencent Holdings and OPEC’s monthly oil market report. US weekly jobless claims on Thursday night come ahead of Friday’s release of China industrial production and retail sales data.