US MORNING: USD Shrugs Off Bad Economic Data

The US dollar marches higher undeterred by job losses

Oil powers up amid continued supply cut speculation

US indices open unchanged from yesterday

Continuing USD Demand

Demand for US dollars is unlikely to fall any time soon and, as demonstrated by price action, this has been the case all week. The safe haven status of the USD remains undisputed and unchallenged in times of turmoil.

Higher interest rates across emerging market economies globally have been a major source of revenue over the past decade. As the coronavirus crisis hits, US dollars are in demand from corporates looking to repatriate profits from abroad, and from foreign companies and states that need to cover their USD obligations.

Meanwhile, the euro is under pressure as Eurozone member states still haven’t agreed on the joint debt issuance of so-called ‘coronabonds’. Germany and the Netherlands continue to push against the idea and insist that heavily-affected countries like Spain and Italy should apply for help from the European Stability Mechanism.

The ESM was set up to in 2011 to ensure financial stability across the Euro area. In the meantime, abysmal economic confidence numbers this morning haven’t helped the single currency as the services sector PMI in Italy dropped to an all-time record low of 17.4, while Germany and France fared little better.

Stocks Supported Despite Bad Data

According to the latest report from the US Department of Labor, a total of 713,000 jobs were lost in March. This data comes with the caveat that most of the numbers wouldn’t be included in this months’ report due to survey period ending around the middle of last month.

The market appears to have largely discounted the negative numbers released throughout the week and is looking forward to better indications of the state of the economy over the coming confidence and PMI surveys, as stocks remain roughly unchanged from Thursday.

Oil Continues to March Higher

Oil prices continued marching higher on Friday in the run-up of what could be a major coordinated effort to cut global production. The US, Canada, Mexico and Brazil are rumoured to be joining the OPEC+ agreement next week.