Day Ahead and Sentiments for 11th May 2020

DAY AHEAD

There can be no hiding from the awful economic data that is now pouring in from all angles as we move well into the second quarter. Australian jobs, UK Q1 GDP, and US retail sales and inflation numbers will be the next key releases to showcase the virus-inflicted damage. But amid growing optimism about the pandemic easing, the Reserve Bank of New Zealand will likely err on the side of caution at its policy meeting, posing a downside risk for the Kiwi and other commodity dollars.

SENTIMENT

OVERALL SENTIMENT:

US stocks continued to grind higher, while Fed Futures edged away from negative interest rates territory to hover around 0%. With interest rates edging higher, Gold lost some momentum and backed off more than 1% from the highs. USD, however, remained weak against most developed currencies except the JPY. With stock sentiment diverging from the economic reality, it has become a market that requires patience as fundamentals will eventually matter again.

With Australia and New Zealand seemingly doing all the right things to keep the outbreak under control, their currencies are leading the way in this bout of USD weakness. This is likely to continue as food security and optimism on re-opening of economies become key themes going forward.