US stocks closed in the green on Thursday as investors cheered new stimulus measures announced by the Federal Reserve. The central bank said it would pump $2.3 trillion through new lending programs to combat the economic toll of the coronavirus pandemic. The Fed rolled out a broad effort to bolster local governments and small and mid-sized businesses in its latest move to keep the domestic economy intact. Moreover, the central bank’s Chair Jerome Powell said the monetary authorities will continue to use all the tools at its disposal until the economy begins to fully rebound from the harm caused by the outbreak.
The latest move by the central bank helped investors to shrug off the report that showed the number of Americans seeking unemployment benefits topped 6 million for the second straight time last week. Over the last three weeks, the indicator jumped over 15 million.
Meanwhile, the greenback came under the selling pressure on a combination of fresh stimulus measures and another dismal economic report. Against this backdrop, EURUSD managed to climb to the 1.0950 intermediate resistance, staying shy from the 50-DMA around 1.0970 amid subdued trading on Good Friday, with European and US stock markets being closed today.
Also, on the positive side for the common currency is the fact that Spain reported the lowest daily deaths since March 24. Today, the Spanish parliament approved the Prime Minister’s plan to extend a state of emergency for two weeks to April 25 in the country. Now, market focus shifts to the US CPI data due later today. However, the reaction to the release may be limited due to subdued pre-holiday trading.
Elsewhere, IMF’s Kristalina Georgieva warned that the coronavirus pandemic will drown the global economy into the deepest recession since the Great Depression. She stressed that there is tremendous uncertainty around the outlook and said that it could get worse depending on many variable factors, including the duration of the pandemic. The Fund will release an updated world economic forecast on Tuesday.
In commodities, oil prices dipped despite the OPEC+ countries agreeing to slash production by 10 million barrels per day. Earlier, Trump tweeted on the likelihood of a production cut of 10-15 million barrels per day by Saudi Arabia and Russia. The measures that are yet to be agreed in a final deal, are not enough to compensate for a dramatic decline in energy demand across the globe. As such, there is no reason to expect a strong rally in oil prices even if producers strike a deal.
Nathan Lambert, Head of Global FX Analytical Department