The IMF said on Wednesday the global economy will shrink 4.9% this year, compared with its April estimate of 3%. The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast. In 2021, global growth is projected at 5.4 per cent, the report said.
Global stocks fell following a renewed US-EU trade tensions and downward revision of growth forecasts by the International Monetary Fund (IMF). While European stocks slightly recovered from the early losses after the ECB launched a new facility to protect the financial system from the impact of coronavirus. On Wednesday, Wall Street ended lower as Dow Jones had its biggest correction in over 2 weeks falling over 700 points.
Crude oil prices plunged to the fresh weekly low after rising US inventories, the EIA weekly report posted a 1.4 million increase in crude oil inventories and the API reported an increase of 1.75 million barrels on Tuesday.
Commodity currencies like the Australian dollar and New Zealand dollar depreciated after global oil prices have fallen sharply on Wednesday.
The yellow metal trading strong this whole week as concerns about a surge in the number of coronavirus cases mounted. The gold price further received support after IMF downgrade to global GDP projections.
The Trump administration is considering expanding and raising tariffs on $7.5 billion of imports from the European Union and the U.K. that it first imposed last year. At the US-China front, Trump has ordered US Trade Representative to check whether China was buying US lobsters under the phase one trade deal.
On the data front, Japan's all industry activity index tumbled by 6.4 per cent month-over-month in April 2020, following a downwardly revised 3.4 per cent fall in March and posting the third month of decline for the index.
Moving ahead today, the important events to watch:
Europe ECB meeting minutes – 11.30 GMT
US Gross Domestic Product – 12.30 GMT
US Durable goods orders - 12.30 GMT
US Jobless claims – 12.30 GMT
The number of people infected with the coronavirus across the world rose towards 9.5 million, of which around 480 thousand have died. The US has recorded a one-day total of 34,700 new confirmed COVID-19 cases, the highest level since late April. The recent spike in cases has prompted US states of New York, New Jersey and Connecticut to enforce 14-day quarantine for travellers from nine other states entering these regions. India recorded its biggest surge in the number of coronavirus cases in 24 hours for a second consecutive day with 16,922 new patients. Australia reported its first COVID-19 death in more than a month on Wednesday, Victoria recorded 33 new cases of coronavirus on Thursday, the biggest increase in new cases in more than two months. The WHO said Wednesday that the number of COVID-19 cases worldwide is expected to reach 10 million within the next week.
GOLD: Gold price trading in a range between $1758 and $1778 currently. The yellow metal dropped to $1753 on Wednesday after a peak to $1780 but bounced back later to above $1760.
The important levels to watch for today: Support- $1753 and $1740 Resistance- $1780 and $1800.
EUR/USD: The pair remained under pressure during the European session, at the time writing the currency pair trading below $1.1240.
The important levels to watch for today: Support- 1.1210 and 1.1170 Resistance- 1.1280 and 1.1320.
Quote of the day: Don’t wait for better investment options, invest and then wait for a better time.
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