Forex Today: Risk aversion to keep leading the way

What you need to know on Monday, May 15th:

 Fears of a second wave of coronavirus in the US and the Fed anticipating a tough road towards economic recovery kept the markets in risk-off throughout the end of the week. The American dollar met demand amid a run to safety, ending the week up against most major rivals.

The EUR/USD pair settled at 1.1250, recovering from a weekly low of 1.1212, as Wall Street managed to revert early losses and settled in the green. Nevertheless, US indexes added between 1% and 2% after shedding over 5% in the previous session.

Dismal UK data coupled with renewed dollar’s demand, resulting in GBP/USD falling to 1.2473. Monthly GDP shrank a record 20.4% in April, although BOE’s Governor Bailey poured some cold water on the issue, as he stated that he sees some signs of recovery in most recent gauges of the economy. According to him, the dismal growth number was in-line with expectations.

The USD/JPY pair bottomed for a second consecutive day in the 106.50 price zone, recovering on Friday alongside Wall Street. The pair closed the week in the red and retains its bearish potential mid-term.

Commodity-linked currencies were affected by the risk-averse sentiment, ending the week in the red against the greenback.

Over the weekend, news were mostly COVID-19 related. The number of new contagions in the US continues to rise, particularly in those states that eased lockdown measures. The situation in New York, which was the epicentre of the pandemic, remains under control, but that’s not the case in Florida, California, and Texas. Protests continue, although less violent, anyway a risk factor when it comes to a possible second wave.

European governments signed a contract for up to 400 million doses of the coronavirus vaccine with AstraZeneca to supply the region, should the vaccine finally gets approved. Deliveries will start by the end of the year. The number of global cases is almost 8 million, while the death toll surpasses 430K.

Crude oil finished the week little changed, with WTI settling around $36.50 a barrel, finding support on Friday on the US Baker Hughes report, which showed that the number of active US oil rigs decreased to 199.

Gold prices were up to close the week with gains amid renewed demand for safe-haven assets. Spot gold settled at $1,730.00 a troy ounce.

Posted in FX