Falling coronavirus infection rates have provided investors the confidence that the lockdown approach was working, allowing equity investors to look forward to 2021 as impressive monetary and fiscal policy provide a post-pandemic bridge. However, rising new daily COVID-19 cases in two of the three most populous states in the US will test that resolve. And will put to the test the wall of money theory as well as those who wholeheartedly believe in the continuous functional power of liquidity in the system.
Note that USD/CNH is only slightly higher at Asia open, despite negative news of Beijing related to COVID-19. Meanwhile, the pullback in AUD and NZD should prove more temporary, especially if domestic drivers are dominant.
If COVID-19 becomes the main narrative and a primary driver of markets again, EM currencies that have ignored their still-rising daily cases look set to underperform.
But oil prices matter as the reaction of energy markets to rising COVID-19 cases could prove crucial this week for commodity currencies.
For oil, there is an increasing focus on the weak recovery in demand. The OPEC+ Joint Technical Committee meets on Wednesday, where a panel will advise on output cuts following the one-month extension agreed earlier this month. A Joint (NASDAQ:JYNT) Ministerial Monitoring Committee will meet on Thursday.
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COVID-19 Drives Markets Again, Oil Reaction Crucial
Published 06/15/2020, 12:24 AM
Updated 07/09/2023, 06:31 AM
COVID-19 Drives Markets Again, Oil Reaction Crucial
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