Markets ignore weak GDP reading in favor of risky assets on positive news of the anti-viral drug remdesivir

The US dollar headed for a fourth straight day of losses as more countries announced plans to begin reopening their economies. The positive investment sentiment hurt the safe-haven US dollar as did the lack of a consensus in the US as to when the US economy will reopen. US GDP numbers for Q1 showed an annualized contraction of 4.8% vs. the prior quarter. The results were worse than the -4.0% consensus expectation.
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  • FX Rates
    April 29, 2020

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  • USD

    The dollar is weaker on positive risk sentiment as more countries announce plans to begin reopening their economies – albeit slowly. The dollar is still 5% higher than pre-COVID levels.

    The anti-viral drug, remdesivir, showed it met its primary endpoint during a government study. Although the complete data has not been released, the news led investors to speculate the drug trial results will allow the US economy to return to full strength soon.

    GBP

    The pound strengthened relative to the US dollar after a weaker than expected US GDP reading. The pound had been weaker due to a general perception that the UK lacks COVID testing capabilities relative to its European neighbors and therefore will be delayed in re-opening its economy.

    EUR

    The euro is stronger as speculators bet on a “V” shaped economic recovery after more countries begin to ease lock-down restrictions. The euro strengthened despite Fitch downgrading Italian sovereign debt.

    CAD
    The Canadian dollar gained on overall positive sentiment that global economies will be re-opening soon. Oil is stronger on specific details of a Russian oil output cut of 19% in response to OPEC+ reductions.
    ASIA/PACIFIC

    The Japanese yen lost ground versus the US dollar after encouraging news on the anti-viral drug remdesivir. 

    The Aussie dollar continued its march higher against the US dollar on overall USD weakness and increase in the price of oil.

    Most all Asian currencies benefited from overall risk-on sentiment.

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