Week in a glance: pandemic peak, vaccine and US vs China

25 мая 2020 г.

The past week was not very rich for the sound macroeconomic statistics, but it turned out to be exceptionally eventful.

Traditionally, the coronavirus epidemic has remained the main theme. The barrier of 5 million cases was passed and a new global peak was detected, which was largely due to the sharp increase in the number of cases in Brazil and India, as well as the stably difficult situation in Russia.

Even China, which, it would seem, successfully fight the coronavirus, was again forced to implement quarantine measures, with over 100 million people under restrictions.

Despite such depressing statistics, the stock markets of developed countries grew, which was largely due to the news about the successful trials of the coronavirus vaccine by Moderna. However, towards the end of the week, optimism faded when it became clear to everyone that this was only the first phase and there are still many months before the potential happy end. And something more about the “magic pills”. A couple of weeks ago, a similar reaction in the markets was provoked by Remdesivir, but last week, Bloomberg published information that it mainly helps healthier patients.

Another positive news of the past week was the information from Germany and France who agreed to create a European fund with the amount of $ 546 billion to help countries with economic consequences of pandemic, but here you can find the negative. The fact is that this fund has serious opposition from Austria, Sweden, Netherlands and a number of other countries that are not very eager to sponsor the Italian populists and others.

Since the last week the Japanese economy is officially in recession. In addition, a lot of data from the UK was published and by and large all of them can be attributed to the pound liabilities. So this week we will continue to search for opportunities to sell British pound primarily against the US dollar (sell GBPUSD) and the euro (buy EURGBP).

The white streak for oil last week continued: US oil reserves fell sharply, as did the number of active oil rigs in the US. So we continue to hold medium-term positions in oil purchases. Recall that our position is multi-stage: the first purchase is from $30, the second from $25 and the third from $20. That is, all three positions are already in plus.

The United States and China closed the week. Their relations are rapidly deteriorating. This week we will almost certainly see a further escalation of the conflict. So purchases of gold, the US dollar and the Japanese yen look pretty attractive this week. And, sales in the stock markets this week are among of our priorities.