Since the end of last week, we hear more and more often that the economic consequences of the quarantine are extremely high and are largely underestimated. For example, Australia is already beginning to consider the possibility of partial easing of restrictions in connection with the epidemic. A number of other countries, including the United States, are also discussing such scenarios with the possibility of the partial reduction of restrictions for certain types of businesses.
Of course, the reduction of restrictions, which will lead to an increase in business activity, is a positive. Even though there is a possibility of the coronavirus spreading further, we are already witnessing another wave of interest in trading activity in the foreign exchange market.
Let's go back to Australia and AUD, which has strengthened quite a lot across the entire spectrum of the market. Thus, the AUD/USD currency pair has strengthened by 220 points since the beginning of this week, reaching a strong technical resistance level of 0.6200. Therefore, the emergence of information about the willingness to reduce restrictions, for example, the USA, should give a boost to the USD, along with any other large economies and their currencies.
Now, let's move on to the oil market and once again we hear Donald Trump, who hints that the United States is unlikely to join the OPEC+ deal. As a result, the price of WTI oil fell to $23 per barrel. Let me remind you that currently, the main driver of growth for the oil market remains the expectation that OPEC+ will agree to reduce production by 10 million barrels. Trump's comment reduces the likelihood of a cartel compromise at a meeting scheduled for Thursday, April 9th.
As a result, following the movement in the price of oil after Trump’s comments, we observed a weakening of the CAD. While the oil price was rising we saw a weakening of the USD/CAD currency pair and we can count on a bigger decline in the quotes of this currency pair if there is a further increase in oil prices. This is only possible if an OPEC+ agreement is reached.
The above review is not a direct guide to trading, and can only be classed as recommendations.