THE dollar depreciated 1.26% to 99.11 largely due to the month-end rebalancing added with the dovish Federal Open Market Committee (FOMC) meeting after the Federal Reserve (Fed) opened the door for more monetary easing and dampened expectations for a quick economic recovery from the coronavirus crisis.
Nevertheless, the Fed kept its policy rate unchanged between 0% and 0.25% and maintained its open-ended quantitative easing (QE) programme. Meanwhile, data released this week continues to disappoint, which includes the first-quarter 2020 (1Q20) gross domestic product (GDP) contracting larger than expected by -4.8% quarter-on-quarter (q/q) annualised from 2.1% q/q annualised in 4Q19 (cons: -4% q/q).
Brent price surged 27.01% to US$25.98 per barrel following a smaller-than-expected build in crude oil inventories that was registered at nine million barrels for the week ending April 24 compared to 15 million in the previous week (cons: 10.6 million); and optimism that the demand-supply gap may narrow soon. The euro appreciated 1.13% at 1.10 largely due to a weaker dollar. However, the gains were capped as the European Central Bank (ECB) disappointed some investors who had expected that it would expand bond purchases to junk bonds as part of its QE programme.
Nevertheless, the ECB kept its key interest rates on the main refinancing operations, marginal lending facility, and the deposit facility unchanged at 0.00%, 0.25% and -0.50%, respectively, which also fell in line with expectations.
...