US Open – UK Stimulus, Lagarde reiterates urgency to act, Biden vs Trump, Oil rebound ends, Gold steadies

US stock futures are poised for a lower open as the coronavirus spread in the US tops 1,000, a 1-mile containment zone was setup just outside of New York city, and as expectations grow for further bans of community gatherings. The virus spread is intensifying in Europe and the US, but we could be nearing the peak as respiratory viruses typically struggle in warm and moist weather. 


The Bank of England emergency rate cut combined with historic spending on infrastructure shows the UK is throwing everything at coronavirus shock to the economy.  The first emergency cut since the global financial crisis saw the pound selloff but quickly stabilize after markets process all the stimulus efforts that accompanied the rate cut.  The BOE cut the countercyclical buffer by 100 basis points to 0.00%, which means 190 billion pounds that the banks can lend to small companies.  The BOE announced a new Term Funding Scheme that will help banks give cheap loans to small businesses. 

Chancellor of the Exchequer Sunak’s budget was well received as it will meet fiscal rules and shows a significant commitment in responding to the coronavirus impact. 

The FTSE 100 rallied alongside the British pound but most of the gains were limited as the short-term downside risks to the economy remain intact. 


ECB President Lagarde’s tipped her hand after noting that Europe risks a major economic shock similar to the financial crisis unless leaders act urgently on the coronavirus.  The ECB is running out of options with where rates currently stand and as the eurozone nears a recession, it appears QE is on the table for this week’s meeting. 


For investors hoping to see another Biden rally, that will not be the case today, or anytime in the near future.  Former VP Biden had another Super Tuesday, winning the big prize of Michigan while Bernie only won North Dakota and possibly Washington.  Markets have completely priced in a Trump-Biden Presidential election and the reaction on Wall Street will be somewhat neutral if we see Biden pull off the upset.


Oil prices appear poised to make a return towards this week’s crash low as oversupply concerns will go nowhere anytime soon as the Saudis, Russians, and UAE scramble to win market share.  The oil rebound over the past 24 hours was overdone and the next question on everyone’s mind should be when will prices retest Monday’s low.  Calls for an emergency OPEC + meeting are laughable and concerns should grow that the Trump administration will try to offer support to the shale industry.  The drivers on both the demand and supply side are screaming for lower oil prices in both the short- and long-term.  Brent could test the $30 a barrel level over the next week, while WTI crude seems destined for the $27.50 level. 


Gold prices are higher, but still struggling to recapture the $1,700 level despite another strong signal from ECB’s Lagarde that Europe needs to act soon and another wave of global easing from both the BOE and Iceland’s central bank. 

Gold is still in the early stages of a major bull run.  In this battle of king of the safe-haven trade, gold will have an easier time to the $2,000 an ounce level than the 10-year Treasury yield will have to falling to zero.  The dollar is about to become a funding currency and gold should see tremendous upside as long as the Fed does not deliver a policy mistake.  Next week, will be key for the gold trade and bullish momentum should accelerate if the Fed cuts by 50-basis points and announces a new QE program. 

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya