US Open – G7 Pledge, Lawmakers inch toward deal, PMI Data, Oil simmers, Gold’s rollercoaster ride higher

US stocks are rising higher after lawmakers appear very close to finally reaching a stimulus deal and after the G7 pledged they will do whatever it takes to restore economic growth.  Despite all the unprecedented stimulus from central banks and governments, a bottom is not in place.  Passive investing is starting to pick up after seeing the Dow Jones Industrial Average almost collapse 40% from its record high in early February.  Volatility needs to continue to ease, but investors will not be surprised if we see one last major selloff before anyone will feels comfortable in calling a bottom.  The most ravaged stocks are showing signs of life, so traders may feel we are nearing a key bottom. 

PMI Data/Trump

The European flash PMI readings confirmed the disastrous outlook that confirms it will be a bad recession.  Everyone fell into contraction territory with most of the PMI Services and composite readings falling to record lows.  Germany’s recession might be worse than initially feared, which could provide added incentive for German lawmakers to expedite their fiscal push. 

The US PMI reading likely raises the bar for steeper job losses. The data is bad in March and it will only get worse over the next couple months. 

President Trump is pushing for America to be open for business in less than three to four months.  While that might be the base case, Trump’s eagerness to return people to work sooner than the recommendation of health experts will ultimately not end well for the President.  Trump’s tweet encouraging that soon people can come back to work and practice social distancing will put further doubt with his other timelines. 


Oil is quickly giving up its stimulus gains as crude demand destruction seems poised to only get worse for the energy space.  The news that India is imposing a nationwide lockdown for 21 days reminded Wall Street no one has a handle of how much the world will come to a halt and that it still can get worse if the rest of the emerging market economies follow suit.  Demand destruction is only getting worse for the energy space and it will probably be impossible for oil prices to continue to stabilize.  You know its bad for oil when you have the G7 signal how important it is for oil-producing countries to stabilize prices in order to promote global economic stability.  It is hard to imagine a scenario that involves a sustained move higher with oil prices unless a breakthrough is made with Texas rejuvenating OPEC + talks or lockdown efforts are eased and demand for crude slowly returns. 


Gold volatility is out of control.  Earlier in London, gold prices were roaring higher on stimulus bets and a falling dollar.  Gold failed to reach the $1,700 an ounce level when many US traders commuted from their kitchens to their creative work-from-home setups.  Gold’s selloff accelerated as the dollar caught a bid after investors become skeptical the Europeans are doing enough with their fiscal and monetary stimulus efforts.  Gold is seeing a dislocation with futures and spot pricing, with the spread popping to $40.  Gold’s longer-term outlook is for higher prices, but today’s price action reminds investors that it will need a softer dollar for that to hold. 

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