US Open – Reopening Rally, German ruling complicates ECB’s QE efforts, Oil’s bullish macro outlook, Gold struggles

US equities are continuing to ride momentum that large parts of the US economy seem close to opening up for business.  The first wave of the virus has ravaged New York and California, so it should not surprise markets that risk sentiment is surging following the announcement that some of their regional parts are getting close to reopening.

While huge pockets of the economy start to see a return of economic activity, the US is far from delivering an all clear signal for battling the virus.  COVID-19 cases are bound to go up as the economy reopens.  A draft government model showed that following the reopening of parts of the US economy beginning in May, daily deaths could rise to 3,000 a day by June 1st and with 200,000 new cases daily.  This is not a worst-case scenario, so if States reopen prematurely, or if social distancing efforts are not kept up, it seems possible that the numbers could get much worse. 

New York was hardest hit but now it seems the virus is making its way around the country. The hospitalization rates are rising nationally when you take out New York.  COVID-19 seems to be plateauing, but not quite yet at its peak.  A return of normalcy seems far away, but risk appetite seems to be more focused on the growing optimism that the US is nearing its peak. The severity of the second wave of cases however seems to be not getting much attention.


Germany’s Constitutional court stated that some parts of the ECB QE program are not supported by EU treaties, giving ECB three months to clean up its 2.7 trillion-euro asset purchase program. Germany’s top court 7-1 ruling sent the euro lower and Italian bond yields higher. 

The ruling however should not impact the Pandemic Emergency Purchase Program (PEPP).  Uncertainty going forward with what the ECB can do however is very negative for the euro area. 


Crude demand is starting to show signs of life as some US states begin to inch toward reopening.  After the oil price elevator crash that took three months, demand devastation is fully priced in and the oversupply concerns are slowly easing. Oil prices appear to be taking the staircase up and that will continue as expectations for fuel demand to pickup improve.   

Oil extended its gains after industry data provider Genscape Inc. reported the smallest weekly gain since mid-March.  Oil production cuts are happening all over the place and this good news for prices.  Last week, US oil giants, Exxon, Chevron and ConocoPhillips all signaled deeper oil production curtailment and today French major, Total slashed their production outlook and intensified their cost cutting pledge. 

Oil is riding a nice wave right now it seems it will keep going on for at least a few more dollars. 


Gold prices continue to tread water as investors try to grapple with all the optimism that comes from reopening headlines and a concerning outlook with how new cases and the death toll will surge in the US over the next couple months.  In the short-term, reopening parts of California and New York will prevent gold mustering up any major rallies.  Gold’s outlook for the rest of the summer will see some headwinds with delays in the next round of global fiscal and monetary stimulus, but disastrous economic data worldwide and permanent damage to the economy continue support significantly higher prices from here.  Gold could see strong support come from the $1650 level in the short-term but should still target $1800 over the next couple months. 


Bitcoin’s halving event seems to be fully priced in.  Crypto traders appear to be content with the recent rally and will likely hold on hope for the halving event to trigger a new wave of interest with cryptocurrencies.  Bitcoin could easily drop back to $8000 before making another attempt back above $9000.  The halving event is about a week away and we will likely see prices enter a broadening formation. 

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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