US Open – Jobless Claims Demolishes Records, Dollar holds on to losses, BOE snooze fest, Oil is stuck in a range, Gold rises

The main economic event of the week confirmed what everyone was dreading, the unemployment crisis in America could rival what happened in the Great Depression.  Jobless claims were filed by 3.28 million, demolishing its prior record high of 695,000 claims set in 1982.  The market reaction was somewhat limited considering the magnitude of the headline number, because some individual states were providing daily updates. 

Unfortunately, the job situation is expected to get much worse as the virus fallout intensifies throughout America.  Many states also reported that their filing systems crashed due to excessive volumes, so it seems reasonable to expect a few more historic weekly jobless claims surges.  Traders who put a lot of weight into the non-farm payroll report for their economic modeling will need to wait till the April NFP release as the March survey window has already passed. 

Since the US workforce is approximately 160 million, it should not surprise anyone if over the next several weeks filings for unemployment total reaches 16 million jobless claims.

US stocks turned positive as the massive stimulus bill is expected to help protect many of these Americans who just filed claims.  The dollar continues to maintain a soft tone as the Fed’s unprecedented measures are working in relieving funding stresses in Europe and Asia. 

BOE

The BOE rate decision was a snooze fest as no further action was delivered following the emergency measures earlier in the month. The pound did little following the rate decision that pretty much went as planned.

Oil

Oil prices appear stuck in a range (WTI crude between $23-25) as energy traders await the next major oversupply development.  It seems market dislocations will happen as producers will start running out of room store crude.  Roughly three-fourths of the world storage facilities are already full.  If the Saudis and Russians follow through with the unleashing of record oil supply next month, energy markets will have to brace for another plunge in oil prices.

Gold

Gold prices are surging as the next phase of trading coronavirus pandemic will focus on the data and how bad it will get.  The Fed’s actions are working, and funding market stress overseas will likely continue to ease and that means the dollar may continue to slide.  Gold will resume its role as a favored safe-haven as traders begin to try to model how bad the global economy will get and knowing that governments and central banks are doing everything they can.  Gold should have a clear path higher as it seems global stimulus has taken away the scramble for cash liquidation trade. 

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