Currency Market Snapshot For The Week
· INR depreciated by 0.07% against the USD last week and depreciated by 0.26% against the euro.
· USD rose by 0.60% on a week on week basis and is at a level of 100.38.
· The British pound depreciated by 1.06% against the USD
· Euro depreciated by 0.48% against the USD.
Global Bond Market Snapshot For The Week
· US 10-year benchmark bond yields fell by 4 bps last week.
· German 10-year bond yields remained flat, French 10-year bond yields fell by 5 bps.
· Italy’s 10-year benchmark yield rose by 3 bps to 1.82%.
· US benchmark Junk bond yields rose by 24 bps to 8.28%
INR ended the week marginally lower against USD despite hitting its new record low level of Rs 76.92 on Wednesday. The recovery came largely by an improvement in investors’ risk appetite as some countries hit hard by coronavirus are considering relaxation in lockdown restrictions to mitigate the extent of economic fallout by the pandemic. Further, the expectations of another aid package from Indian policymakers helped INR, as Prime Minister on Wednesday arranged a cabinet meeting to check on the coronavirus (COVID-19) developments. INR depreciated by 0.09% against the USD last week and depreciated by 0.26% against the euro.
USD remained higher against major world currencies last week as the COVID-19 pandemic’s negative economic impact continued to encourage market participants to hold their funds in USD. Weaker U.S. economic data released on Friday failed to trigger a meaningful move in either direction but remained supported due to strong gains against both the euro and pound this week.
USD Index (DXY), which tracks the movement of the USD against six major currencies, rose by 0.60% on a week on week basis and is at a level of 100.38.
The global market sentiments took a hit on Friday after a report suggested that a drug test conducted in China showed Gilead Sciences’ remdesivir failed to improve the condition of patients infected with COVID-19. Gilead Sciences responded via tweet that the results of a trial that were mistakenly and prematurely posted on the World Health Organization’s website, and subsequently removed, were not conclusive. “The study was terminated early due to low enrolment and, as a result, it was underpowered to enable statistically meaningful conclusions”.
Euro depreciated by 0.48% against USD last week after the European Union agreed to build a trillion-euro emergency fund but left the details for later. With Italy and Spain hit far harder than Germany by the crisis, old enmities have surfaced across a bloc which faces a cut to output as deep as 15% according to the European Central Bank.
Weekly Global Bond Market Analysis
US 10-year benchmark bond yields fell by 4 bps to 0.61% last week as the ongoing uncertainty about the economic impact of the COVID-19 pandemic helped to keep the bond-market anchored. Market participants will closely eye any reopening of the U.S. and other overseas economies as they get over the worst of the COVID-19 pandemic. However, removal of lockdowns will spur a rebound in consumer and industrial activity, but the uncertainty remains as to what normal will look like. This uncertainty has driven haven inflows into government bonds, keeping them pinned at the lowest yield levels in years.
Data on Friday pointed to a U.S. economy already in recession. Durable goods orders slumped by 14.4% in March. The University of Michigan’s consumer sentiment index fell to 71.8 in April, from 89.1 in March.
Eurozone bond yields were largely flat last week. German 10-year bond yields remained flat last week, France 10-year bond yields fell by 5 bps and is at negative 0.02%. Italy’s 10-year benchmark yields rose by 3 bps.
US benchmark Junk bond yield rose by 24 bps and is at 8.28%, Euro benchmark Junk bond yields rose by 18 bps to 5.82%.