US Dollar Sinks, Dow Jones Up on Virus Drug Trial, Trump Reopen Plan

US Dollar, Japanese Yen, Virus Drug Trial, Trump Reopening Guidelines – Asia Pacific Market Open

• US Dollar and Japanese Yen sink as Dow Jones and S&P 500 futures rally
• Gilead reports virus drug trial, Donald Trump offers reopening guidelines
• Australian Dollar may appreciate, eyeing first-quarter China GDP data

US Dollar, Japanese Yen Sink on Virus Drug Trial and Trump Reopening Guidelines

The haven-linked US Dollar and anti-risk Japanese Yen are off to a rough start heading into Friday’s Asia Pacific trading session. Dow Jones and S&P 500 futures are soaring, at one point climbing over 3 percent in the aftermath of the Wall Street close. This is benefiting the sentiment-linked Australian Dollar and New Zealand Dollar. Anti-fiat gold prices are aiming cautiously lower.

Markets received a double whammy. It began with a report from Stat – a medical-oriented news publication – that a drug being used to treat severe COVID-19 patients is seeing “rapid recoveries in fever and respiratory symptoms.” The report did caution that a “lack of a control arm” could make “interpreting the results more challenging”. The medicine is called Remdesivir and it is being developed by Gilead Sciences.

This was then followed by US President Donald Trump announcing guidelines to allow the economy to reopen. In addition, he anticipates fewer fatalities from the coronavirus than even the most optimistic projections. The country is expected to “come back in three phases”. 29 states are “in the ballgame for opening relatively soon.”

Friday’s Asia Pacific Trading Session

With that in mind, a broadly optimistic tone in financial markets may transpire in the remaining 24 hours. This could even be compounded by first-quarter Chinese GDP data. That is because the extent to which data out of the world’s second-largest economy is tending to disappoint relative to expectations has been easing as of late. Growth is anticipated to shrink 12% q/q but the road ahead could be less dismal as the nation slowly restarts.

Still, a softer-than-anticipated could put a lid on some of the recent gains in the Australian Dollar. China is Australia’s largest trading partner and can thus imply knock-on economic effects. Down the road, if the upbeat mood in sentiment prevails, the AUD could extend gains as the US Dollar weakens alongside the Japanese Yen,

US Dollar Technical Analysis

On the 4-hour chart below is my majors-based US Dollar index. It averages its performance against EUR, JPY, GBP and AUD. There has been a push above key descending resistance from March – blue lines. Yet confirmation seems lackluster at this point. A close above 1.3510 could pave the path for a broad upward push in the Greenback against its major peers. Otherwise a turn lower places the focus on current April lows.

Majors-Based US Dollar Index 4-Hour Chart

Chart Created Using TradingView

--- Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter