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Forex Market Begins Recovery after Widespread Oil Fallout

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  • Attitudes Remain Cautious But Improving
  • Oil Price Dive Had Further Weakened Majors Worldwide
  • Markets Open Positively As Oil Rebounds

 

The global forex market has begun to see the light at the end of the tunnel Wednesday. This comes after an increasingly difficult week in the face of never before seen lows in the oil market. Forex trading in all major currency pairs has remained cautious, but has started to return slowly with the global oil price beginning its rebound. This is also set to have a positive impact when markets open on Wednesday with many forecasted to move in a positive direction.

GBP/USD Among Markets to Show Positive Signs

Currency markets that had already been struggling with the ongoing coronavirus pandemic among other issues were battered further by the vanishing oil prices earlier in the week. Sterling has been among those worst impacted as there have also been calls for the post-Brexit transition period to be extended. There is also a continuing discontent in the UK over the speed and volume of testing for COVID-19. These factors all contributed to forex brokers reporting very little support for the Pound as it slipped below $1.23 against the US Dollar.

Having now regained some traction above that point again, the hope is that the GBP can push on amid more positive news that the virus curve may be starting to level out in the UK. This comes as the lowest daily death toll in two weeks was announced by health chiefs, albeit still at a very high number of 763.

Oil Shockwave Resonated Worldwide

Oil prices began a recovery on Tuesday which has continued into today’s session after waking from a nightmare start to the week. WTI crude prices had gone into negative territory for the first time ever on Monday, even if it was only due to a strange combination of events with May futures contracts expiring yesterday.

Prices of the same are up more than 30% today even if analysts do continue to warn of storage space running out around the world. Part of this rise may be credited to an early announcement from US President Trump threatening action against Iran for their harassment of US ships in the Persian Gulf. Tensions appear to be heightened as Iran announced the launch of their first military satellite into orbit.

Markets Open Well as Energies Bounce Back

Major markets all opened in largely positive mood Wednesday, beginning to recover after losses at the beginning of the week. The Dow Jones jumped more than 400 points at the opening bell, while both the NASDAQ, and S&P 500 gained upwards of 2%. This buoyancy has been caused by a resettling of oil where WTI crude now trades up over 30% at more than $15 a barrel.

In such a difficult time, such gains need not be mistaken for signaling an outright market positivity, but still, traders will look for the bright sparks wherever they can be found.

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Anthony is a financial journalist and business advisor with several years’ experience writing for some of the most well-known sites in the Forex world. A keen trader turned industry writer, he is currently based in Shanghai with a finger on the pulse of Asia’s biggest markets.

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