Today the oil market is on the downside again, despite hopes that the United States and Saudi Arabia will reach an agreement to support oil prices. The Brent crude dropped to $26.27, while the WTI reached $23.52 per barrel. Later today we expect a report on US reserves, which will likely affect these prices.
In the United States, there has finally been some progress regarding the new legislation to fight the damage wreaked by the coronavirus on the economy. The Republican plan to allocate 2 trillion US dollars to pay salaries to the currently unemployed, as well as funds to keep businesses afloat during the quarantine period is close to being approved. The Republicans do not have the majority in the House of Representatives, however, so the bill might be amended before Democrats allow it to pass into law.
The stock markets already recovered a bit earlier this week on the expectation that there will be a massive stimulus package in the United States. Today there is barely any movement in the price of stock indices, but at least for now the descent has stopped.
As the markets have calmed down a little, demand for the US dollar has decreased, allowing the currency to weaken slightly and allow other assets such as the euro to recover.
Meanwhile, in Europe there is much talk about the next step in supporting the economy through the Covid-19 crisis. The Ifo survey from Germany showed the eurozone is performing quite poorly, close to levels seen right after the 2008 financial crisis. Normally, EU countries have very strict limits on GDP deficits, but in the current situation, it is expected that they will agree to borrow deeper into their pockets in order to survive the coronavirus pandemic.
