There are growing signs of a recession in the United States and other global economies, on the back of the Covid-19 spread.
Data on Wednesday really gave the markets a real taste for that. U.S. data showed retail sales plunging by 8.7% in March, the biggest decline since tracking began in 1992. Consumer spending accounts for more than two-thirds of U.S. economic activity.
Elsewhere, a report from the Federal Reserve covered that manufacturing output plummeted 6.3% last month, the biggest decrease since February 1946. The New York Federal Reserve also reported that its Empire State manufacturing index, which tracks activity in the sector for New York State, fell to an all-time low.
Earnings from big financial institutions are also alarming; Bank of America and Citigroup reported plunging first-quarter profits. Separately, in the retail sector; J.C. Penney is reportedly exploring filing for bankruptcy, which could very well be the first of many.
Unemployment claims continue to climb in the United States, with many being forced out of work as companies greatly feel the squeeze. Focus today on the Initial Jobless Claims data.
What does this all mean for the USD?
Momentum is picking up pace as a flight to safety bid, pushing the dollar higher against its peers. It appears to be the growing case again of things being a win-win scenario again for the greenback, bad data buy the Dollar, good data, buy the Dollar.
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