The increase in reports of rising new cases of coronavirus infection casts doubt on the near recovery of the global economy to the start of the year levels and increases overall uncertainty. As a result, the stock indices of most countries went into the "red" zone on Wednesday morning. On the other hand, gold is trading near the historical maximum.

The natural behavior of protective and risky assets in the markets is the opposite reaction to the general news background, but both have been trading in a wide range for several weeks, without seeing a global direction.

Considering the huge amount of funds that were poured into the economy against the backdrop of the impending crisis, it is logical to assume that risky assets will continue to grow. At the same time, there is no clarity as to how deep the world economy will plunge, since the current crisis, with all the desire, cannot be attributed to the "consequences of the pandemic," its sources are deeper, and the consequences are wider than they could have arisen because of one even the dangerous, coronavirus.

The CFTC report showed that the period of the weakening of the dollar may have ended, the overall short position in US currency has noticeably declined. At the same time, the long position in gold increased, which indicates the near end of the first wave of recovery and the growth in demand for defensive assets.

USD/CAD

The Bank of Canada published a quarterly review of business prospects and its results look like a gloomy prophecy with an apocalyptic connotation. Most of the indicators declined significantly below historical averages, sales forecasts collapsed, and a return to the "pre-pandemic level" is expected within the next year.

Most businesses intend to significantly reduce their investment spending, and reports of capacity shortages and labor shortages have also declined markedly, indicating that the economic downturn is expanding. Inflation expectations have fallen sharply, meaning that most firms do not expect a recovery in consumer demand either.

All hope is for government assistance and the Bank of Canada's ultra-soft financial policy. As a result, the growth of the Canadian dollar can only occur against the background of a general increase in demand for risky assets, which is possible only if the large-scale stimulus continues.

Based on the CFTC report, the total short position in CAD declined slightly to -1.511 billion dollars. The trend seems to be in favor of the Canadian currency, but it is so weak that it does not allow hoping for a stable trend. The estimated price is directed down, but the gap in the cellular price is already too large.

USD/CAD supports the bottom trend line, starting March 19 from 1.4664, and given that the dollar does not look as weak as a week ago, there is a high probability of going up the channel. The resistance levels are located at 1.3712 and 1.3850/80, where the correctional wave may end.

USD/JPY

The indexes of coincident and leading economic indicators published by the Cabinet of Ministers of Japan and reflecting the current state of the economy speak for themselves. Despite the fact that only data for may are taken into account, the dynamics does not suggest any positive surprises in the foreseeable future.

Japan, in support of the economy, issued T-bills in the amount of more than 90 trillion yen, including for financing additional budget expenses. At the same time, the government does not consider any options for raising taxes, based on the principle of "first economic growth, and only then taxes."

Judging by the general dynamics, economic growth should be expected. As a result, it will be necessary to continue to finance the budget by creating debt. At the same time, no one has an understanding of how this debt will be repaid in the future, that is, more and more factors indicate that the Japanese economy is like a boat approaching a waterfall.

The long yen position has declined markedly and the estimated price continues to fluctuate in a narrow range.

Given that the weakness phase of the dollar may be coming to its end, the chances of getting out of the range have declined. The support is at 107.30/40, from which the start of a growth wave is possible, the first resistance is 108.15, while the second is 108.60 / 70.