European session review: USD and JPY strengthen due to increased demand for safe-haven currencies amid continuing rout in oil market

USD and JPY rose against other major currencies in the European session on Tuesday as demand for safe-haven currencies increased amid a continuing drop in the U.S. oil prices. JPY firmed against USD.

After dropping to -$37.63 per barrel on Monday, the May WTI contract, expiring today, recovered to -$3.91 per barrel on thin trading volumes. Meanwhile, the June WTI contract extended losses by 22.4% to trade at $15.86 per barrel due to a lack of storage capacity as oil supply exceeds demand.

On this backdrop, commodity currencies, including CAD, NOK and AUD, saw sell-offs.

GBP was also under pressure, despite good employment data, as investors had to liquidate some of the positions they had to cover the losses. The Office for National Statistics (ONS) reported the UK's employment rate rose 0.2 percentage points in the three months to February to a record high of 76.6 percent. At the same time, the UK's jobless rate edged up 0.1 percentage points from the previous three-month period to 4 percent, which was slightly above economists' forecast of 3.9 percent. The report also showed that the claimant count increased marginally in March - to 3.5 percent from 3.4 percent in February.

EUR fell against USD and JPY but rose against the rest of major rivals, helped by the ZEW's survey, which showed that German economic confidence improved strongly in April. Market participants also continued to price in the increased borrowing that would be necessary to support the region's economic recovery. The ECB's policymaker Fabio Panetta called on European officials to approve a joint fiscal response to the COVID-19 crisis, adding that action taken to date had been insufficient.