Global Markets

China Stimulus Boosts Global Rally, US & Canadian Inflation Data in Focus

China Stimulus
China Stimulus

Latest headlines from China provided markets with a trigger for change in directional bias. Fed speech, FOMC meeting minutes, US API weekly stockpile data, Canadian and US inflation data in focus. 

Summary: Global equities and indices finally saw rally gain a change in directional bias on fresh stimulus from China. Headlines revealed that large manufacturing hubs located on the Chinese coast which were closed to curb virus outbreak have finally received the nod from the government to restart production activity, which along with news of a decline in the number of new coronavirus victims in China helped provide the market with some relief rally momentum.

This relief rally also had enough strength to help the market get free from the impact of Apple’s revenue warnings as improved industrial activity in China would mean some that loss to quarterly data for March may not be as worse as forecasted early.

Following positive cues from Asian markets, the European market saw major shares scale fresh record levels, which were further underpinned by broad-based weakness surrounding Euro. In the forex market, major global currencies denominated against USD saw clear positive price action hinting at clear risk on market sentiment. 

Precious Metals: Rare metals are trading in a consolidative manner, albeit retaining positive bias in today’s risk on market mood. The positive bias lingering in the safe-haven market comes from weak USD in the global market, which provided traders in the international market with an opportunity to stock up. 

Crude Oil: Crude oil price recovered from loss incurred earlier this week on both major international benchmarks as news of factories reopening in China following virus outbreak curbs helped boost demand outlook. Supply cut efforts from OPEC also helped liquid gold retain some level of positive bias. 

AUD/USD: The pair traded positive in Asian and early European market hours, having managed to hold firm above the 0.6700 handle on broad-based risk sentiment and China stimulus. Weaker USD also helped with rally earlier in the day, but it has since turned flat as Greenback firmed up ahead of FOMC minutes. 

On The Lookout: In North American market hours today, traders focus is set on the speech from Fed members, the release of FOMC Meeting Minutes and televised debate where the former Republican mayor of New York Mike Bloomberg is expected to make debut alongside other candidates for Democratic party.

Crude oil price scaled fresh three week highs, but API & EIA weekly crude oil inventory stockpile data set to release in the next 48 hours will be deciding factor of short term crude oil directional bias. On the quarterly financial data release front, Wall Street is set to see reports released from Garmin, Dish Network, Entergy, Eversource Energy, Net Ease, Mosaic, Pioneer Natural, and Realty Income. 

Trading Perspective: US Futures trading in the international market ahead of Wall Street opening was positive on cues from fresh headlines from China. Signs of declining new virus victim count and resumption in Chinese industrial activities were viewed as a sign of better than expected economic activity in the quarter ending in March, providing market bulls with some fresh fundamental support. 

EUR/USD: The pair continues to trade with clear dovish bias despite broad-based risk sentiment and is currently well near multi-year lows. But the rally has temporarily ceased as USD remains weak and German index DXY scaled fresh yearly highs. Traders now await US inflation data and Fed speech/meeting minutes for short term profit opportunities. 

GBP/USD: The pair is trading with a clear positive bias and shows strong support around mid-1.30 handle. Inflation data-led easing in expectations for rate cut helped GBP bulls gain the upper hand while broad-based USD weakness underpinned Pound’s rally. Traders now await US inflation data and Fed speech/meeting minutes for short term profit opportunities.

USD/CAD: The pair gave up gains from earlier this week as USD weakened in the global market. Loonie’s strength brought forth by a sharp upsurge in crude oil price also weighed down US Greenback resulting in a sharp slide. Traders now await Canadian and US US inflation data and Fed speech/meeting minutes for short term profit opportunities.

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