Chinese Data Led Rally to Drive Wall Street Price Activity Today

Karthik Subramanian

Karthik Subramanian has been a professional trader and fund manager over the last 18 years. He is basically a software developer who made the transition to financial domain around 18 years back as the attractiveness of the financial markets proved too much for him. He lives in Chennai in India along with his wife and son. He began his career as a software developer in 1999 and then gradually moved into the financial industry as he began trading stocks in his pastime. He then moved into the financial markets full time and then shifted his focus to the FX markets due to the liquid nature of these markets. Since then, he has been trading FX diligently and his favourite pair are the EURUSD and EURJPY. Over the last couple of years, he has found blockchain to be of high interest and considering his background in software and finance, he has since assembled a team of highly talented developers who have since worked on a variety of projects like crypto exchanges and blockchain architecturing. Now, he balances his time between trading and commenting on both the FX and crypto markets. He has worked with many publications including FX Street and Finance Magnates, which has helped him gain experience and also recognition across the industry. He loves to write and this passion has helped him to reach out across the FX and crypto industry. Right now, he works on his pet projects in the FX and crypto industry and spends his time writing and managing his blockchain team and helping it to reach higher.

global equities

Chinese Data Led Rally to Drive Wall Street Price Activity Today, Covid-19 Woes Continue To Weigh

July 7, 2020
COVID-19  woes continue to weigh

Florida and Texas suffer the highest recorded victim count, hope for economic recovery led by Chinese data in focus.

Summary: As the trading session opened for the week, global equities and indices are enjoying a positive price rally.

This rally is led by economic recovery hopes stemming from better than expected Chinese data. Following cues from the Asian market, the European market saw the price of risk assets and key indices jump at open and head towards one-month highs. Cues from China helped Cyclical stocks in the European market gain momentum allowing for positive price action. European market saw mixed macro data readings, but the same had little to no impact on the price action of key assets. While Euro area retail sales saw better than expected outcome, German factory orders and Spanish Industrial Production data were highly disappointing. 

Precious Metals: Both Gold and Silver are trading positive today, but the gains were very limited, and directional bias was almost neutral as risk sentiment boomed in major global market regions. As COVID-19 continues to escalate with each passing day in both US and abroad, overall caution continues to escalate providing some level of fundamental support for safe have assets. 

Crude Oil: Crude oil price is seeing positive price action in the global market today across both Brent and WTI benchmarks. Saudi Arabia’s move to increase the price of all its oil products by $1 was highly accepted by traders which along with evidence of market rebalancing last week following US inventory data helped align the demand to supply ratio in favor of oil bulls for now. 

DXY: The US Dollar index continues to remain trapped inside a familiar price range. Positive developments in the global market led by Chinese data spurred hopes of economic recovery weighing down US Greenback. But caution from escalating local and global COVID-19 new victim count underpins demand for USD helping keep price above mid-96 mark for now

On The Lookout: COVID-19 cases continue to remain the main focus of investors as the impact of the second wave of the outbreak continues to dominate the global market. In the USA, Florida, and Texas take the top two spots for a count of highest new victims recorded till date while all four high impact states continue to suffer serious damage from a virus outbreak. WHO’s warnings of a high-level outbreak occurring during the weekend in South Asian and Latin American regions were also cause concerns. WHO continues to collect data and has suggested governments not re-open business if the new outbreak rate is higher than 5%. On the release front, the US calendar remains relatively calm aside from the release of ISM Non-manufacturing PMI/Employment/Business Activity data for June and Markit Composite & Services PMI. 

Trading Perspective: US futures trading in the international market was positive in hopes that momentum from Chinese data will carry forward across the key global market and allow for risk on market activity. Cues from Asian and European markets display a clear tone of risk sentiment supported by hopes for economic recovery which along with the action of US assets in international markets suggest Wall Street is set to open positive today. 

EUR/USD: The pair is trading with clear positive bias and price remains steady above the 1.1300 marks. Better than expected Euro area retail sales data and Cues from positive Chinese data underpin Euro bulls. US Greenback remains subdued despite support from caution on account of COVID-19 woes, however, keeps gains of Euro capped below the 1.1350 mark. Traders now await US data for short term profit opportunities. 

GBP/USD: The pair is trading mostly flat in the international market as GBP suffers from the impact of Bailey’s suggestion for a negative interest rate. But positive UK macro data and risk on market mood allowed GBP to stay firm above the mid-1.24 for now. Traders now await US data for short term profit opportunities. 

USD/CAD: The pair are locked in deadlock scenario at the mid-1.35 handle as neither currency lacks the strength to build a rally for the fifth consecutive session. Despite USD receiving strength from caution global market, rebalanced crude oil market underpins CAD bulls enough to offset USD’s momentum keeping pair trapped in a range of 1.3518-1.3568 for a brief period. Traders now await US data and BOC business outlook survey data for short term profit opportunities. 

Please feel free to share your thoughts with us in the comments below. 

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