Forex and equities are experiencing a bearish rout, selling off across global markets. Wall Street indices to scale fresh record lows.
Summary: Global equities are continuing their bearish rout today as COVID-19 woes continue to constantly outweigh any support from stimulus measures announced by major central banks to date. Retail investors seem committed to pulling out funds from the market rather than take advantage of volatile market price action in the form of scalping opportunities as analysts point at a continuous slide of major risk assets in short to medium-term outlook.
Major indices from across the globe are seeing record lows this week as coronavirus woes have overshadowed all other local and international news to become a major driving force of market momentum.
In the European market, STOXX 600 index remains stuck around7-yr lows while other major European indices are also trading at record low levels down by 5% in the mid-European session. Energy firms and Auto sector shares are the major victims in today’s downward price action stemming from JP Morgan’s warnings and a decline in the crude oil price.
Precious Metals: Overall bias of rare metals market remains dovish as retail investors remain committed to pulling out funds from the market, be it both risk or safe-haven assets. However, the US Fed’s move to restore liquidity in the short term funding market helped stabilize the price of gold and other safe-haven metals.
Crude Oil: Crude oil price continues to decline in the global market, with the price of both major international benchmarks declining below $30 handle. While Brent remains around $27 per barrel, WTI has declined below $25 handle and is currently trading at 17-year lows of $23.84 per barrel down by 11% on the day.
DXY: While Dollar index had been under pressure earlier this month since last week, the index has staged steady recovery back by broad-based demand for USD as safe-haven demand and Fed’s supportive stimulus measures. The index has reversed scenario completely from the start of the month and is currently at 100 level well near 3-year highs pressure other major global currencies.
On The Lookout: Following comments from German Chancellor Angela Merkel, which raised hopes for jointly guaranteed Euro bonds, France will release emergency budget plans to counter the COVID-19 pandemic later today. In the race for US Presidential election nomination in Democratic Party, Former Vice President Joe Bidden has the majority at the moment with support of 1147 delegates.
US futures were halted yet again on limit down measures as losses continue to escalate in the international market. In the economic calendar release front, the US calendar will see the release of Building Permits, Housing Starts, and EIA crude oil inventory data while the Canadian calendar sees the release of Core CPI data.
Trading Perspective: In the forex market, major global currencies are expected to trade low against US Greenback while Wall Street is set to see major indices open with a sharp gap-down move as evident from a decline of US futures in the international market which mandated exchange operators to shut down US futures for the second day this month.
EUR/USD: The pair continues to trade with clear dovish directional bias against the US Greenback, given escalating death toll and resulting damage to the economy in Eurozone markets. USD remains backed by broad-based safe-haven demand and stimulus measures. The pair has seen a price decline below 1.10 handle and test intra-day lows of 1.0895 handle, which suggests positive US macro data later in the day would result in pair declining well below the mid-1.08 handle.
GBP/USD: The worst performing major global currency British Pound continues to decline on fast pace scaling as low as 1.175 during intra-day activity. However, strong support at key levels has helped the pair remain above 1.18 handle for now. Given USD’s strength, the pair has declined nearly 2% today and shows scope for further declines in US market hours. Traders now await US data for short term scalping opportunities.
USD/CAD: The pair is trading positive for the third consecutive session today, supported by broad-based USD’s strength. The pair has gained more than 4% since just this Monday with a sharp decline in crude oil price, fuelling a steep bullish price rally. Given US Crude oil’s price decline to 17-yr lows and dovish momentum in the crude oil market, the pair is likely to scale 1.45 handle before the end of today’s US market hours. Traders await the US and Canadian macro data for short term profit opportunities.