Virus Outbreak hits European shores, new victim counts back on the rise. Local factors to drive Wall Street on its dovish activity today as the macro calendar schedule is silent.
Summary: The global stock market is seeing sharp declines as the coronavirus outbreak concerns escalated over the weekend. While the new victim count inside China seems to have come under control, the same cannot be said for other nations. As reports hinting at a further increase in new victim count in countries outside of China hit the stands over weekend, European market hours saw major indices and equities take a sharp nose dive wiping nearly USD 420 billion in trading session today.
In European markets, Italy reported an infection count of 150 victims pushing shares and major indices in Milan down by nearly 4.2% on the day. In the forex market, safe-haven currencies traded positive while risk currency pairs saw dovish price action in favor of USD.
Precious Metals: Rare metals saw a sharp spike in demand today with the price of yellow metal scaling fresh 2020 highs as safe-haven demand peaked following news of virus outbreak in Italy. However, firm USD on safe-haven demand capped further gains resulting in consolidative move near intra-day highs.
Crude Oil: Crude oil price saw a sharp slide in the global market with futures seeing nearly 5% nosedive today as escalating virus outbreak in major global economies seem like it will take a serious toll on global economic growth and activity this year.
AUD/USD: The pair is trading with clear dovish bias in the global market today. Having scaled fresh 11-year lows in trading sessions last Friday, the pair has entered into a consolidative move near-decade lows but holds steady above the 0.66 handle despite fresh dovish cues in the global market today.
On The Lookout: The major focus of global investors in the short term is on headlines surrounding spreading virus outbreak in major global economies, their reaction to the outbreak, and estimated damage it could cause to global economic growth. While the outbreak seems to have peaked in China, the same cannot be said for other nations suffering from the virus outbreak anytime soon.
With each passing day, countries continue to report an escalating number of new cases bringing forth a fresh wave of cautious trading activity in the global market. Safe-haven assets –currencies and metals are seeing a sharp spike in demand, while Crude oil price is seeing a decline on a monumental scale. Given the silent macro calendar schedule today, local headlines are expected to provide traders with short term trading cues.
Trading Perspective: US futures trading in the international market saw a sharp slump as virus outbreak cases outside of China escalated to new highs. Taking into account cues from international market and futures activity in the global market, Wall Street is expected to see major indices and equities open with a gap down move followed by further downside move later in the day. Trump’s visit to India and other geopolitical headlines will provide short term profit opportunities.
EUR/USD: The pair is trading range-bound today, albeit clear directional bias in favor of USD. Euro remained backed by cues from today’s macro data release, while USD is backed by broad-based safe-haven demand. The pair is trading is a loop between 1.0805-1.0845 handle, and a decline below 1.0800 will open the way for a sharp downside move, but the pair can hold steady if supply remains strong at major support levels.
GBP/USD: The pair is seeing clear bearish action on the broad-based cautious tone of virus outbreak cues. While the pair slid below the 1.29 handle it has since managed to regain hold above the support level post, which is trading range-bound within intra-day range. USD lacks strength despite support from safe-haven demand owing to a decline in US T.Yields, which suggests range bound activity to remain unfazed.
USD/CAD: The pair is showing clear positive bias in favor of USD as US Greenback remains supported by broad-based risk currency sell-off. Crude oil price decline weakened Loonie, but USD remains below mid-1.32 handle as US T.Yields are declining. Traders await Canadian wholesale sales data for short term profit opportunities.
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