Declining virus outbreak victim count and Powell’s testimony before congress spurs market bulls. Speech from heads of major global central banks to provide short term trading cues…
Summary: The global market is continuing to see major indices and equities trade on positive note building up on gains made in the previous session. The gains are induced by broad-based risk on investor sentiment as news of victim count for coronavirus outbreak continues to decline.
The first day of Powell’s testimony before congress saw the head of the US Federal Reserve ignore the impact of the virus outbreak and continue to hold firm on positive projections for US economic growth. Reports from China on declining victim count backing the words of Chinese medical advisor earlier this week helped improve risk sentiment in the global market by two-fold in trading session today.
Following Asian markets, European markets also opened on a positive note over cues from Asian markets. The indices and key equities further tested record levels as gains in Dutch brewing firm Heineken International’s stock helped add positive momentum in the European market. In the Forex market, USD continues to remain firm but major global currencies show clear bullish bias as risk sentiment finally returns to the market in a full-fledged manner.
Precious Metals: Rare metals continued to decline as risk sentiment improved and equities rebound over declining victim count and firm USD. However, lingering caution in the global market helped keep the price of gold, silver and other major rare metals above key support levels.
Crude Oil: Crude oil price continues to see positive price action in the global market for the third consecutive session today as cues from Fed Chair Powell speech and declining victim count helped improve demand outlook. However, build in API weekly crude oil stockpile info from the USA capped gains.
AUD/USD: The pair continues to trade positive for the third consecutive session today and has managed to retest mid-0.67 handle as broad-based risk on sentiment induced by declining victim count in China provided AUD with fundamental support. But firm USD keeps gains capped at the momentum.
On The Lookout: The global market is finally getting the much anticipated bullish fundamentals required to push major indices and risk assets on long term bullish price run. While the momentum was supposed to pick up shortly after Phase-1 of the trade deal was signed, the virus outbreak woes stemming from China put a damper on market momentum.
However, the headlines now hint at a scenario where the virus outbreak finally seems to have peaked and officials seem to have bought situation under control putting market bulls finally in control of much-awaited fundamentally supported positive price momentum.
The first session of two-day testimony in front of Congress saw Fed Chair Powell cut through the public concern of impact on the US economy as he holds his projections for positive economic growth firm and steady also providing market bulls with good support.
North American market hours see relatively silent macro calendar update aside from the release of Federal Budget Balance and EIA weekly crude oil inventory data in the USA. It should also be noted that the late European session is set to see UK’s Autumn budget release today post while US market hours see a speech from Fed Harker and Powell, while Pacific Asian hours see a speech from BOC Gov Poloz, RBA GoV Lowe and RBZ Gov Orr.
Trading Perspective: The earnings calendar for the USA is filled with release from multiple tier 1 firms such as CME Group, Equinix, MGM, Marathon Oil, Moody’s and Trip Advisor. In the forex market, major global currencies are expected to trade positive against USD on broad-based risk sentiment while USD remains under pressure over the impact of disappointing macro data updates from the previous session.
US futures trading in the international market saw positive activity on virus outbreak-related developments and broad-based risk sentiment which along with cues from the international market suggest Wall Street is set to open on a positive note while major indices trade near record levels.
EUR/USD: The pair is trading mostly flat with slight bearish bias visible as European macro data was highly disappointing. However, broad-based risk on sentiment helps keep EURO afloat while USD remains firm albeit some level of pressure from disappointing data in the previous session. Traders await Powell’s speech and Fed budget balance data for short term profit opportunities.
GBP/USD: The pair is trading with clear positive bias as broad-based risk sentiment keeps market bulls fundamental supported while USD in under pressure over disappointing US Jobs data. Traders now await UK Autumn Budget information for directional cues and US data for short term profit opportunities.
USD/CAD: The pair is declining for the second consecutive session today but the price remains steady above the mid-1.32 handle. While Canadian Loonie remains supported by broad-based risk sentiment and upbeat crude oil price in the global market, firm USD despite pressure from disappointing macro data on lingering caution in the global market helped keep pair from seeing a sharp decline. Traders now await a speech from key central bank figures and US data for directional cues and profit opportunities.
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