Death toll spike keeps rebound activity under check. Stimulus measures related headlines to dictate overall price activity.
Summary: As the trading session opened for the week, Asian markets saw major indices and key stocks across top Asian exchanges rebound from previous week’s lows. The rebound was primarily influenced by hopes and expectations for global policy stimulus measures as Bank of Japan’s Governor Kuroda told during his speech today that measures would be taken to stabilize financial markets.
However, gains were capped as caution still reigns supreme given escalation of the total COVID-19 death toll to 3000 victims as per data from global headlines. Bullish cues from Asian markets carried forward into European markets helping major indices and equities rebound. Major European indices climbed nearly 1.5% post last week’s 12% decline, but risk aversion continues to remain steady as evident from positive activity surrounding safe-haven assets in the global market.
Precious Metals: While risk assets are on rebound activity, gold, silver, and other major precious metals are also experiencing rebound activity as risk aversion remains strong in the global market over escalating death toll count. Subdued USD on declining US T.Yields also helped with rebound price action.
Crude Oil: Crude oil futures are trading positive in the international market with price seeing a nearly 3% increase in value as hopes surrounding stimulus measures from global central bank helped improve demand to supply ratio. Expectations for the supply cut decision from OPEC later this week also helped in Crude oil’s rebound activity.
AUD/USD: The pair is trading positive in the global market with price testing mid-0.65 handle as hopes of stimulus measures from global central banks helped improve risk sentiment. However, gains were capped on disappointing Chinese manufacturing data, which took a hit on virus outbreak woes. Weak USD weighed down by declining US T.Yields helped keep positive price action sustained across the day.
On The Lookout: As trading session opens for the week, major indices across key markets see rebound action, but the prospect for change in directional bias remains low to null as caution reigns supreme with escalating COVID-19 related death toll.
On the Brexit front, the EU & UK have begun talks for future relations. Still, hopes for progress are extremely low, given the EU’s dissatisfaction with the UK’s decision and attitude towards compliance with bloc’s rules. In the week ahead, traders await the release of OPEC decision following meeting during Thursday and Friday over decisions on further supply reduction. Thursday will see the race for the US Presidential nomination gain a clear outlook over the exact standing of each contender given the fact that 14 states will cast ballots, which will decide the status of each candidate.
There is also the release of the BOC interest rate decision. The BOC’s forward guidance and policy stance will greatly help gain a clear idea of the willingness from major central banks to make efforts towards stimulating the economy and making rate cut decisions. On the release front, the US calendar today sees the release of ISM manufacturing employment and PMI data and earnings report from NYSE listed Baxter International Inc.
Trading Perspective: As USD remains weak, major global currencies are likely to maintain positive price action for the rest of today’s European and US markets hours, but the possibility for sharp gains and change in directional bias remain non-existent.
While cues from the international market point to the possibility of a rebound in Wall Street later today, the opening is expected to be subdued with major indices and key stocks continuing to decline as evident from US futures trading in the international market today which saw dovish price action. Wall Street could see some level of rebound activity. Still, major indices will remain under bearish pressure unless global economic outlook gains a positive change or headlines hint at the virus outbreak in major global economies reach the peak.
EUR/USD: The common currency is trading positive in the global market as Manufacturing PMI from major economies – French, Italy, Germany, and the EU area see better than expected readings. Weaker USD also helped with the EURO’s rebound pushing pair’s price towards the mid-1.11 handle. While the pair has stabilized around the mid-1.11 price range, a positive US data reading could continue to pressure EURO bulls. The pair is likely to move in a range between 1.1180-1.1120, depending on today’s US data reading.
GBP/USD: The pair is trading with clear dovish bias despite broad-based improvement in risk sentiment in the global market. GBP’s loss is kept in check primarily due to USD’s weakness led by declining US T.Yields. But escalating odds of no-deal Brexit scenario as both EU&UK remain at loggerheads over complying with the block’s rules to keep the GBP under pressure preventing pair from scaling the 1.285 handle anytime soon.
USD/CAD: The pair is trading with clear dovish directional bias as outlook surrounding Canadian Loonie improved considerably today while USD weakened on T.Yields decline. Commodity-linked currency is supported by a 3% spike in the liquid gold price. The pair is steady above 1.33 handle for now, but further gains in crude oil price and the escalating death toll would push the odds in favor of CAD.
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