Equities recover on stimulus measures from major central banks provided equities with the momentum to continue yesterday’s recovery activity.
Summary: Global equities are trading positive building up on rebound momentum from the previous session. The positive bias in investor sentiment is underpinned by headlines hinting at a unified front by global policymakers who signaled an intent to address the economic fallout from the ongoing coronavirus outbreak.
Headlines hit major markets revealing an urgent meeting between finance ministers and central bank governors of the G7 body via conference call to discuss and decide on taking appropriate measures to support the global economy.
As hopes for stimulus from major central banks escalate, the global market saw a fresh wave of risk sentiment ride over all key exchanges across Asian and European markets. European market opened positive over cues from the international market and shares of major multi-national conglomerates spiked by nearly 3% in early European market hours reversing loss incurred from the previous week considerably.
Precious Metals: Rare metals continue to hold fort despite a fresh wave of risk sentiment as caution still loomed heavily in the global market as traders awaited cues from central bank figures post-conference call meetings between G7 members.
Crude Oil: Crude oil price continued to extend gain as news of co-ordinated effort from major global central banks to support economic activity boosted crude oil demand outlook. Further, hopes for a further supply cut from OPEC members during a meeting later this week also underpinned positive price action.
AUD/USD: The pair is trading with positive bias but mostly trades within a short price band surrounding mid-0.65 handle. An unexpected rate cut from RBA came as a positive boost to AUD but recovery to US T.Yields helped USD gain strength capping AUD’s gains.
On The Lookout: The major focus of investors across the globe is on proceedings of a conference call between G7 finance ministers and central bank governors during 7 AM ET as their decisions to support economic activity will greatly affect the short to medium-term outlook and directional bias of major risk assets in financial markets. On US markets, aside from speech from Fed members Mester and Evans, there is a critical vote in 14 states for Democratic Party’s presidential nomination race.
On the release front, the US calendar is silent for the day aside from API weekly crude oil inventory data but Pacific-Asian market hours will see the release of Australian GDP and services PMI data and Chinese Caixin Services PMI data. On the earnings front, US Wall Street sees quarterly data from Nordstrom, Kohls Corp, and Target.
Trading Perspective: While risk sentiment favors the positive activity of risk assets, the forex market will see major currencies capped inside familiar price range as USD recovered strength on a rebound in US T.Yields. Wall Street is set to open positive and build on previous session’s gains as evident from the activity of US stock and index futures which traded positive in the international market today.
EURUSD: The pair is trading zig-zag around 1.11 handle but sharp supply around 1.1100 handle and broad-based risk sentiment kept EURO bulls supported. USD’s recovery caps EURO’s gains below the mid-1.11 handle. Cues from G7- emergency conference will decide the directional bias of EURO but pair is unlikely to scale the 1.1150 handle during North American session.
GBP/USD: The pair is trading positive in the global market against UAS as BOE Carney said that BOE is ready to take all measures needed to support the economy from coronavirus outbreak woes. USD’s recovery supported by a rebound in US T.Yields keeps gains capped below the 1.2920 handle. Traders await cues from the G7-conference call for directional cues.
USD/CAD: The pair managed to recover its hold above the mid-1.33 handle as US T.Yields rebounded on comments from US Fed hinting at measures to support economy from coronavirus outbreak woes. But a sharp recovery in crude oil price keeps CAD underpinned. The pair is unlikely to scale 1.34 handle regardless of the positive outcome from G7-conference call unless Crude oil price weakness. The pair is likely to remain range-bound within 1.3330-1.3380 handle during the North American session.
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