Recovery rally eases on the spike in death toll, but lingering risk sentiment prevents sharp declines. Focus shifts to key payroll and unemployment updates from the USA.
Summary: Global equities and indices take a hit as the week comes to close despite the mid-week’s recovery as the coronavirus outbreak death toll continues to escalate. Asian market saw mixed activity in major markets with Hong Kong, Singapore and Japanese markets seeing a slump in risk assets while Shanghai and New Zealand markets saw major indices and equities close on a positive note.
Reports from Chinese and US Presidents re-affirming commitment to comply with the Phase-1 trade deal despite the impact on virus outbreak on global economy underpinned market bulls from fundamental perspective but reports of escalating deal toll on coronavirus outbreak continue to inspire fear causing the mid-week’s recovery rally to ease-off.
In the forex market, US Greenback holds firm and scaled fresh four-month highs on risk aversion and macro data-led rally while local factors and geo-political event-related headlines keep major and emerging market currencies under pressure.
Precious Metals: Rare metals are continuing to see sharp slump as risk sentiment still lingers in the market while USD in which metals are denominated scaled fresh multi-month highs. Caution in the global market continues to fuel safe-haven demand for costly exchange rate for international traders has caused investors to flock to other options such as bonds and safe-haven currencies.
Crude Oil: Crude oil price continues to decline as concerns surrounding global demand continues to escalate in an unfavorable direction. Reports of China seeing a drop in demand over virus outbreak impact on its economy comes as major blow but steep loss is prevented as traders await updates from OPEC’s meeting scheduled for the weekend in Cairo during which OPEC members & Russia are expected to come to an agreement on recent proposal of further output reductions from global crude oil suppliers.
AUD/USD: As caution regains firm hold on market over escalating virus outbreak death tolls, AUD comes under fierce attack by bears. RBA’s growth forecast downgrade for the year ahead and the declining copper price came as a major blow to mining and trade-dependent Australian economy resulting in firm dovish pressure on AUD. Focus now shifts to US payroll and unemployment data.
On The Lookout: As the market comes to close for the week, the entire focus of investors shift to macro data and earnings reports. While virus outbreak cues continue to dictate short to medium-term outlook, macro data updates from the US seem to provide an opportunity for major US indices and equities to gain a shift in directional bias.
Today’s macro calendar schedule sees the release of Non-Farm Payroll data, Participation & Unemployment Rate and Average Hourly Earnings data from US markets and Employment Change, Unemployment Rate and IVEY PMI data from the Canadian calendar. On earnings calendar front, Wall Street sees financial data from CBOE Global, AbbVie Inc, and First Energy.
Trading Perspective: Firm USD and positive forecast for US macro data updates suggest major and emerging currencies matched against US Greenback are likely to see a dovish activity as the trading session comes to close for the week. US Futures trading in the international market saw slump from recent highs despite linger risk on market mood as recovery rally eased off over escalating coronavirus outbreak death toll. These factors suggest Wall Street is likely to some level of dovish activity today despite the mid-week’s recovery rally, however, major indices are likely to close well near multi-month highs in case NFP data and Unemployment data sees better than forecast outcome.
EUR/USD: The pair is trading directly proportional to US Greenback in the global market today. While the USD index scaled fresh 4-month highs, the common currency tested 4-month lows as EURO is currently experiencing an oversold activity. Disappointing Germany & France industrial production data added pressure to EURO bulls keeping price activity trapped around mid-1.09 handle. Traders now await US NFP data and Unemployment rate for short term profit opportunities.
GBP/USD: The pair is trading mostly range-bound with neutral bias in the European session today. While the pair holds steady above the 1.2900 handle for now. Technical outlook implies the strong possibility for a decline below key support levels which spell disaster for GBP. While Brexit uncertainties keep GBP under pressure, firm USD also adds to GBP’s woes. Traders now await US NFP data and Unemployment rate for short term profit opportunities.
USD/CAD: The pair is trading with a clear positive bias today and has scaled fresh 2-month highs as US Greenback bulls gain fundamental strength from positive macro data outcome and its status as a pseudo-safe-haven currency. Broad-based risk currency sell-off pushes USD to multi-month highs while declining crude oil price weighs down commodity-linked currency Canadian Loonie. Traders now await macro data updates from both US and Canadian calendar for short term profit opportunities and directional bias.
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