Comments from China’s medical advisor, which hinted at the possibility of a virus outbreak peaking, fuels risk on trading activity.
Summary: Global equities recover momentum finally as the coronavirus outbreak finally seems to be contained. While death count continues to escalate with each passing day, reports of recovering patients also seem to be rising with the ratio of recovering patients to the death toll in favor of recovering patients. Also, news that the number of victims experiencing the viral outbreak is declining helped improve risk sentiment.
Asian markets saw major indices and key equities shoot up over comments from China’s medical advisor, which hinted at the possibility of the virus outbreak peaking. Following cues from Asian markets, European markets also opened on a positive note with major indices and stocks scaling record highs on broad-based risk sentiment. In the forex market, USD remains high as demand seems to be underpinned by its status as a pseudo–safe-haven currency.
Precious Metals: Rare metals declined in the global market as risk sentiment boomed over comments from Chinese medical advisor hinting at virus outbreak peaking in China. Further, a firm USD in the global market added pressure in the form of a higher exchange rate for traders outside the US denting demand.
Crude Oil: Crude oil price recovered in the global market over cues from China. As headlines hinted at the possibility of the virus outbreak woes decreasing, demand outlook from China improved. Further, efforts from OPEC to further decrease supply in the global market also favored bulls pushing gains above 1.5%
AUD/USD: The pair gained positive traction in the global market on fresh cues from China and broad-based risk on sentiment. But firm USD and disappointing Aussie data caused gains to be capped. For now, the pair consolidated hold around the 0.67 handle awaiting fresh cues from US market hours.
On The Lookout: Focus shifts to headlines surrounding Sprint – T-Mobile merger as reports suggest possible approval from a federal judge who is set to pass his verdict for the much-delayed merger later today. Reports from the Wall Street Journal stating that the move could finally be approved provided market with fresh, positive influence.
Powell’s regular two-day testimony before Congress is also in focus as traders hope to hear his assessment of the US economy’s impact projections stemming from the recent coronavirus outbreak. There is also a speech from other FOMC members Bowman and Patrick, which are likely to provide cues on balance sheet expansion related decisions. However, fresh woes have surfaced in the form of a possible EU-US trade war as US ambassador to EU Mr. Gordon Sondland has been called back to the USA just after two days following President Trump’s acquittal from impeachment trial in the U.S. Senate.
Trading Perspective: On the release front, the US economic calendar sees the release of JOLTS Job Openings data, Redbook release of API weekly Crude Oil stockpile while earnings calendar sees the release of quarterly financial data from Western Union, Under Armour, Hilton Worldwide and Hasbro. US futures trading in the international market saw positive activity on broad-based risk sentiment while the forex market saw major currencies rebound despite firm USD which suggests major global forex pairs are likely to trade in a positive note in US market hours while Wall Street is set to see major indices scale record levels.
EUR/USD: The pair is trading flat, albeit expressing slight bullish bias as EURO bulls are underpinned by broad-based risk appetite. While the price fell below the 1.09 handle, Euro has managed to regain a foothold and consolidate above the said level while traders await a speech from ECB’s Lagarde and Fed Chair Powell for directional cues.
GBP/USD: The pair is trading positive as GBP bulls are underpinned by waning virus outbreak woes and mixed data from the UK today. Firm USD and no-deal Brexit woes kept gains capped. Traders now await the US data and Powell speech for short term trading cues and directional bias.
USD/CAD: The pair is trading with clear dovish bias despite firm USD in the global market on broad-based risk on tone. Cues from China, which helped cause a sharp upsurge in Crude oil prices in the global market, underpinned Loonie bulls. Traders now await US API weekly crude oil stockpile data and Fed speech for profit opportunities and directional bias.
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