Earnings to continue dominating Wall Street and US GDP in focus but WHO updates may affect risk assets related price activity.
Summary: Global equities lost gains from the previous session and are back near weekly lows with risk aversion prevalent in global investor sentiment. As death tolls continue to rise on the Chinese virus outbreak, headlines popped up hinting at WHO considering declaring the virus outbreak as a global concern going back on their previous statement. This has caused risk appetite to be completely wiped out in trading activity across major global stock exchanges in trading session today.
European market opened on a dovish note over cues from the international market and saw major indices and key stocks take further hit from a slew of disappointing earnings update adding to the already high bearish market mood. In the forex market, risk currencies declined while safe-haven currencies and USD climbed high on safe-haven demand and sell-off surrounding major currencies.
Precious Metals: Rare metals are enjoying a field day today in the global market on a sharp spike in safe-haven demand. While USD may remain firm, reports which suggest WHO may go back on their statement and declare coronavirus outbreak as global concern over escalating death toll underpins demand for rare metals.
Crude Oil: Crude Oil saw the price of both major international benchmarks and key futures fall sharply as virus outbreak woes continue to escalate to fresh highs. Larger than expected spike in US weekly crude oil inventory stockpile also came as a major blow as the glut scenario continues to grow with high supply and waning demand.
AUD/USD: The pair lose all of the gains made so far this week and has declined below mid-0.67 handle as risk aversion induced by virus outbreak woes weigh down the Chinese proxy. Meanwhile, increasing demand for USD on broad-based risk currency sell-off also adds pressure to AUD bulls. However, the pair exhibits strong support around 0.6700 handle which helps prevent a bearish breakout.
On The Lookout: The focus today lies in several major events. Starting with Bank of England’s interest rate decision, traders hope for a fresh update on virus outbreak from WHO, key earnings report and Brexit proceedings. Bank of England kept interest rates unchanged despite broad-based expectation for rate cut which is welcoming the move as traders face Brexit deadline as UK & EU seem all set to begin parting ways officially tomorrow.
On earnings calendar schedule, Wall Street sees quarterly reports from Alexion, Amazon.com, Coco-Cola, Dupont, Electronic Arts, Thermo Fischer Scientific, Verizon, and Western Digital. On the macro calendar front, North American market hours will see the release of US preliminary GDP and Initial Jobless Claims data.
Trading Perspective: Broad-based risk aversion and dovish cues from the international market suggest Wall Street is likely to see subdued opening today. While earnings reports may continue to dominate Wall Street activity, the long term sentiment will be influenced by the release of preliminary GDP data as it will help gain a better picture following comments from US Fed policy meet press conference yesterday.
EUR/USD: The pair remained under pressure across today’s trading session on broad-based dovish cues. However, strong support near 1.10 handle keeps the pair confined in tight range-bound price action. Traders now await US data for short term profit opportunities.
GBP/USD: The pair is trading positive in the late European session as Bank of England kept interest rates unchanged despite the recent spike in concern surrounding possible rate cut move. However, gains are capped on caution ahead of the looming Brexit line, keeping price capped below 1.31 handle. Traders await fresh headlines from the UK for directional bias and US data for profit opportunities.
USD/CAD: The pair is trading with clear bullish directional bias as virus outbreak woes keep USD underpinned fundamentally. The decline in crude oil price weighs down Canadian Loonie while rising US bond yields and broad-based risk currency sell-off underpins Loonie pushing the price of the pair to fresh 7-week highs. Traders now await US GDP for short term profit opportunities.
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