Trump aid comments brew China-U.S. tensions, Virus woes continue to dominate the market.
Summary: Global equities are seeing mixed price action today led by local cues. European markets today saw major indices and key equities suffer major blow as news of US President Trump aides efforts to undermine USD/HKD rates and decline of key stocks induced dovish trading activity. Aside from HSBC, Nokia shares also saw a sharp decline as concerns over a potential loss of Verizon business weighed investor sentiment. UK budget set to release later today is also in focus as the mini-budget update is expected to come with a considerable package geared towards stimulus measures.
Rare Metals: Gold and silver continue to trading positive with both metals scaling new highs as a caution on the latest COVID-19 victim count data drive safe-haven demand. Price of gold scaled $1800 handle yet again and made new 2020 highs.
Crude Oil: Crude Oil price continues to trade positive in the international market despite weekly US API reading data show a build in inventory. The build-in stockpile despite seeing a spike remains within estimation allowing the price of Brent and WTI to remain above key levels.
DXY: The US Dollar edged higher against its global peers during European market hours as the second wave of COVID-19 outbreak continues to reap more victims with each passing day. While USD remains backed by safe-haven demand its actual gains in the market remain limited resulting in the price of USD index remaining trapped within 96.5-97.5 handle for now.
On The Lookout: Tensions between China and the USA continue to escalate following the latest Bloomberg update. US Secretary of State – Mike Pompeo stated that Trump administration is looking to undermine Hong Kong Dollar in retaliation to China’s enforcement of new security law which negates the former British Colony’s autonomy status. In enforced this could bring about a new change in US-China’s recent trade and political relationship dynamics. Virus victim count continues to escalate with each passing day in the U.S.A. with the latest count crossing 60,000 new cases recently. Of these cases, more than 10,000 victims come from Texas state causing mood in the US to plummet considerably.
WHO executive director Mike Ryan has issued a warning stating the possibility of global death count starting to raise one again. On the release front, the US calendar lacks key updates aside from EIA weekly crude oil stockpile data and speech from Fed Bostic.
Trading Perspective: US futures trading in the international market were wobbly as virus victim count continues to escalate to new highs with each passing day undermining any hopes of economic recovery. This along with muted cues from the international market suggests wall street is set to see flat opening today.
EUR/USD: The pair is back above 1.13 handle as traders continue to hedge within familiar price levels. But a rebound in USD over safe-haven demand keeps gains limited. Lack of macro data update leads to local updates dominating short term price momentum.
GBP/USD: The pair is trading positive as hopes for additional stimulus in today’s mini-budget announcement comes into focus. But, German Chancellor Merkel’s comments stating Brexit talks made little progress and rebound in USD kept gains capped under 1.26 handle while traders await fresh cues from the US market for short term profit opportunities.
USD/CAD: The pair continues to move flat with 1.35 handle as there are no fresh developments on either side. Rebound in USD led by fresh caution on escalating safe-haven demand had already been priced in while build in crude oil inventories was within investor expectations. As neither of these had a visible impact of either Greenback or Loonie the pair is unlikely to breach 1.3600 marks during today’s North American market hours.
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