Phase 4 economic support bill & US-Russia energy market-related talks, WHO reports in focus.
Summary: Global equities and major indices are trading on a positive note today over reports from WHO, which hinted at the possibility of a virus outbreak in Europe showing signs of peaking soon. While major risk assets across Asian and European markets saw price action take on clear positive note gains were relatively limited.
Positive Chinese PMI data helped Asian indices stay fundamentally supported; however, cautions continued to reign in European markets to some level as fatalities continue to rise in key European markets such as Spain and France. Italy, on the other hand, is finally showing signs of a slowdown in COVID-19 expansion in-line with WHO’s reports.
Further pressure came in the form of radical move in Hungary, where its parliament voted PM Viktor Orban to rule over the nation with no end date. This came under the pretext of “coronavirus bill”, adding to EU’s woes while it’s already facing exit related problems with the UK.
Precious Metals: Rare metals are trading with clear dovish bias, albeit in a range-bound manner within familiar price levels. The rebound in risk sentiment in the global market greatly affected the demand for safe-haven assets. Still, the price of gold continues to hold above $1600 handle hinting at lingering cautious investor sentiment in the global market.
Crude Oil: Crude oil price is trading flat in the international market, slightly above previous session lows on fresh US-Russia talks update. As the price war between Saudi Arabia and Russia continues to affect demand to supply ratio in the market, US President Trump stated earlier this month that he would intervene to resolve the issue. News that Russian President Vladimir Putin has agreed to talk with US President Trump on bringing stability to the energy market helped prevent further declines today.
DXY: US Dollar index, which measures the strength of US Greenback against six major global currencies, continues to remain steady above the 99 handle and maintains a positive tone. While caution underpins its broad-based strength, it is unlikely to rebound in the near future as headlines report the US government preparing “Phase 4” of economic support bill worth USD 600 billion. This move adds to the recent 2.2 trillion USD support bill of “Phase 3” approved recently, capping USD’s growth in the global market.
On The Lookout: As updates flow on the meeting between Russia and US President Putin and Trump on bringing stability to the energy market, the focus remains on prospects of further progress of talks between two parties. Any favorable decision moving forward now will greatly help in shaping crude oil supply and price dynamics with immediate effect.
However, Saudi’s production boost is set to go live tomorrow, significantly affecting the already huge global glut scenario. On the other side of the Atlantic, US COVID-19 victim count continues to grow steadily, making it compete with Europe for the status of a country with the highest victims. Work has begun for Phase 4 of the economic support bill, worth USD 600 billion, in order to support local government operations in the USA.
On the economic calendar release front, the US calendar will see the release of CB Consumer Confidence data while Canadian Calendar sees the release of GDP and RMPI data. Later in Pacific-Asian market hours, the Chinese calendar sees the release of Caixin Manufacturing PMI data.
Trading Perspective: In the forex market, major global currencies are continuing to trade range-bound as USD remains firm on prevalent cautious tone while risk currencies are supported by a slight improvement in risk sentiment today. Wall Street is set to see major indices and equities open on a positive note as Phase 4 economic support bill update and Russia-US talks update helped improve risk sentiment.
EUR/USD: The pair is grasping for support factors as bears grow strong again. Mixed economic data and news of Hungary’s radical parliament move also added pressure on EURO while USD holds firm on broad-based cautions tone resulting in pair declining below 1.10 handle. Traders now await US macro data for short term profit opportunities, and there is also a change for headlines based cues to drive the price lower.
GBP/USD: The pair continues to trade range-bound, holding steady above 1.24 handle as neither USD nor GBP has the decisive factor that could help gain the upper hand. GBP has recovered from recent credit downgrade’s influence while USD remains strong but unchanged as well, resulting in neither pair gaining required strength for a breakout. Traders now await US macro data for short term profit opportunity.
USD/CAD: The pair continues to trade positive as Crude oil price showed no improvement despite the Russia-US talks update. The price of USD shot up on news of work on the Phase 4 economic support bill, but the pair has lost most of the intra-day gains and is currently trading back near the 1.419 handle. Traders now await the US and Canadian macro data for short term profit opportunities.
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