Trade tensions relaxed post-call between China-U.S. representatives. Macro data & Earning Reports in Focus.
Summary: Global equities and major indices are trading positive today having built on the positive momentum from the previous session. Wall Street yesterday saw major indices trade on a positive note with NASDAQ indices completely recovering from losses incurred so far this year as better than expected PayPal earnings gave a solid boost.
Further reports from the US stating that high-level trade representatives from US and China had a teleconference meeting in which both members agreed to fully meet their obligations in a timely manner despite current global health emergency causing tensions in the market to cool down. These two favourable proceedings greatly helped improve risk sentiment in the market causing major indices and equities in Asian exchanges to trade and close on a positive note.
European market which took cues from Wall Street and Asia opened on a positive note with major indices posting solid gains. Better than expected pre-tax reports from Dutch bank and easing lockdown woes also helped improve risk sentiment considerably.
Precious Metals: Rare metals are trading mostly flat as risk sentiment improved in the market over easing trade tensions between China and the USA. Further, easing USD also helped prevent a sharp meltdown in the price of safe-haven assets as traders decreased their profit booking activity considerably despite it being the last session of the week.
Crude Oil: Crude oil price is seeing positive activity in both WTI & Brent futures with futures of both indices posting more than 2% gains in intra-day activity. As trade tensions eased and lockdown easing measures continue across the globe, crude oil demand outlook continues to improve providing crude oil bulls with fundamental support.
DXY: US Dollar index has declined below the 100 mark but holds firm above mid-99 mark as a medium to long term outlook remains dovish over pandemic concerns. But upbeat earnings optimism and easing tensions between China and the USA has resulted in US Greenback losing strength to its rival global currencies.
On The Lookout: Italy’s sovereign debt rating from credit rating agencies such as DBRS & Moody’s are scheduled to release later today, but Moody’s is likely to downgrade its rating further at this point in time.
On the release front, US calendar sees release of Non-Farm Payrolls, Unemployment rate, Participation rate and average hourly earnings data while Canadian calendar sees the release of building permits unemployment rate, employment change and housing starts data.
On earnings calendar front, Wall Street will see quarterly data from PPL, Broadridge, Ventas, Expedia, Pinnacle West, Kimco, Noble Energy and Norwegian Cruise Line.
Trading Perspective: Wall Street is set to open positive as easing tensions between China & USA and easing lockdown proceedings have created a fundamentally well-supported risk-on market sentiment. US futures trading in the international market was positive while data set to release today are also expected to see an improvement compared to previous readings. These factors will keep Wall Street equities and indices fundamentally supported on last trading session of the week.
EUR/USD: The pair is trading flat in the global market holding steady near 1.083 handle as improved risk sentiment in the market failed to provide EURO bulls with support for a bullish price rally. On the other hand, dovish USD helped prevent sharp declines. Traders now await US data for short term profit opportunities, but given market sentiment price is unlikely to close for the week below 1.08 handle.
GBP/USD: The pair is trading positive in the international market with intra-day momentum helping GBP breach 1.24 handle and prevalent risk sentiment. But lack of fundamental support for GBP bulls resulted in price falling below the 1.2400 handle yet again, and the price action has seen remained range-bound between 1.2355-1.2380 handle. At the same time, traders await US data for short term profit opportunities.
USD/CAD: The pair with clear dovish bias as improved risk sentiment in the market led by easing China-U.S. trade tensions and improved crude oil price movement provided a great deal of support to CAD. This, along with USD sell-off earlier in the day, caused the price to move below 1.40 handle. Traders now await the US and Canadian macro data for short term profit opportunities.
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