US Jobless Claims disappoint, COVID-19 drug cues keep risk sentiment underpinned. Earnings in focus.
Summary: Global equities are mixed on the last trading session of April 2020. While the Asian market saw major indices and key equities trade and close with clear positive tone on prevalent positive risk sentiment, the European market saw major indices and key equities tumble down sharply. While mixed macro data had a relatively low impact, news of Royal Dutch Shell reducing its quarterly dividend and the resulting decline of its shares caused a major blow in early European market hours.
Later in the day, a poor showing from the ECB which kept most of its policy decisions and stance unchanged and sharp decline in quarterly earnings of key stocks came as additional factors eating away at positive risk sentiment and gains built so far this week. As risk sentiment started caving-in and most of the major markets in Europe were closed the next day on account of Labor day celebrations, profit booking activity saw sudden surge draining much of its gains from key risk assets.
Gold: Price of gold continues to decline steadily with the price of spot gold down below $1690 handle while futures also mirrored the decline in the spot price, albeit stopping decline barely above $1710 handle. This is the fourth consecutive session of decline this week fuelled by profit booking activities but fading risk appetite in European market hours helped prevent a major meltdown in price activity.
Crude Oil: Crude oil price activity is displaying a clear positive tone in both spot and futures markets. As optimism surrounding COVID-19 experimental drug rose, demand outlook for crude oil also began to spike resulting in Brent futures seeing 4% gains in intra-day sessions. In comparison, WTI futures recorded a 1% spike in intra-day activity.
DXY: US Dollar index, which measures the strength of US Greenback against six major currencies continues to remain firmly rooted above the mid-99 handle. But prevalent risk sentiment in the market has resulted in USD index displaying a clear dovish tone so far today.
On The Lookout: The trading session, in reality, has mostly come to an end for the week. While several major markets remain open tomorrow, most of the markets will be closed on account of labour-day celebrations which means low trading volume and price volatility in sessions to come. Wall Street has so far enjoyed a positive activity building upon the momentum from better than expected quarterly earnings reports published by key industry icons. But the rally is likely to take a dovish hit today as weekly jobless claims data for the US which hit in late European session continued to report data in huge employment record albeit lower compared to last week hinting at impact of the COVID-19 pandemic on US economy.
Later in the day, the US market will see the release of Personal Spending data and Chicago PMI while the Canadian calendar sees the release of Core Retail Sales and GDP data.
Trading Perspective: US Futures trading in the international market declined over the impact from jobless data and a decline in broad market risk sentiment. Wall Street is set to open on the dovish note, but COVID-19 drug optimism will help limit decline while traders await earnings report from Visa, McDonald, Comcast, Kraft Heinz, and Altria for directional cues.
EUR/USD: The pair has finally managed to conquer 1.09 handle riding the momentum of USD’s weakness. But mixed EU area macro data and disappointing ECB outcome weighed down EURO bulls capping gains at the 1.097 handle leading to price consolidating around the 1.093 handle. Cues from disappointing US Jobless claims is set to keep USD under pressure across North American market hours. Traders now await remaining US data for short term profit opportunity but Euro unlikely to decline below 1.09 handle.
GBP/USD: The pair similar to Euro has managed to take advantage of USD’s weakness on jobless claims update and slowly climb above 1.26 handle. But, the lack of fundamental strength resulted in GBP losing some of its gains and consolidating around the 1.258 handle. Traders now await remaining US data for short term profit opportunity.
USD/CAD: The pair is trading flat with a slight positive bias, albeit trapped below 1.40 handle. While USD remains weak in broad market and jobless claims data came as a major blow, traders have already priced in Crude oil’s gains resulting in CAD unable to retain the upper hand in a price rally. Traders now await Canadian GDP data for short term profit opportunities and directional cues.
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