Macro data in focus as risk aversion reigns over a sharp increase in Chinese coronavirus victims.
Summary: Global market today saw major indices and equities take a pause in rally as the death toll of virus outbreak affecting victims nearly doubled in China as per recent headlines. However, some level of risk sentiment lingered and kept major assets from seeing sharp declines as the count of new victims for virus outbreak remains low.
Following cues from the Asian market, European market also saw a subdued opening post which warning from Nestle which downgraded its 2020 growth forecast added a serious blow to market bulls in the European market. While equities are seeing range-bound activity post slight decline in the early trading session, the forex market is seeing major pairs continue to trade flat on broad-based cautious investor sentiment.
Precious Metals: Rare metals saw a slight pick up in price activity today as caution influenced by the increase in death toll resulted in safe-haven assets such as precious metals and bonds seeing increased demand. However, firm USD kept gains in check leading to the pair trading within familiar levels.
Crude Oil: Crude oil price took a hit and lost a significant portion of gains made earlier this week over the news of a sharp spike in the death toll in China. A sharp spike in both API & EIA weekly crude oil stockpile data well above estimate also added pressure to crude oil price in the international market on supply concerns.
AUD/USD: The pair finally gave up its consecutive sessions off positive price run as fresh headlines from China on death toll escalation took the wind out of AUD bulls. However, the pair still remains steady above the 0.6700 handle as sliding US Bond Yields kept USD contained in the global market.
On The Lookout: Coronavirus outbreak-related concerns remain in focus despite recent headlines reporting at outbreak peaking. While new victim count remains low, the death toll escalates to 250 victims causing cautions to remain firm in the global market. Speech from major central bank figures in the previous session saw representatives downplay the impact of the virus outbreak, but analysts and investors are still wary of outcome for Q1 data for 2020.
Wall Street earnings calendar seems busy as usual with the release of an earnings report from PepsiCo, Nvidia, Duke Energy, Roku and Expedia. On the macro data front, US calendar is set to see the release of Core CPI and Initial Jobless Claims both tier-2 updates.
Trading Perspective: Forex market will see major global currencies trade range-bound against major pairs as USD remains under pressure over declining US T.Yields. But support in form of demand for safe-haven assets kept USD from seeing sharp decline while escalating caution on the spike in virus-related death toll kept major currencies under pressure. US Futures saw a decline in the international market ahead of Wall Street opening on broad-based risk aversion and death toll influenced caution which suggests Wall Street is set to see sharp dovish activity today.
EUR/USD: The pair tested fresh 2020 lows near the 1.0850 handle as broad-based risk aversion weighed down the already dovish EURO. But weak USD was unable to capitalize on the EURO’s decline as US T.Yields are declining. Traders await US data for short term profit opportunities.
GBP/USD: The pair is trading positive despite broad-based caution as new of Sajid Javid resigned as chancellor of exchequer pushing pair to fresh 1 week tops. Weaker USD in the global market also aided GBP bulls, pushing the price to mid-1.30 handle. Traders await US data for short term profit opportunities.
USD/CAD: The pair is trading flat with a clear lack of directional bias as USD remains weaker despite broad-based risk aversion on declining US T.Yields while CAD is under pressure from declining crude oil price. Traders now await US data for short term profit opportunities and directional bias.