Wall Street to Continue Dovish Rally in the Global Market

Karthik Subramanian

Karthik Subramanian has been a professional trader and fund manager over the last 18 years. He is basically a software developer who made the transition to financial domain around 18 years back as the attractiveness of the financial markets proved too much for him. He lives in Chennai in India along with his wife and son. He began his career as a software developer in 1999 and then gradually moved into the financial industry as he began trading stocks in his pastime. He then moved into the financial markets full time and then shifted his focus to the FX markets due to the liquid nature of these markets. Since then, he has been trading FX diligently and his favourite pair are the EURUSD and EURJPY. Over the last couple of years, he has found blockchain to be of high interest and considering his background in software and finance, he has since assembled a team of highly talented developers who have since worked on a variety of projects like crypto exchanges and blockchain architecturing. Now, he balances his time between trading and commenting on both the FX and crypto markets. He has worked with many publications including FX Street and Finance Magnates, which has helped him gain experience and also recognition across the industry. He loves to write and this passion has helped him to reach out across the FX and crypto industry. Right now, he works on his pet projects in the FX and crypto industry and spends his time writing and managing his blockchain team and helping it to reach higher.

global equities

Wall Street to Continue Dovish Rally, Covid-19 Woes Outweigh Recovery Hopes

July 10, 2020
Covid-19 woes outweigh recovery hopes

Jobless data and Trump’s supreme court hearing in focus.

Summary: Global equities continue to remain trapped in dovish price action as local news fails to build positive rally despite providing a boost in intra-day market activity. European market today saw major indices and key equities post gains in early sessions albeit with limited impact on overall market activity. Cues from the Chinese market helped luxury and mining stocks post gains over positive activity in the Shanghai market despite fears stemming from China-U.S. tensions.

Aside from these gains in the technology sector led by SAP’s full-year outlook and business activity update also provided some level of positive price momentum. But concerns of increasing COVID-19 victims across key global economies in the second wave of global outbreak continue to weigh down investor sentiment.

Rare Metals: Rare metals are experiencing consolidation following a strong rally in the previous session. As the price of rare metals scaled fresh yearly highs and Gold tested new 9-year highs, the rally was followed by intense profit booking activity pushing the price below $1800 mark for gold while silver remains steady above $18. However, lingering caution in the market helped limit decline and keep prices steady above key support levels. 

Crude Oil: Crude oil price remains within a familiar level but is seeing dovish activity in the market today. As both US weekly inventory updates – API & EIA reported a build in inventory, demand to supply ratio became shaky once again causing the price of Brent and WTI futures to experience a nearly 1% decline. 

DXY: The US Dollar index continues to remain steady at the 96 handle. While USD remains well backed by broad market cautious tone on virus woes, lingering recovery hopes and stimulus measures from the government to aid economic recovery continue to offset Greenback’s strength keeping it steady at current levels. 

On The Lookout: Jobless data and Trump’s Supreme Court tax rulings remain in focus. As trading session heads to North American market hours, investor focus moves towards jobless claims data. US market will see the release of initial and continuing jobless claims today while the Canadian calendar sees the release of Housing Starts and Building Permits data.

Aside from the release front, there is also a speech from Presidential Candidate Joe Biden and President Donald Trump’s Supreme Court hearing during which the final verdict is expected to be passed on his tax returns issue. Trump has repeatedly refused to submit his tax returns for subpoenas from congressional investigators and prosecutors. Given that the groups are mostly controlled by Democrats and an election is coming ahead is this year, this ruling could seriously impact his campaign activities. 

Trading Perspective: US futures trading in the international market continues to remain in red as virus woes dominate market mood influencing defensive activity from traders. Caution ahead of jobless data also affected price momentum and volatility in late European market hours. Wall Street is expected to open in red as virus victim count in the US continues to breach new record levels with each passing day in the USA. 

EUR/USD: The pair is oscillating around the 1.1300 mark amid a lack of fresh cues to influence directional bias. While cautious remains firmly rooted in the market, USD is unable to make solid strides as focus shifts to President Trump’s Supreme Court hearing on tax returns and jobless count data from the USA. Fresh updates from the USA will influence short term activity but price action is likely to remain trapped between the 1.1210/1.1370 mark.

GBP/USD: The pair is trading mostly flat albeit with slight positive bias as GBP remains supported by the latest update which saw government add 30 Billion Pounds to the stimulus package. USD remains backed by caution but lacked strength offset to GBP rally as focus shifts to jobless claims and Trump’s Supreme Court heading. Price to remain steady above the 1.26 handle regardless of impact from macro data updates. 

USD/CAD: The pair is seeing positive price action in the market today but price remains capped below the 1.3590 mark. The rally is driven by Loonie’s weakness on dovish crude oil price, but lack of USD’s strength to build on today’s gains will keep the price below said price level in North American market hours. Macro data updates from US & Canada and President Trump’s Supreme Court hearing in focus

Please feel free to share your thoughts with us in the comments below. 

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