Earnings reports, Tesla Lawsuit, and US COVID-19 related headlines to provide directional bias and momentum in Wall Street.
Summary: The global equity market is off to a mixed start for the week on local cues. In Asian market hours, an announcement from China’s central bank stating that it will provide more powerful stimulus packages and reports of recovery in car sales helped improve market sentiment. In the European market, major indices and key benchmarks opened positive on cues from the Asian market.
Further, headlines hinting at slow lockdown easing measures from France and the UK also helped improve risk sentiment earlier in the day. However, most major indices and key equities had pared their early gains and suffered steep loss by mid-session as reports surfaced from Germany hinting at yet another bloom of fresh COVID-19 victim count once lockdown was relaxed. This, along with a strong decline in the energy and travel sector, shares cemented key assets into solid declining activity.
Precious Metals: Both gold and silver are trading positive in the international market today supported by cues from multiple fronts, news of COVID-19 outbreak renewal in Germany, and passive outbreak among white house staffs caused safe-haven demand to peak, helping gold re-claim $1700 handle.
Crude Oil: Both international crude oil benchmarks WTI & Brent are seeing positive price action today. WTI Futures are moving above $9.5 per barrel while Brent futures are above $28 per barrel as news from Saudi Arabia stating additional reduction of production by one million barrels per day helped improve global demand to supply ratio in favour of crude oil bulls.
DXY: The dollar index, which measures the strength of Greenback against six major rival global currencies holds steady above the 100 mark as broad-based cautious tone increased over reports from US & European markets. With the renewal of COVID-19 outbreak as major countries ease lockdown measures, USD is likely to remain backed by strong, safe-haven demand in the market.
On The Lookout: The main focus of investors at the moment is on proceedings in the US market. North American hours today will see Tesla resume its lawsuit proceedings against Alameda country in California for a permit to re-open its US production plant in Fremont.
A small scale COVID-19 outbreak in White House has added credibility to warnings from advisors who speak of victim count escalating in case of lockdown easing in member states. This, along with expectations from Fed speech on signs for negative interest rate next year, is likely to keep price action highly volatile during the trading session today.
On earnings calendar front, Wall Street sees quarterly data from Marriott Int, Expedia, Mylan, Under Armour, and Coty Inc.
Trading Perspective: Given dovish cues from European markets and pre-market sentiment in the USA over fresh COVID-19 victim count, the cautious tone remains high, suggesting Wall Street is set to see dovish activity today. Futures trading in the international market displayed dovish activity suggesting Wall Street is set to open lower as trading session resumes for the week.
EUR/USD: The pair is trading mostly flat in the global market today. But price action shows a clear dovish bias as news of new covid-19 victims in Germany once lockdown measures caused EURO bulls to come under pressure. But news of COVID-19 outbreak among White house staff added pressure on USD helping keep decline in check. The price remains in the lower half of 1.08 handle now and cues from Fed speech later in the day will help provide directional bias as trading session gains momentum for the week.
GBP/USD: The pair is seeing a highly volatile price action driven by broad market risk sentiment. The pair tested 1.24 handle on positive risk sentiment earlier in the day supported by news of UK’s plans for slow lockdown easing. But risk-averse market mood later in the day weighed down the pair causing the price to test intra-day low at 1.2284 post which price has consolidated around mid-1.23 handle. Traders now await Fed speech later in the day as any signs on future interest rate stance will help provide directional bias.
USD/CAD: The pair is trading flat as both sides have the strength to keep the other from building a rally. Positive crude oil price underpinned by reports from Saudi production cut helped CAD remain firm while USD is backed by safe-haven demand. But news of COVID-19 outbreak among white house staff keeps USD under pressure causing pair to move rangebound around the 1.4000 handle.
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