US President Trump’s lockdown extensions decision is the main driving factor behind market activity today.
Summary: As the trading session opened for the week, major indices and key equities across Asian and European markets continued to tumble on escalating COVID-19 woes.
The global death toll of COVID-19 victims continues to grow with each passing day showing no signs of peaking any time soon, which keeps broad-based investor tone in full-on cautious mode. Chinese central bank slashed its interest rates yet again in a bid to support its economic activity, but the impact from current and previous easing on both China and other major global markets are yet to fully reflect on global economic activity.
In the European market, fears of further escalation in COVID-19 victim count has resulted in further expansion of lockdown across major European nations. This went along with news that US President Donald Trump has abandoned plans to jump-start the US economy in mid-April and wait until the end of April before making any moves as per recommendations of top medical advisors affected global economic growth outlook considerably.
As lockdown extensions basically point at bearish fundamentals for the immediately foreseeable future, equities and indices are set to enter another phase of an extended meltdown in Asia and Europe.
Precious Metals: Rare metals posted sharp gains earlier in the day post which traders resorted to removing profits and base investment in a bid to make the best of scenario. This, along with firm USD has resulted in the price of gold and other major metals taking consolidative tone, albeit rare metals enjoying multi-year high price levels.
Crude Oil: The crude oil price continued to decline in both major international benchmarks today. Despite various headlines hinting at possible favourable occurrences, no event that could affect the ongoing glut scenario outlook has come into reality yet. Further, news of the US and other major European markets extending their lockdown duration has resulted in WTI falling below $20 handle to 18-year lows while Brent moved below $25 per barrel in Asian and European market hours.
DXY: The US Dollar index has maintained a relatively stable level today, having managed to hold firm above the 99 handle across Asian and early European market hours. As COVID-19 woes and resultant lockdown duration face an escalation, caution looms steadily boosting demand for USD as a safe-haven asset. However, fund infusion by the US Fed and economic support measures from the US government keep USD from seeing a sharp surge in the global market.
On The Lookout: All eyes are focused on information about local and global lockdown related headlines as COVID-19 shows no signs of peaking any time soon. With the global pandemic scenario growing on unprecedented historic scales, huge support measures taken by major global central banks have failed to create a required impact on economic activity despite causing some visible changes to price dynamics in the financial services market.
On the release front, the US calendar sees the release of Pending Home Sales data while later in Pacific-Asian market hours, the Australian calendar will see the release of private sector credit and China will see the release of Chinese Composite PMI, Manufacturing PMI, and Non-Manufacturing PMI data.
Trading Perspective: Forex market will see major global currencies trade range-bound near familiar levels on firm USD. Wall Street will see a dovish opening post which major indices are highly likely to trade on a divided note as the market will likely see various interpretations of President Trump’s lockdown cues come into play on the first trading session of the week.
EUR/USD: The pair continues to hold fort above 1.10 handle for now. While USD remains firm in the global market on broad-based cautious tone, it is yet to gain momentum while EURO’s fundamentals hold steady for now resulting in range-bound price action below the 1.105 handle for now. Traders now await fresh cues from US market hours for short term profit opportunities.
GBP/USD: The pair is holding steady above 1.24 handle for now but the pair is swinging between 1.23 and 1.24 handle in intra-day session over the impact from last week’s Fitch rating downgrade for UK economy. Further firm USD also adds pressure to GBP bulls resulting in a clear dovish tone despite price holding within familiar price levels. Traders now await fresh cues from US market hours for short term profit opportunities.
USD/CAD: The pair has managed to regain hold above 1.41 handle on a sharp decline in the crude oil price to multi-year lows. While USD by itself lacks the strength required to make a sharp upward move, the decline in crude oil price is weakening Canadian Loonie considerably providing USD bulls with momentum required for upside lift. Traders now await fresh cues from US market hours for short term profit opportunities.
