Macro data-led activity dominates the market as trading session heads to close for the week.
Summary: European market today saw major indices and key equities open on a dovish note and continue sliding to new lows following up on previous session activity. However, the rally came to a halt in mid-late session as cyclical got adjusted to real-time market activity recovering from decline led by a news-led rally.
While the Fed update sent major risk assets across the globe tumbling down over escalating concerns of slow economic recovery forecast, cyclical stocks recovered some of its losses on hopes that stimulus package from Germany, EU and ECB will help cushion the impact from an economic downturn and provide support for a recovery rally.
Precious Metals: Caution continues to escalate in the market despite risk assets adjusting to real-time flow as Fed’s projections of slow economic recovery across the globe seems highly likely given the resurgence of covid-19 victim count on all key markets which have reopened their economy. This has caused a sharp spike in demand for safe-haven assets resulting in the price of both gold and silver trading positive well above key psychological levels.
Crude Oil: Crude oil price consolidated hold slightly above weekly lows and showed some level of rebound activity following yesterday’s 8% decline in price action. While the sharp decline was led by a forecast for slow economic recovery and lacking demand outlook led by Fed cues, the demand to supply ratio hardly saw any major change in favourable directional which puts both WTI and Brent on the path to a dovish close for the week.
DXY: US Dollar Index remains firmly rooted in the 96 handle for the week, but the index is slowly edging higher as US Greenback has strengthened to some extent over increased caution led by bleak Fed economic recovery outlook and resurgence of COVID-19 victim count. But the index is set to close for the week well below 97.5 level even in data and cues in North American hours later in the day helps USD triumph against its global rivals as the week comes to close later today.
On The Lookout: At a time when Brexit uncertainties and covid-19 outbreak are already taking a serious toll on UK economic activity, today’s GDP data came as a major blow. UK’s yearly GDP was down by new historic levels at 24.5% while monthly GDP was down by 20.4% well below even its rival economies in neighbouring EU nations. All key sectors in the UK have taken a strong hit over COVID-19 outbreak which built up on the previously existing Brexit woes causing this decline. In US market hours, as the week comes to close, traders are on the lookout for May’s Import and export price index and Michigan consumer sentiment data for short term trading cues.
Trading Perspective: Wall Street is set to open on a positive note as trading activity in the international market suggests investors have recovered from the impact of Fed’s economic recovery outlook update which helped key assets and indices re-adjust price activity to some extent. Given the recent pattern where rebound always follows up after a sharp decline led by news-driven data, US futures trading in the international market saw positive activity which suggests Wall Street will open and trade on a positive note today.
EUR/USD: The pair is oscillating in familiar price levels having adjusted to regular activity post recovering from Fed update led rally. The pair tested as high as 1.1341handle, but firm USD in the international market caused the price to tumble back to mid – 1.12 handle. Traders now await US data for short term profit opportunities.
GBP/USD: The pair is trading with clear dovish bias and price has declined all the way to lower half of 1.25 handle as UK’s GDP update gave British Pound a major blow. The pair tested an intra-day low of the 1.2520 handle and has since remained rangebound in the lower half of 1.25 handle as firm USD, and cues from UK macro data keep GBP bulls under significant pressure. Traders now await US data for short term profit opportunities, but pair is all set to close for the week well below the 1.26 handle.
USD/CAD: The pair is trading mostly flat as both pairs continue to lack the decisive factor for a breakout. While Fed update and linger caution in the market over fears of renewed COVID-19 outbreak underpins USD bulls, the Greenback still remains weak in the international market. Canadian Loonie, on the other hand, received some support from Crude oil price recovery earlier today. But the overall dovish environment surrounding Crude oil market keeps Loonie in pressure resulting in pair oscillating between 1.35-1.365 handle awaiting a directional trigger for breakout rally. Traders now await US macro data for short term profit opportunities.
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