Economic recovery hopes spurred by central bank support efforts help underpin risk sentiment.
Summary: Global equities are trading positive on the last trading session of the week supported by hopes for economic recovery. European equities are trading positive on the day led by hopes for economic recovery as focus shifted to European council meeting as they plan on voting over expanding European economic recovery fund. The European Council is expected to discuss increasing support packages from 750 Billion Euros of debt to 1.1 Trillion Euros from 2021 to 2027. As headlines hinted at possible progress in German government bailout for Lufthansa, the shares of airline operators rose by more than 3% in mid-European market hours.
Precious Metals: While risk sentiment remained prevalent in the market, haven demand is also on the rise as the new victim count of Covid-19 continues to escalate, causing concerns for the second wave of global COVID-19 outbreak. This allowed both Gold and Silver to trade with positive bias across Asian and European market hours with a substantial 1% gain in intraday price action.
Crude Oil: Crude oil price is seeing affirmative price action on both WTI and Brent benchmarks and their futures in the international market. While the price declined over concerns stemming from escalating stockpile count earlier this week, price action improved with fundamental support today as OPEC and its allies promised to abide by their supply reduction commitments which in turn helped improve the demand-supply ratio.
DXY: The US Dollar index, which measures the strength of US Greenback against six major global rivals, stands firm at 97 handles and edged its way up to 97.5 marks over prevalent cautious tone in the market. However, increasing risk sentiment supported by hopes for economic recovery capped USD’s gains. It pressured greenback into giving up some of its early benefits as focus shifted to the EU, increasing its support package.
On The Lookout: OPEC’s reassurance came as a refreshing move to control oil price decline helping support rally in the global energy sector shares, albeit lack of immediately visible change in price action. The EU is set to vote on increasing its support package spending with forecast hinting at a strong possibility of a positive outcome. This, along with the ongoing Fed spending program, is expected to improve global economic recovery at a swift pace helping improve market mood today.
In North American market hours, there is a speech from multiple Fed members – Rosengren, Powell, Quarles, and Mester. But not much is expected from these speeches as most cues have already been priced in by traders given Fed Chair Powell’s testimony before Congress earlier this week. There is also a release of US Q1 current account balance, but the same is not expected to create a huge impact. Meanwhile, the Canadian calendar sees the release of Retail Sales data.
Trading Perspective: US Futures trading in the international market saw affirmative price action as optimism surrounding fast-paced economic recovery over increased spending and active participation from major global central banks, which provided an ample amount of structural support.
Wall Street is set to open positive as the last trading session of the week comes into play with cues from the international market and broad market sentiment in the home ground showing a high level of risk appetite.
EUR/USD: The pair is trading mostly flat but the price has finally declined below the 1.1200 mark as USD continued to grow strong over escalating concerns on a second wave of the COVID-19 outbreak. But the decline was capped and price dances around 1.12 mark as focus shifts to EU council meet which votes on support package spending increase proposal. Traders now await cues from the EU council vote for directional bias and US macro data for short term profit opportunity.
GBP/USD: The pair is trading with clear dovish bias and fell below mid-1.23 mark as the market ignored positive macro data outcome given pressure from very little change to BOE’s QE program. Firm USD in the global market and concerns of a second wave of the COVID-19 outbreak keeps pressure on GBP bulls but data from positive drug trials in the UK lends a hand. Traders now await US data for short term profit opportunities.
USD/CAD: The pair is trading flat as neither currency has the strength to force a rally with directional bias in its favour. However, gains in crude oil price led by a promise from OPEC and its allies to uphold their commitment helped CAD limit USD’s gains despite its firm strength in the global market and drag the price below the 1.3600 mark. Traders now await the US and Canadian macro data for short term profit opportunities.
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