Summary: Major indices and stocks across key global markets are trading positive on hopes of economic recovery led by the EU’s approval of a huge recovery package. EU summit saw its members finally agree to a 750 Billion Euro stimulus package after four consecutive sessions of talks. While the initial expectation was for approval of 500 Billion Euro worth non-payable support, the approved package saw the value of non-repayable grants reduced to 390 Billion Euro while the rest is expected to be granted in the form of repayable loans.
The impact from the same gave a huge boost to blue-chip sector shares pushing European assets to scale fresh 4-month highs during the trading session today. Aside from blue-chip shares, the European market also saw positive influence from gains in Bayer AG and Logitech International SA shares. Energy sector shares also gained a boost as crude oil price, and demand outlook gained positive support from the EU stimulus package announcement.
Rare Metals: Both Gold and Silver are trading positive with a clear margin of gains as caution continues to loom amid escalating covid-19 victim count. While stimulus package talks spur risk sentiment in the market, it still lacks the strength to offset demand for safe-haven assets in the global market.
Crude Oil: The price of both Brent and WTI benchmarks and their futures are seeing positive activity in the international market today. News of EU approval of massive stimulus package helped improve economic recovery and growth outlook which in-turn helped improve demand outlook providing fundamental support to oil bulls and helping push price to fresh 4-month highs in the European market.
DXY: The US Dollar index fell further in the 95 level today and consolidated around the mid 95 mark as talks of 5th stimulus package in USA and update of EU approval of massive economic recovery package greatly pressured US Greenback. USD maintains most of its recent gains owing to support from caution led by the covid-19 outbreak. But with vaccine cues and stimulus package led economic recovery hope slowly eating away at safe-haven demand in the market, USD is edging lower against global counterparts with each passing day.
On The Lookout: Following the EU’s announcement of the massive support package for economic recovery activity, the focus of traders across the globe shifts to USA’s 5th stimulus package approval proceedings. President Donald Trump wants to add payroll tax relief as part of the package while Treasury Secretary Steven Mnuchin who spoke about the package just mentioned that the stimulus package they are currently working on would focus primarily on Kids, Jobs, and Vaccines. This round of support package is estimated to stand at 1 Trillion USD but signals from Trump administration also support the possibility of some form of Tax incentives in the upcoming support package.
While the covid-19 outbreak continues to scale record levels with each passing day, House Democrats continue to lobby for more support towards reopening schools across various states explicitly. The effort goes to such an extent that the Trump administration is willing to provide more support from stimulus package towards the state which works to reopen business and schools despite the possibility of such efforts leading to another wave of massive covid-19 outbreak.
On the release front today, the US calendar sees API weekly crude oil stockpile data and Redbook release while the Canadian calendar sees the release of retail sales data and new housing price index data.
On earnings calendar front, the US market sees quarterly data from Coca-Cola, Texas instruments, Philip Morris, Lockheed Martin, Prologis, Paccar, Capital One Financial, Synchrony Financial, United Airline Holdings, and Comerica.
Trading Perspective: US futures trading in the international market saw positive activity led by cues from positive IBM earnings report yesterday and broad market risk on tone led by EU support package update. Wall Street is expected to open positive as recovery hopes in the USA remain high supported by vaccine cues and government stimulus measures.
EUR/USD: The pair continues to trade on a positive note with clear fundamental support today as the EU’s approval of massive stimulus package came as a welcoming support factor. The rally was further supported by broad market USD weakness, allowing price to climb above the mid-1.14 handle and test the intra-day high of 1.1490. Traders now await cues from the US on stimulus package efforts for short term profit opportunities.
GBP/USD: The pair is seeing positive price action today with GBP scaling fresh 5-week highs as talks of stimulus measures in the US and Europe greatly improved broad market risk sentiment. USD’s weakness in the broad market also added strength to GBP’s rally, allowing pair to test mid-1.27 handle. Traders now await cues from the US market for short term profit opportunities.
USD/CAD: The pair is continuing to edge lower for the third consecutive session today as USD continues to weaken sharply in the global market. Further, risk sentiment led by talks surrounding US and EU stimulus package also helped improve crude oil demand outlook adding support to CAD bulls, and this caused the price to fall below the 1.345 mark in trading session today. Traders now await US macro data – API weekly stockpile report and Canadian macro data for short term profit opportunities.
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