Earnings in focus, as usual, stimulus-related updates & Trump’s executive order on lowering prescription drug awaited.
Summary: Global equities on Monday were mixed amid varying cues from market-led by covid-19 and geopolitical woes. European market today saw major indices and key equities take a huge dovish blow as the UK imposed a compulsory quarantine measure on travellers returning from Spain amid a surge of the covid-19 count. This caused the travel sector shares to drag market momentum slightly lower in European trading hours. However, the decline was capped over better than expected outcome in German Ifo Business Climate index readings.
Rare Metals: Both gold and silver are continuing to trade with clear positive bias amid escalating covid-19 woes. Gold futures in international market scaled fresh all-time highs and is on a path to set a new record as bulls aim to conquer $2000 mark by the end of this week. At the same time, silver also trades at fresh multi-year peaks as price teased levels last since in 2013 as covid-19 woes continue to clearly underpin demand for rare metals.
Crude Oil: Crude oil price was mostly flat in the international market today. But across both Asian and European market hours, the price displayed a clear but slight bullish edge as hopes that upcoming US stimulus measures will help improve overall demand outlook.
DXY: The US Dollar index continues to edge lower and is currently around mid-93 mark. USD is clearly weighed by government stimulus measures impact and expectation for clear prolonged dovish outlook from the Fed in the current and foreseeable future. The index is currently seeing the US Dollar at its lowest since September 2018.
On The Lookout: Geopolitical tensions have peaked yet again as China retaliated against US move by force closing USA consulate in Chengdu. However, the pressure from the same is yet to fully impact the market as traders focus at the moment on short term stuff. Hopes for the covid-19 vaccine as Moderna moves to test trial for its vaccine on late-stage patients was welcoming move easing woes from ever-escalating covid-19 woes.
While Brexit woes and covid-19 woes continue to plague Europe and UK, the latter has decided to ban travellers from Spain by imposing mandatory two-week quarantine measure in order to prevent in response to a sharp outbreak of new victims in Spain as it heads to usual peak tourism season. Traders now await earnings report from NXP, Alexandria RE, Cincinnati Financial and Principal Financial, Hasbro, Avery Dennison, F5 networks, Universal Health Services and National Oilwell Varco.
On the macro data front, US calendar remains relatively silent aside from the release of core durable goods order data.
Trading Perspective: US Futures trading in the international market were mixed owing to multiple cues causing Chaotic outlook in the market. Just as China-U.S. relations worsened over China retaliation, hopes for US Senate Republicans focusing on discussing 5th Stimulus package worth 1 trillion USD with democrats is also in focus helping improve risk sentiment to some extent.
President Trump is expected to release executive order forcing Pharmaceuticals to lower their price for prescription medication, and this update provided some level of positive bias as well. But decline in tech sector shares ahead of the market open and escalating covid-19 count came as a serious blow.
EUR/USD: The pair is trading with clear positive bias as a rally driven by USD weakness continues to support EURO bulls. This helped price scale above 1.17 handle but mixed macro data outcome in EU area capped gains. Traders now await US data for short term profit opportunities.
GBP/USD: The British Pound takes advantage of short term boost gained by USD weakness and drives the price rally to breach past mid-1.28 handle. Tensions between UK & Spain over special quarantine measure capped gains despite pair testing 1.29 handle for a short moment. Traders now await US data for short term profit opportunities.
USD/CAD: The pair is trading with clear dovish bias as USD scales fresh multi-year lows. But the decline is limited well above the 1.3350 mark as CAD lacks the strength to build rally over-current scenario surrounding crude oil price momentum. Traders await US data for short term profit opportunities, but the overall directional bias remains in favour of Loonie.
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