JP Morgan, Citi Group, Wells Fargo, and Delta Airlines earnings in focus.
Summary: Global equities and indices are seeing dovish market activity today, led by renewed China-U.S. tensions. Risk sentiment in the market has already taken a huge hit from escalating global covid-19 victim count.
While the impact from the second wave of the outbreak had been lower compared to the first wave of news of vaccine developments, Washington’s latest move to reject China’s disputed claims to offshore resources in South China seas caused tensions to bloom once again. Beijing’s response came as a veiled threat stating that US action is inciting tensions in the region, causing focus to shift to geopolitical events yet again.
In the European market, aside from cues in the Asian market, a decline in the tech sector share also impacted the market causing major indices and key stocks to see sharp declines today.
Rare Metals: Both silver and gold are enjoying positive price action today with the price of Gold back above $1800 handle while silver crossed $19 mark. Escalating Sino-U.S. tensions, along with covid-19 woes, helped improve demand for safe-haven metals despite cues hinting at economic recovery, allowing rare metals to see positive price action today.
Crude Oil: Crude oil market is seeing positive price action across its key benchmark indices WTI & Brent and their futures in the international market today. Signals hinting at increased purchase activity from China helped improve demand outlook. Focus now shifts to OPEC monthly report set to be published in North American market hours later today.
DXY: US Dollar index continues to struggle hard in the lower half of the 96 mark. While events that cause safe-haven demand to spike looms large in the market, the impact of US stimulus measures and covid-19 woes impact on the US economy keeps USD under pressure causing it to remain trapped in familiar levels against major rival global currencies.
On The Lookout: The main focus of investors is on earnings reports and OPEC monthly report during US market hours. In response to the escalating covid-19 outbreak, California Governor has ordered the closure of all indoor businesses in a bid to reduce new victim count.
North American market hours sees the release of an earnings report from major US banks and delta airlines. JP Morgan reported better than expected earnings reports in pre-market hours, helping improve investor mood. But caution still looms high on account of China-U.S. tensions and Covid-19 woes. Traders now await earnings report from Delta Airlines, Citi Group, and Wells Fargo and US CPI data on macro data front aside from speech from Fed members Brainard and Bullard.
Trading Perspective: US futures trading in the international market was mostly dovish on account of China-U.S. woes and the Covid-19 outbreak. But price action saw slight positive move over positive JP Morgan earnings report. Wall Street is expected to open flat, post in which earnings reports are likely to provide directional bias.
EUR/USD: The pair tested fresh monthly highs and is trading above the 1.1400 handle as a rally driven by broad market USD weakness drives momentum. But Euro’s lack of strength prevented price action from gaining a sharp breakout to the topside resulting in price consolidating around the 1.1405 mark. Traders now await US data for short term profit opportunities.
GBP/USD: The pair is trading range-bound in 1.25 mark as GBP is weighed down by mixed macro data update from the UK. However, the broad market USD weakness helped keep price action steady above the mid-1.25 mark. Traders now await US data for short term profit opportunities.
USD/CAD: The pair is seeing flat price action around the 1.3600 mark and price often tests the 1.3590 mark as CAD remains firm supported by positive crude oil market activity. USD’s weakness had little impact as safe-haven demand provided USD bulls with enough strength to retain price action at current levels. Traders now await US data for short term profit opportunities.
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