COVID-19 woes pressure market, Powell/Mnuchin speech in focus.
Summary: Global equities and indices are experiencing mixed activity in the market today led by local and geopolitical cues. Favorable data in the Asian market helped keep hopes of economic recovery and optimistic risk sentiment fundamentally supported. But China’s move to pass new national security law further strengthening Beijing’s hold on Hong Kong caused the US government to retaliate by removing all special status which the former autonomous regions enjoyed. This caused market mood to take a slight hit as US-China tensions simmering in the background to come back to into focus once again.
In the European market, major indices & key risk assets saw a muted opening and were mostly trading with dovish bias as traders booked profit on recent gains ahead of the start of the new quarter. The EU area macro data saw positive readings that provided some level of relief.
Rare metals: As Covid-19 cases continue to rise on several key economies forcing them to re-enforce lockdown measures once again, caution remains at a peak in the market, providing strong demand to safe-haven metals. Both gold and silver are trading positive with gold scaling fresh yearly highs and is on a path of best quarterly close since 2016.
Crude Oil: The price of crude oil in the international market was mostly flatlined today. Amid lack of any fresh update to impact demand-supply dynamics, hopes for improved outlook in the upcoming quarter prevented sharp meltdown, but shifting focus to weekly US stockpile updates kept WTI and Brent from seeing any solid gains.
DXY: The US Dollar index, which measures the strength of US Greenback against rival global currencies, remains firmly rooted in 97 marks supported by prevalent caution in the market. But the impact from Fed and government support packages keeps index from seeing further upside move resulting in index stagnating around the lower end of 97 marks.
On The Lookout: There are several factors on the lookout today. Aside from developments surrounding China-U.S. tensions, the UK saw a disappointing slew of macro data, which along with Brexit woes, killed the mood in the UK market. BOE is planning to keep the economy supported with its QE measures as the UK government’s economy re-opening plans came to a halt with escalating COVID-19 count forcing them to quarantine the city of Leicester.
Shell seems to be another victim of the ongoing oil market crisis. Later in the day, there is a speech from the Fed Chair Powell and Mnuchin addressing House Financial Services Committee, during which the Fed Chair is expected to re-iterate his views that ongoing economic recovery still has a highly uncertain outlook. On the release front, the Canadian calendar sees the release of monthly GDP while the US calendar sees the release of CB Consumer Confidence data.
Trading Perspective: US Wall Street is set to see a muted opening as concerns of escalating COVID-19 victim count in various states and resulting lockdown measures are causing risk sentiment to dwindle. US futures trading in the international market, were down as hopes for economic recovery tanked following reports of record COVID-19 victim count in California and Texas despite weekend readings showing signs of a slowdown in victim count.
EUR/USD: The pair continues to remain firmly rooted in familiar price range as both sides of the pair continue to wage war for control. Firm USD in-market supported by caution dragged the pair below 1.1200 marks, but positive EU area data helped price recover back to mid-1.12 handle. Traders now await US data and Fed Chair speech for short term profit opportunities.
GBP/USD: The pair is seeing sharp oscillations in price mostly centered above 1.235 marks. But disappointing UK data caused a pair to sink towards the mid-1.22 handle. Firm USD keeps pair under pressure, but price rebound over comments of PM Johnson’s infrastructure spending plans. Traders now await US data and the Fed Chair speech for short term profit opportunities.
USD/CAD: The pair continues to retain positive bias as CAD suffers from declining crude oil prices in the international market. But, USD failed to breach 1.37 handle and remains trapped in 1.36 handle regardless of USD’s support from safe-haven demand in the market. Traders now await US/Canadian macro data and Fed Chair speech for short term profit opportunities. Please feel free to share your thoughts with us in the comments below.
Please feel free to share your thoughts with us in the comments below.