China-U.S. tension comes as a major blow, a basket of U.S. earnings in focus – Microsoft, Tesla, Chiptole.
Summary: Asian equities maintained a relatively mixed performance across key markets today, but the European market saw a sharp decline in price momentum over the latest developments in US-China relations. Beijing today announced that the U.S. had ordered Chinese embassy in Houston to be shut down and it retaliates by ordering U.S. embassy in Wuhan to be closed down. Just as hopes of economic recovery gained focus on E.U. stimulus package announcement, the wind was knocked out of the bulls by recent developments in Sino-U.S. relations. This caused key indices to go on the defensive with losses primarily focused on Auto making sector.
Rare Metals: Gold and Silver are enjoying a field day today with the price of both metals scaling fresh highs on geopolitical cues. While safe-haven metals have recently enjoyed a fundamentally supported positive price rally led by covid-19 woes, latest developments in China-U.S. tensions has allowed both metals to scale fresh monthly highs. Gold has conquered key resistance levels and is currently on a path to scale new all-time highs last seen nine years ago.
Crude Oil: Crude Oil market is seeing positive price action across both WTI and Brent futures today in the international market. While US API weekly inventory data showed a build in inventory, demand outlook boost gained from E.U. stimulus measures updates helped balance demand-supply ratio allowing for positive price action today while traders focus on EIA weekly U.S. stockpile data scheduled to release later today.
DXY: U.S. Dollar continues to weaken in the global market with each passing day. As China-U.S. relations take a new hit, pressure on USD nearly doubled today given already huge pressure from U.S. and E.U. stimulus efforts. The price of the index has finally declined below the 95 mark and is currently trading at the 94.8 handle in the international market today.
On The Lookout: Development surrounding discussion of 5th U.S. government stimulus package still remains in focus. With 1st stimulus package phase coming to an end in a couple of days, investors are looking for updates on 5th package to be announced as U.S. market continues to suffer huge blows from geopolitical woes and covid-19 pandemic. Talks surrounding stimulus package have come to an impasse as there is a huge difference of opinion on the topic between Republicans, Democrats, Senate Republicans and Trump administration. Aside from these talks, on an economic calendar schedule, traders await the release of U.S. existing home sales data, EIA weekly crude oil stockpile data and speech from ECB President Lagarde.
On the other hand, Wall Street is set to see a slew of earnings reports from a huge basket of industry-leading firms namely – Microsoft, Tesla, Thermo Fischer Scientific, CSX, Biogen, Kinder Morgan, Chiptole Mexican Grill, NASDAQ Inc, Equifax, Fortinet, Baker Hughes A, North Trust, Discover, Dover, Varian, Omnicom, Key Corp, Lamb Weston Holdings, Whirlpool and S.L. Green.
Trading Perspective: U.S. futures trading in the international market has taken a hit over developments in China-U.S. Tensions. Wall Street is set to see a muted opening for the same reason while earnings reports will provide directional cues for intra-day activity.
EUR/USD: The pair continues to climb in favour of EURO albeit with a slow-paced momentum as the rally is built by broad market USD weakness. EURO bulls are also supported by impact from recent EU stimulus package announcement at the moment allowing pair to scale 1.16 handle earlier today. Traders now await US macro data and ECB Lagarde speech for directional cues and profit opportunities.
GBP/USD: The pair remains mostly flat today but continues to hold onto to recent gains as the rally is primarily driven by USD weakness. Vaccines cues from UK market also provide GBP with some level of fundamental support allowing the price of pair to consolidate above 1.27 handle today. Traders now await US macro data for short term profit opportunities.
USD/CAD: The pair continues to trade with dovish bias today and even declined below 1.34 handle for a brief period. However, inherent weakness stemming from Crude oil stockpile related dynamics affected CAD to a certain extent allowing USD to move back above the 1.3400 mark. For now, traders now EIA weekly US stockpile data and other US macro data for short term profit opportunities while dovish USD provides clear directional bias in favour of Loonie.
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