Virus outbreak woes keep market in a cautious mood, speech from central bank figures to help shed light on economic growth outlook given profit warnings from major corporates.
Summary: Wall Street suffered a huge loss yesterday with DOW & S&P 500 indices seeing the worst drop in two years over the coronavirus outbreak influenced cautious cues.
Following Wall Street’s closing, Asian markets opened softer for the day, but news of rumored vaccine for coronavirus resulted in major indices seeing a mixed close at the end of the Asian session. European markets opened with slight gains for the day, but cues from the Asian market soon lost strength in the market causing early gains to fade away and major indices and equities seeing sharp declines.
European markets similar to Wall Street are seeing its major indices scale fresh 3-1/2 year lows but lack of fresh wave of dovish influence and dominant cautious tone led to major risk assets seeing consolidative price action. In the forex market, USD and other safe-haven currencies are enjoying a field day while major risk currencies are seeing range-bound activity near weekly lows.
Precious Metals: Both silver and gold are trading with a slight decline in the global market today as traders took to profit booking activity post previous sessions sharp price in upsurge. Further, firm USD made it a costly investment for traders from the international market to invest in greenback-denominated safe-haven metals resulting in price trading above major support level albeit lower from previous session highs.
Crude Oil: Crude oil price is seeing further declines in the global market today following the previous day’s close with a 4% decline. While futures are seeing a decline, the momentum lacks pressure from bears resulting in a relatively slower decline compared to the previous session. OPEC’s delay in coming to an agreement on supply-related decision ahead of next week’s meet also adds pressure to liquid gold.
AUD/USD: The pair is trading mostly flat albeit exhibiting signs of bearish pressure. The pair saw slight gains earlier in the day resulting in price testing 0.6600 handle but lack of strength behind AUD bulls resulted in price declining back below-mentioned levels. The price is mostly locked around 0.6595-85 range while traders await US data for short term cues.
On The Lookout: Major multinational firms are finally beginning to open up about their views on virus outbreak as they have started taking into account the impact of the virus outbreak on their business. Global payment service giant Mastercard warned that its net revenue will drop by 2%-3% if virus outbreak in the global market continues to persist while US airline operating giant United Airlines which has huge exposure to international flights withdrew its full-year guidance for 2020 stating that impact of virus outbreak escalates uncertainty over travel demand.
On OPEC’s front, the demand outlook continues to deteriorate with each passing day OPEC members fail to come to an agreement on further supply cut related decisions as per comments from Saudi Arabian Energy Minister. However, members of the OPEC+ group are expected to make the critical decision for rebalancing the oil market during their upcoming meeting in Vienna next week.
On the macro calendar front, the US calendar sees the release of CB Consumer Confidence data and speech by FOMC members Kaplan and Clarida while the Canadian calendar sees a speech from BOC Gov Council member Lane.
Trading Perspective: Wall Street is likely to open flat as activity of US futures in the international market suggests the possibility of major indices reversing some of its loss from multi-year lows scaled in the previous session. However, the overbearing cautious tone in the market is likely to keep all risk assets under pressure given the earnings-related warnings from major US corporates.
EUR/USD: The pair is trading range bound around mid-1.08 handle with clear signs of bearish influence on EURO as virus outbreak woes put a dent on the economic growth outlook. While USD remains firm on safe-haven demand it is unable to make headway owing to fed rate cut expectations which are on the rise resulting in price action with lack of directional bias. Traders now await US data and Fed speech for short term profit opportunities.
GBP/USD: The pair is seeing GBP build on its momentum from the previous session’s price bounce as GBP bulls took advantage of USD’s momentary lapse in control of price action owing to escalating rate cut bets from Fed. While the pair approached 1.30 handle it failed to scale the mark as USD held firm despite slight pullback supported by its strength gained from the safe-haven appeal. Traders now await US data and Fed speech for short term profit opportunities.
USD/CAD: The pair is trading flat as both sides lack the strength to induce a rally owing to varied cues. CAD gained strength from the slight recovery in crude oil price but failed to see follow through on its rally as the crude oil price remains under bearish pressure. While USD weakened on escalating fed rate cut bets, safe-haven demand helped prevent CAD from gaining an initiative resulting in today’s directional price activity. Traders await US data and speech from central bank figures for directional cues.
Please feel free to share your thoughts with us in the comments below.