Equities Terminate Rebound Rally on COVID-19 Cues, Wall Street to Trade Positive on Trump’s Comment

Trump’s comments

European COVID-19 death toll halts recovery rally. Trump comments on COVID-19 peaking to keep Wall Street trading positive. 

Summary: After two days of sharp rebound price action in global equities and forex market, bulls gave up control of price rally on renewed COVID-19 woes. In the European market, while the existing news of COVID-19 easing in some major cities and countries helped ease concerns, fresh update hinting at the sharp escalation in death toll count in Spain and France caused risk sentiment to dwindle again.

Further, the report caused France to register as the fourth nation with death toll count exceeding 10000 members and this news greatly affected the morale of investors despite virus impact easing in other parts such as Italy, which was initially the ground zero of COVID-19 outbreak in the European continent. Forex market saw major currencies trade flat inside familiar price levels as USD recovered its lost strength in the previous session over renewed safe-haven demand. 

Precious Metals: Rare metals are trading positive in the global market today over the renewed sense of uncertainties given escalating COVID-19 death toll in key European nations and lack of agreement between EU ministers on the rescue package. However, profit booking activity earlier in the day resulted in the price of gold falling below multi-year highs scaled yesterday post, which price consolidated above $1650. 

Crude Oil: Crude Oil price is trading flat in the international market oscillating in a zig-zag pattern around $25 per barrel. The sharp surge in the US weekly crude oil stockpile API data weighed down oil bulls, but hopes for OPEC members and G20 energy meeting to yield results later this week helped limit decline today. 

DXY: The US Dollar index, which measures the strength of US Greenback against six major global currencies, is seeing positive movement today with the index moving back above $100 handle. The gains were the result of renewed safe-haven demand on a fresh spike in the European COVID-19 death toll. But President Trump’s comments hinting at Covid-19 nearing peak prevented the index from seeing a sharp upsurge. 

On The Lookout: As the price of crude oil, its supply and demand ratio greatly affects global economic progress and outlook, all eyes are focused on OPEC+ members are G20 energy summit to come to a solid agreement by the end of this week. However, the reality of such events seeing solid progress is still doubtful as Russia wants USA, Canada and other energy producers outside of cartel to reduce their output and production levels as well if it should participate in supply reduction agreement. As the decision on such a large scale and its impact still remain debated, the outcome of these events is the major focus.

In Europe, the EU finance ministers failed to agree on the economic support package bill. The investor sentiment has plummeted considerably, given that it is already hammered down over COVID-19 death toll woes. On the economic calendar release front, the US calendar sees the release of EIA weekly inventory data and Fed meeting minutes while the Canadian calendar sees the release of Housing Starts and Building Permits data. 

Trading Perspective: Broad-based caution and firm USD are likely to keep major global currencies matched against USD in range-bound price action. US futures trading in the international market saw a spike in positive momentum over President Trump’s comments stating that COVID-19 is nearing peak in the USA. This suggests that Wall Street indices will continue their positive price action for the third consecutive session this week. 

EUR/USD: The pair is holding steady above 1.08 handle across European session. But the price went below mid-1.08 handle as USD gained strength over escalating caution in the market. As USD still lacks the strength to make a major change in direction bias, price is likely to oscillate around mid-1.08 handle while traders await US Fed meeting minutes for directional cues. 

GBP/USD: The pair continues to trade positive against USD despite intra-day activity seeing price slide as low as 1.2288 over a sharp surge in USD strength on a spike in cautious tone during European market hours. As GBP still holds most of the gains from recent rebound momentum, the price is oscillating above the mid-1.23 handle to 1.2420 handle for now. Traders now await US Fed meeting minutes for directional cues. 

USD/CAD: The pair is trading in zig-zag fashion around 1.3985 to 1.408 handle as CAD continues to fight back against USD-given strength from Crude oil price action in the global market. But the recovery of USD’s strength in the global market prevented CAD from holding control over directional bias. Traders now await US crude oil stockpile data and Fed meeting minutes for directional cues. 

Please feel free to share your thoughts with us in the comments below. 

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