US economic support bill vote, BOC’s interest rate decision in focus as the trading session comes to close for the week.
Summary: Global equities are closing for the week on relatively dovish note despite slight recovery earlier this week. While European markets saw corrective rally yesterday, it still managed to close for the day on positive note recording three consecutive sessions of positive price action. But the chain of positive closing was broken today as death toll saw a sharp escalation in Spain and UK’s shutdown of its housing markets which caused a ripple effect in construction, realtor and bank sector shares.
Failure to come to an agreement on issuing all members backed bonds during teleconference discussion had a serious impact on markets of three main parties involved France, Spain and Italy. G7 members are failing to move forward with the next leg of support measures in boosting the economy over USA’s instance in calling the COVID-19 virus a Wuhan virus and demanding compensation from China.
Precious Metals: Rare metals price saw a sharp upsurge in early trading session as a conflict between US and China escalated giving safe-haven metals a fresh flow of fundamental support. This combined with USD consolidating near weekly lows helped rare metals scale key psychological price levels post which they have entered consolidation slightly below weekly highs.
Crude Oil: Crude oil price recovered early in the day over news that Russia is in discussion with several members of OPEC nation about controlling crude oil price decline, but Russia denied details on who its counterparts where. Despite Russia’s efforts today, broad-based risk assets decline affected demand to supply ratio pushing price of WTI futures near $20 per barrel while Brent fell below $25 per barrel.
DXY: The USD index is trading on a positive note today consolidating its hold over the 99 handle on multiple cues from global markets. However, lingering risk sentiment prevented the Greenback from scaling the 100 handle in Asian and European market hours. Given rebound in cautious tone in the market, USD index is likely to close for the week on a positive note against six major global currencies later today.
On The Lookout: Majority of investor focus from international and local markets remain on today’s US House of Representatives vote on support package worth $2 trillion USD. While the recent vote count in Senate and prevalent support from ruling party members display confidence at the approval of the bill during today’s vote, grumblings from opposing party members despite unanimous approval earlier this week suggest the possibility of vote count getting affected during the session later today.
Wall Street is expected to undergo profit booking activity on last trading session of the week, which combined with cues from international market suggest the possibility of major US indices seeing limited gains today. US COVID-19 victim count escalated much higher compared to Italy and China, but thankfully the death toll continues to remain lower compared to these two nations as per latest reports.
On the economic calendar, the US market sees the release of Personal Spending and PCE Price Index data while the Canadian calendar sees release of budget balance and BOC interest rate decision update later today.
Trading Perspective: Major global currencies are likely to close on a positive note against US Greenback this week as USD faces its worst week since 2009 but the scope of gains is likely to be limited given broad-based range-bound price activity in the forex market this week. US Wall Street is set to see major indices open lower in the day as futures trading in the international market saw decline ahead of US market hours.
EUR/USD: The pair has finally managed to gain strong grip above 1.10 handle and tested intra-day highs of 1.1087, but a rebound in USD’s strength in global market capped further gains. As USD held firm in the international market the pair lost most of the intra-day gains and is currently hovering above 1.10 handle while traders await US macro data for short term profit opportunities.
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