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Wall Street to Crumble on Trump Tweet & Q2 Woes

August 1, 2020

Tech giant earnings, US GDP & Jobless data to dominate the market today. 

Summary: European equities today suffered a serious blow since the start of the session. Weak earnings led cues caused risk sentiment led by Fed’s promise for extended support across the year to evaporate from the market. Further, key indices suffered a major blow as earnings reports were highly disappointing, and macro data showed a distressing decline in German GDP, which suffered worse than expected impact in Q2 over covid-19 led woes.

US President Donald Trump’s tweet
US President Donald Trump’s tweet

Euro area unemployment rate was also worrisome causing risk assets to suffer a sharp decline in the market today. Later in the day, US President Donald Trump’s tweet hinting at the possibility of delaying November’s presidential election also caused a serious impact in the market pushing key indices to fresh monthly lows. 

Rare Metals: Safe haven metals are seeing mixed activity today. While caution remains high in the market, gold failed to conquer $2000 mark despite USD weakness & entered consolidating near recent highs over support from Fed update while Silver declined by 4% on profit-booking activity. 

Crude Oil: Crude oil market is seeing both Brent and WTI futures suffer sharp decline today. While a sharp decline in US weekly inventory data provided a breather for oil bulls, the latest demand outlook turned cloudy. With OPEC+ members set to resume regular activity starting this August and demand outlook remaining bleak over covid-19 woes and China-U.S. tensions, demand-supply concerns came back to focus causing sharp losses today. 

DXY: US Dollar Index saw readings edge to the lower end of the 93 mark and is on the verge of testing the 92 handle as US Fed reinforced its recent comments for extending support activity until the end of this year as opposed to September deadline which was previously decided. President Trump’s tweets hinting at a possible delay in the election is yet to cause any visible impact as traders await fresh cues from US market during North American trading hours today. 

On The Lookout: Earnings and Macro data are set to dominate Wall Street today as there are no new developments surrounding 5th stimulus package despite the deadline for the end of unemployment benefits set to come into effect this week. On macro calendar front, US market sees the release of Preliminary Q2 GDP & GDP Price index data, and Initial Jobless Claims while Chinese market sees the release of Manufacturing and Non-Manufacturing PMI for July later in the day.

There is also the release of the Australian market’s PPI & Private Sector Credit info which will affect activity in Pacific-Asian market hours. On earning calendar front, Wall Street sees data from Apple, Amazon, Alphabet A & C, Master Card, Comcast, Gilead, Northrop Grumman, Moodys, Global Payments, ICE, Baxter, Dupont, Electronic Arts, Ford Motors, Kellogg’s, MGM, Expedia & AO Smith. 

Trading Perspective:  US Futures trading in the international market fell sharply as data forecasts predict a worse outcome in US readings led by covid-19 impact for Q2 data. Following, cues from European market which released similar data and impact from covid-19 on US economy visible in recent past, Wall Street is expected to see major indices decline sharply at open today. President Trump’s tweet hinting at a possible delay in US presidential elections also came as major blow ahead of the market open. 

EUR/USD: The pair continues to trade positive despite serious blow from disappointing EU & German macro data. The rally driven by USD weakness pushed the price above 1.18 handle, but lack of EURO’s strength resulted in gains being capped below 1.1835. Traders now await US data for short term profit opportunities, but Euro is unlikely to post sharp gains or decline below 1.18 mark during American trading hours today. 

GBP/USD: The British Pound has finally managed to crack 1.30 handle on rally fuelled by USD weakness and posts its 10th consecutive session of bullish price rally today. The pair scales fresh 4-month highs having crossed price levels last seen in early March as Pound remains relatively immune to Brexit woes at the moment. Traders now await US data for short term profit opportunities. 

USD/CAD: While five other major global currencies continue to post gains against USD on rally driven by Greenback’s weakness, the commodity-linked currency continues to allow USD to recover strength. As Crude oil market conditions look bleak, the Greenback has managed to move back above 1.34 handle while loonie is likely to suffer further decline on the disappointing demand outlook for liquid gold. Traders now await US data for short term profit opportunities. 

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

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