Fed cues help improve risk sentiment, US discussions surrounding 2 trillion USD economic support bill, and macro data in focus.
Summary: Global equities are trading positive while major indices across Asian and European markets rebound from previous session lows on fed cues. US Federal Reserve yesterday announced plans for buying unlimited treasury bonds and mortgage-backed securities to keep borrowing costs at rock bottom levels in a bid to support economic activity.
In the European market, news that fresh victim count and death toll declined for the second consecutive sessions came as a major positive factor helping market bulls move ahead with recovery rally. However, worse than expected PMI results and broad-based caution on the economic impact caused by the virus outbreak have resulted in gains been capped, preventing major indices and equities from experiencing a sharp change in directional bias.
Precious Metals: Rare metals are trading positive despite improvement in risk sentiment on Fed cues. Given strong caution lingering in the global market, the US Fed’s move to purchase unlimited treasury bonds has made safe-haven metals an attractive option despite its status as non-interest yielding assets.
Crude Oil: Crude oil price trading in the international market is seeing positive price momentum despite major benchmark indices WTI and Brent remaining under $25 handle. Rumors surrounding possible deal between Saudi Arabia and the US amid an ongoing price war with Russia acted as a positive influence.
DXY: USD index, which measures the strength of Greenback against six major global currencies, is moving in red today and has fallen below the 102 handle as risk sentiment improved in the global market over fed cues. However, USD’s strength as a safe-haven asset amid prevalent cautious market mood kept the downside in check.
On The Lookout: US government’s latest economic bill under debate in Senate continues to remain the main focus. While the package is yet to be approved by the government, its value has increased to 2 trillion USD. While Republican Party’s proposal seems to aid large companies, Democrats have come up with a proposal of similar value, which aims at providing handouts to families and small businesses. Investors now wait to see what sort of support package will hit the market and how it will impact economic activity and growth. Aside from the economic support bill, traders await the release of US Preliminary PMI’s, new home sales, and weekly API crude oil stockpile data for short term profit opportunities.
Trading Perspective: Wall Street is expected to see major indices and equities open and trade on a positive note given the improvement in broad market risk sentiment and cues from the international market. US futures trading in the international market was halted on the limit up measure as Fed cues continue to underpin market bulls driving gains across major risk assets.
EUR/USD: The pair is trading on a positive note given the broad-based improvement in risk sentiment. But price continues to hold below 1.08 handle despite intra-day highs scaled at 1.0889 as EU area PMI’s saw a disappointing outcome. Traders now await US data for short term profit opportunities.
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