Friday June 12th, 2020

A calm has somewhat returned to the market’s after yesterday’s “risk off” routing of the equity and currencies markets amid fears of a second covid-19 wave in the US and pessimism from the Fed’s statement. Equity and currency markets have rebounded from their overnight lows and are cautiously recouping lost ground. Petro & Trade related currencies have rebounded between ½% – 1% vs US$ this morning, as the US$ index slips slightly vs a basket of major currencies. The rise in Covid cases across California, Texas, Arizona and other states will watched closely by the markets and will impact investor sentiment – safe haven US$ buying. Intraday market will follow Covid-19 updates and Michigan Consumer Sentiment index for June for direction.

Oil prices are set to finish the week lower on coronavirus resurgence fears. China is seen snapping up cheaper oil and is expected to import a record amount of US Crude in July. C$ rebounded from its weakest level of 1.3666 vs US$ yesterday, settling back at the mid-point of Junes overall range. C$ will track oil prices and Covid-19 updates within the US for direction. Support 1.3460, with minor resistance 1.3585 and key resistance at 1.3700. 

Euro is holding nears its lows after selling off almost ¾% vs US$ as 2nd wave fears swept the markets yesterday.  Eur Industrial production came in at -17.1 (MoM), -28% (YoY), highlighting the impact of the pandemic on the EU’s economy. Positively for the EU is the falling cases of Covid across the continent and the strong stimulus support, puts Euro in a better position than most to weather the pandemic impact. Support 1.1250 and resistance at 1.1385, with potential remaining to extend to 1.1490 (March 9 highs).

GBP rebounded from yesterday’s lows vs US$ despite a record low in UK GDP. The UK’s economy plunged by a record -20.4% in April (YoY -24.5%), as well its Manufacturing output collapsed in April by -24.3% and Industrial production by -20.3%. The drastic data results will put additional pressure on the UK PM to loosen the countries current lockdown restrictions. The current coronavirus economic related conditions and ongoing deadlock with Brexit negotiations is expected to limit the GBP’s ability to recover. Support sits at1.2465 while resistance lowers to 1.2750.