Friday June 25th, 2020

Markets showed some signs of optimism this morning with both equity and oil prices rising despite the growing number of covid-19 cases globally. The US had its single worst day of new covid-19 cases with +37k reported yesterday as 30 states reported a rise in new daily cases. Globally there are 9.7mio confirmed cases, with the death toll globally over 492k, the US has the largest # of confirmed cases at 2.5mio and 25% of global fatalities. The Fed Reserve warning about the resilience of banks is always weighing on investor sentiment. Safe haven gold is set for its 3rd weekly straight gain, sitting at an 8-year high and JPY strengthened 0.3% vs US$ today. US$ index is flat vs a basket of major currencies, CNY & Asian currencies weakened vs US$. Markets await the release of Michigan Consumer sentiment index, Personal spending / income / consumer expenditure, which will provide initial direction to the markets.

Oil prices inch higher on rising fuel demand countering the growing coronavirus cases in US and Latam. Traffic congestions patterns are rebounding in the US, China and parts of Europe, but the UK, Italy, Ireland & France gasoline demand remains down over -70%. C$ remains stable at the high end of its recent range, sitting at 10-day lows and holding below the key 1.3685 level. The loss of Canada’s triple AAA rating and concern over rising US covid19 cases is keeping pressure on C$. A rebound in oil prices will likely bring some support to C$, intraday the focus will be on US data releases for direction. Support rises to 1.3550, with key resistance at 1.3685, if breached we could see US$ extend to 1.3800 (June 1st highs).

Euro is holding around the 1.12 level vs US$, with positive EUR consumer confidence numbers out alongside the ECB president warning of a “Complicated recovery”. Rising covid-19 cases in the states continues to dominate market headlines and impact investor sentiment. The ECB President is speaking today and is expected to address the German Constitutional court ruling, reiterate the EBC’s commitment to supporting markets and urge leaders to adopt her proposed EU Fund. Covid-19 updates and US data will drive intraday direction with a bias of further “Risk-Off” -US$ strengthening to follow. Key support 1.1170, a break could see further weakness to 1.1050, with resistance 1.1300.

GBP is holding around the 1.24 level as the pendulum of good/bad Brexit news continues to swing weighing on the pound. Negotiators for both the EU & UK have been commenting ahead of next week’s face-to-face meeting, with comments that no breakthroughs are expected until October. US data release will be the markets primary driver, expect to see GBP hold within the support/resistance levels today. Support lowers to 1.2350 and resistance at 1.2500.