Monday June 15th, 2020

Oil and Equity markets fall, and currency markets are mixed with fears of a coronavirus second wave prompting a “risk off” sentiment. Global coronavirus cases surpassed 8mio with related deaths increasing over 435k. A second wave of infections in Beijing is prompting authorities to reinstates coronavirus curbs. In the US, the CDC is predicting that covid-19 deaths could reach 130k by July 4th, as many states continue to reopen. Currency markets are weaker as 2nd wave fears grow, CNY & Asian currencies down around ¼% vs US$. Trade & Petro currencies AUD, NOK, NZD & ZAR down around ½% vs US$, and MXN, RUB & KRW are down over 1% vs US$. No key economic releases today, so the market will remain focused on Coronavirus updates for direction.

Oil prices slip as China, Japan & the US announce a rise in new covid-19 cases, hampering the possible recovery in fuel demand. In Canada oil sands companies have shelved almost C$2bln in “green” initiatives in an effort to survive with low oil prices related to covid-19. C$ weakened vs US$ on 2nd wave fears and the resulting falling oil prices. On the charts a break of 1.3710 would negate the recent C$ rally and suggests further C$ weakness to 1.3835. Support 1.3585 and key resistance at 1.3710. 

Safe haven US$ buying puts the breaks to Euro’s rally as fears of a 2nd wave is prompting investors to adopt a “risk-off” strategy. Europe continues to move ahead with loosening lockdown restrictions, with Spain opening to tourists next week. France has announced a “Green Zone” allowing its cafes to reopen and Germany has green lighted travel for its citizens.  Support 1.1175 and resistance at 1.1385 – focus remains on coronavirus updates.

GBP remains under pressure, sinking to a two-week low vs US$ on 2nd wave fears and Brexit concerns. The UK PM will join a video conference with EU leaders today, with hopes of a breakthrough in Brexit negotiations. Markets are not optimistic that the stalemate will be broken, and the Mail on Sunday suggested the UK PM will use the meeting to “Bang the Table” telling EU leaders not to drag their feet. Expectations are that the PM will not ask for an extension for Brexit and the UK will leave at the end of the year. Support remains around 1.2450 while resistance lowers to 1.2600.