Monday June 22nd, 2020

New virus fears concern investors with the WHO reporting the single largest day of new covid-19 cases on Sunday. The WHO reported a record 183,030 new cases of COVID-19 in a 24-hour period with increases spiking in South America and the US. Gold hit a 1 month high, oil prices steadied, US$ weakened amid rising covid-19 cases, while safe have Yen & Chf held firm. US$ and Asian currencies weakened on rising covid-19 fears while other major currencies strengthened. AUD rallied benefitting from the head of the RBA commenting that the impact of COVID-19 would not be as bad as feared, both Aud and NZD rallying over ½% in early trading. US existing home sales and Chicago Fed National Activity Index released this morning may provide some intraday direction for US$ alongside covid updates.

Oil prices steady supported by ongoing output cuts being offset by concerns of the record rise in global coronavirus cases potentially stalling the recovery in fuel demand. BoC Governor Macklem speech today will be watched closely for direction beyond covid-19 after an article on Sunday headlined “As BoC quells sub-zero rates talk, next move may be a hike in 2022”. C$ opens stronger verses US$ but remains within the mid-point of Junes range. Alongside US data this morning the BoC Governor speech will be followed closely. Support remains at 1.3500 with resistance at 1.3635. 

Euro strengthened on a weaker US$, helping the single currency to rebound through 1.12 level. The rise of Covid-19 cases in Germany is causing some concern, but country is taking stringent measures to contain the outbreaks. With the light economic calendar today, investors will focus on the German Bundesbank President’s speech for direction on the economic outlook and possible stimulus signs. Coronavirus developments remain a key focus for markets today. Support rises to 1.1175 and resistance at 1.1285.

GBP failed to hold onto early gains vs US$ and has retreated from its highs 1.2430 vs US$. GBP rallied on early US$ weakness but in the absence of any economic releases, positive Brexit news or further relaxation of lockdown restrictions, investors unwound long GBP positions. The BoE Governor commented that the central bank should start to reverse its quantitative easing (QE) asset purchases before raising interest rates on a sustained basis. A break of 1.2320 opens the move to May lows of 1.2070 with Resistance at 1.2450.