Thursday June 25th, 2020

The ongoing surge in coronavirus cases and the IMF’s downgraded economic forecast yesterday saw investors return to safe haven buying. Markets are opening up relatively unchanged from yesterdays close with global equity and oil markets slightly down and US$ index up marginally vs a basket of major currencies. Chinese CNY is down 0.3% and NZD extended its losses down 0.4%, while the rest of Asia & Australian currencies are down just over 0.1% vs US$. A flurry of US data releases and several Fed FOMC voting members speaking today will provide intraday direction. Markets will monitor coronavirus updates and US Jobless claims, US GDP & specifically Durable Goods for signs of a US recovery from the pandemic. 

Oil prices open down slightly after yesterday’s 5% sell off. US crude inventories remain at record levels for a 3rd straight week and fears of falling demand from rising covid19 cases is capping oils ability to rally. C$ weakened yesterday as the country’s sovereign debt rating was cut to AA+ by the Fitch. Coronavirus concerns remains a key concern for investors and will most likely keep pressure on C$. Support rises to 1.3550, with key resistance at 1.3685, if breached we could see US$ extend to 1.3800 (June 1st highs).

Euro eased yesterday following the IMF’s somber economic forecast and the return of investors buying of safe haven US$. The threat of US tariffs to the sum of $3.1bln amid new virus outbreaks in Spain and Germany is also cause for investors focus. The ECB will release its minutes today and will likely show the level of concern amongst its members from the increased bond-buying scheme. US data & coronavirus updates will provide intraday direction. Key support sits at 1.1170, a break could see further weakness to 1.1050, with resistance lowering to 1.1300.

GBP rebounded from its lows overnight amid reports that the EU could possibly be ready to compromise in Brexit talks. The Financial Times reported that the EU is ready to compromise on the “Level-playing field” issue, aligning regulations after the current transition period ends. This is a positive ray of hope for the UK as the last four rounds of talks have resulted in deadlock. Brexit is a long way from being resolved and the currency remains under pressure amid safe haven buying. US data results will provide intraday direction for the pound. Support lowers to 1.2350 and resistance at 1.2500.