Markets remain conflicted between the positive signals of economic recovery out of the US, Europe and China vs second wave fears of the coronavirus. German retails sales, Chinese PMI and yesterday’s US consumer confidence all met or surpassed expectations. In the US which recorded another record number of daily cases, the Fed Chairman reiterated that without defeating the disease it is unlikely to see the US return to pre-pandemic output. US$ index is opening unchanged from yesterdays closed, but signs of unwinding safe haven US$ are being seen. Key concerns remain Covid-19 and ongoing Sino/US tensions – Hong Kong protests. Today US FOMC minutes, US ADP Employment change, US Manufacturing PMI will all provide intraday direction.
Oil prices rallied in early trading by +2.5% on positive economic data and a Reuters survey showing OPEC+ countries cutting output deeper than expected. Canada Day so markets are closed with no data releases. C$ was a top performer yesterday boosted by expectations Canadian GDP for May will show a positive rebound, anticipation of stronger oil prices and a weaker US$. Support lowers to 1.3480 (low Jun23rd), if breached it opens the potential to test 1.3310 (Jun10 lows) with resistance at 1.3635.
Euro remains steady balancing between stronger economic data and US$ safe haven buying as global coronavirus cases surpass 10.6mio. Eur reopening remains on track as covid-19 cases remain contained, vacation locations have reopened, EU commission continues to press/compromise to pass its stimulus package. The headwind remains coronavirus and a fear of the 2nd way halting the recovery progress. US Data will dictate intraday direction today. Support holds at 1.1170, a break could see a retest of 1.1050 a key pivot level with resistance at 1.1300.
GBP remains volatile bouncing off yesterday’s lows benefiting from a risk on sentiment and hopes for the UK PM stimulus plan. Tuesday’s rally has stalled again with the same ongoing concerns re-emerging again. Brexit uncertainty, Leicester City covid-19 lockdown and doubts that the UK PM stimulus plan isn’t enough. Expect more details on UK PM stimulus plan, but overall a Brexit resolution remains the key GBP. Intraday US data and UK BoE governor speech will be followed for direction today. Support holds at 1.2290 with resistance at 1.2460.