Wednesday June 24th, 2020

Investors turned cautious as coronavirus cases continue to increase across the US, China, Latam and India. Global coronavirus cases are expected to pass 9.4mio today, with 2mio new cases reported in just the last 14 days, and in the 23 US states seeing a surge in new cases this week. Investors unnerved by the rising covid cases pushed safe haven gold prices to an 8-year high, while equity and oil markets weakened. US$ opened mixed, firmer vs the Asian currencies and flat verses the EUR, JPY and GBP. NZD the big mover, down 1% vs US$ after the central bank said the balance of economic risk remains to the downside. The IMF will release revised global growth projections in its World Economic Outlook later today, giving investors an idea of the damage/recovery projections from the covid-19 pandemic.

Oil prices retreat almost 2% from their 3-month highs as Covid-19 second wave fears outweighed optimism from the gradual reopening of global economies. C$ retreats from its highest level since June 11th as oil prices slip and second wave fears see investors slowly return to US$ buying. No key data out today so C$ is anticipated to consolidate within its current trading range. Support remains at 1.3500 with resistance holding at 1.3585, key resistance remains at 1.3685.

Euro eased vs the US$ as “risk-off” sentiment returns seeing equity markets ease across the continent. News that the US contemplating up to $3.1bln in fresh tariffs on the EU and UK put additional pressure on the single currency. Eur found some support from German IFO business Climate data which showed confidence grew in June better than expected. Covid updates will dictate intraday direction ahead of tomorrow’s ECB monetary policy meeting. Support rises to 1.1225 and resistance at 1.1350.

GBP is managing to hold above the phycological 1.25 level after yesterday’s positive economic data. Trade remains the UK’s biggest anchor at the moment as it negotiates post Brexit trade relationships, it now has to contend with possible US tariffs. The UK PM announced Tuesday increased easing of the lockdown restrictions, allowing bars and restaurants to reopen on July 4th. The PM’s announcement was followed up with an open letter in the British Medical Journal today warning of a real risk of a second wave in the UK. Support rises to 1.2430 with resistance at 1.2585.