Today’s Fundamental Focus – 17th June 2020

Today’s Market Outlook

The US Index is trying to hold the 2018 trend-line, and if it manages to do so, then it may reaffirm the trend higher in place over the recent years. The majority of traders are expecting a break below the 95.72, which could start to break the bullish bias and propel it towards lower prices instead. What happens with the US Index obviously would hint sentiments for the USD. This is of course largely reliant on the EUR as the single-currency accounts for roughly 57% of the index. 

Talking about Antipodean currencies, the NZD as of yesterday was the second weakest as the country’s coronavirus free days came to a stop. It looks like that floor-ward trend may continue for the Kiwi. Also for the AUD, recent changes in sentiment seemed to have hinted that the current Aussie price trend may soon turn lower. Psychologically, this could be a result of a greater share of investors attempting to keep their eyes onto the prize upwards, but to queuing up their orders at the bottom-line price (significant support). 

The JPY, USD, and CHF are not performing as well as expected, despite the markets being in strong risk-on mode. What could explain the lackluster movements of the JPY is that due to its strength over the past weeks has led to a subdued sentiment amongst Tokyo exporters. 

Crude oil prices have appreciated, in its efforts to repeat a broader recovery in risk appetite. The WTI contract edged cautiously higher alongside stocks and other cyclical assets for much of the day, but the move hit a wall once soundbites from US Senate testimony by Fed Chair Jerome Powell hit the wires (as expected). 

Today’s High Impact Events

The times below are GMT+3

UK Consumer Price Index (CPI) – 09.00

The Consumer Price Index has been estimated to stand at 110.66 in 12 months’ time. For the long-term though, the United Kingdom Consumer Price Index (CPI) is projected to trend around 112.00 points in 2021 and 113.90 points in 2022, according to external econometric models. 

Canada CPI – 15.30

The Canadian CPI is expected to not impact the USDCAD as much, given the heavy focus on external drivers like risk sentiment and equity flows. However, decent Canadian data could support CAD crosses in general. 

Fed Chair Powell Testifies – 19.00

Following his appearance before the Senate Banking Committee, Federal Reserve Chairman Jerome Powell will testify before the House Financial Services Committee today. Yesterday during his live speech, Powell emphasized that the Fed is encouraged by the recent economic data, but the central bank remains cautious and believes that the U.S. economy is still a long way from “normalcy.” 

In summary, market sentiments today looked to reflect Powell’s statement yesterday – ‘’we cannot signal the all-clear until COVID-19 is beaten, or at least properly contained’’. The recent spike in new cases in several states will force the US to do more in order to make much more needed progress, especially with the threat that renewed lockdowns could have a massive impact on confidence, risk assets, and of course economic activity. 

New Zealand GDP – 01.45

In the land of the Long White Cloud, its’ economy with a golden run of nine years of uninterrupted growth, is set to come to a quivering standstill with the release of first-quarter GDP numbers today, as it would reflect mostly the impact of the Covid-19 pandemic, which has forced the shutdown of more businesses. 

Coronavirus Status Update 

USD CDC COVID 19 cases rose by 18,577 (prev.+21,957) and death toll rose by 494 (prev+373).

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