News

America’s Roundup: Dollar weak as euro rises on Franco-German proposal for recovery fund ,Wall Street dips, Gold edges higher ,Oil dips as U.S. Senate grills Fed chair, Treasury secretary –May 20th,2020

Market Roundup

• US April Building Permits 1.074M ,1.000M forecast, 1.350M previous

• US April Building Permits (MoM) -20.8%, -7.0% previous

• US April Housing Starts 0.891M, 0.927M forecast, 1.216M previous

• US April Housing Starts (MoM) -30.2%,-22.3% previous

• US Redbook (YoY) -9.5%-7.5% previous

• US Redbook (MoM) -2.6%, -1.5% previous

• Russia GDP Quarterly (YoY) (Q1) 1.6%, 1.9% forecast, 1.5% previous

• New Zealand GlobalDairyTrade Price Index 1.0%, -0.8% previous

Looking Ahead Economic Data

•22:45 New Zealand APRIL FPI (MoM) 0.7% previous

•23:00 Japan May Reuters Tankan Index -30 previous

•23:50 Japan March Core Machinery Orders (YoY) -9.5% forecast,-2.4% previous

•23:50 Japan Core March Machinery Orders (MoM) -7.1% forecast, 2.3% previous

• 00:30 Australia MI Leading Index (MoM) -0.8% previous

• China PBoC Loan Prime Rate 3.85% previous

Looking Ahead – Events, Other Releases (GMT)

•No significant events

Currency Summaries

EUR/USD: The euro rose against dollar on Tuesday as the single currency added to Monday’s gains following news of a Franco-German proposal for a fund that would offer grants to European Union regions and sectors hit hardest by the coronavirus pandemic. Germany and France, whose agreements usually pave the way for broader EU deals, proposed that the European Commission borrow 500 billion euros ($550 billion) on behalf of the whole EU. The Commission is expected to outline their proposal before a European summit scheduled for May 27. Immediate resistance can be seen at 1.0983 (61.8% fib), an upside break can trigger rise towards 1.1019 (1st May high).On the downside, immediate support is seen at 1.0915 (50 % fib), a break below could take the pair towards 1.0848 (38.2% fib).

GBP/USD: Sterling strengthened against the dollar on Tuesday as broad dollar weakness helped the currency shrug off talk of negative interest rates from the Bank of England and a stalemate in Brexit negotiations.Britain and the EU’s chief negotiators on Friday gave downbeat assessments of the latest round of Brexit negotiations, while the Bank of England’s chief economist refused to rule out the possibility of taking interest rates below zero to prop up the country’s economy. Immediate resistance can be seen at 1.2264 (50% fib ), an upside break can trigger rise towards 1.2351 (61.8% fib).On the downside, immediate support is seen at 1.2171(38.2%fib), a break below could take the pair towards 1.2073 (23.6% fib).

USD/CAD: The Canadian dollar strengthened to a one-week high against its U.S. counterpart on Tuesday as oil prices rose and after investor sentiment was boosted the day before by news of encouraging early-stage tests of a possible COVID-19 vaccine. Canada runs a current account deficit and is a major exporter of commodities, such as oil, so the loonie tends to be sensitive to the global flow of trade and capital. The Canadian dollar was trading 0.2% higher at 1.3923 to the greenback, or 71.92 U.S. cents, its strongest level since May 11. Immediate resistance can be seen at 1.3935 (38.2% fib), an upside break can trigger rise towards 1.3997 (38.2%fib ).On the downside, immediate support is seen at 1.3856 (23.6% fib), a break below could take the pair towards 1.3827 (Lower BB).

USD/JPY: The dollar strengthened against the Japanese yen on Tuesday as encouraging results from the trial of a vaccine for COVID-19 reduced demand for safe havens and the greenback rose to a near one-month high against the Japanese yen. Japanese yen dipped after drug maker Moderna Inc’s experimental COVID-19 vaccine appeared safe and showed promise in a small group of healthy volunteers, according to very early data. Strong resistance can be seen at 107.80(23.6% fib), an upside break can trigger rise towards 108.16(Higher BB).On the downside, immediate support is seen at 107.30 (5DMA ), a break below could take the pair towards 107.00 (Psychological level).

Equities Recap

European shares lost some ground on Tuesday after a rally in the previous session, as falls for euro zone banks and telecoms stocks countered optimism from a stimulus plan for the European Union.

UK’s benchmark FTSE 100 closed down by 0.77 percent, Germany’s Dax ended up by 0.15 percent, France’s CAC finished the day down by 0.89 percent.

The S&P 500 was trading flat on Tuesday, handing back some gains from a strong rally in the previous session, as investors digested a mixed set of quarterly results from retailers including Home Depot and Walmart.

Dow Jones closed down by 1.59 percent, S&P 500 ended down by 1.07 percent, Nasdaq finished down by 0.54 percent.

Treasuries Recap

U.S. Treasury yields were lower on Tuesday after testimony by Federal Reserve Chair Jerome Powell.

The benchmark 10-year yield was last down 2.4 basis points at 0.7176%

Commodities Recap

Gold prices rose on Tuesday, supported by fears of a global recession and a wave of central bank stimulus measures, while an uptick in risk appetite after a positive report on a potential COVID-19 vaccine limited bullion’s advance.

Spot gold was up 0.1% at $1,733.06 an ounce by 1244 GMT. U.S. gold futures were steady at $1,733.50.

Oil prices pulled back slightly on Tuesday as a U.S. Senate committee grilled Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin about aid packages intended to bolster the economy.

Benchmark Brent crude was down 40 cents or 1.2% at $34.41 a barrel by 12:36 p.m. EST (1636 GMT).

The front-month contract for U.S. West Texas Intermediate crude, which expires on Tuesday, was down 13 cents a barrel, or 0.4%, at $31.69.


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