Risk appetite takes off? ECB DAY


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Daily Outlook – 4 June 2020

By: Andria Pichidi

Protests against racial discrimination continued in American cities, albeit at a calmer tone and without violence.
Stock markets rally slowed somewhat which helped Treasuries to stabilize and the USD to recoup some losses. U.S. futures are narrowly mixed, with the Dow Jones marginally higher, while other futures are slightly in the red.
The German government agreed EUR 130 bln stimulus package.
Australia: The government announced an AUD 688 million stimulus package focused on the construction sector, with AUD 25K cash grants for new home builders and homeowners undertaking substantial renovations
The BoC held rates steady while maintaining its commitment to continue large-scale asset purchases until the economic recovery is well underway. Tiff Macklem assumed his role as Governor, replacing Poloz.
Brazil reports a new daily record for coronavirus deaths +1,349
Brexit trade talks: Rolls-Royce confirms 3,000 job cuts across the UK. BOE warns UK banks to step up plans for a no-deal Brexit.
USOIL bounced from $36.90 to near $37.40 after the WSJ reported that Saudi Arabia and Russia had agreed in principle to maintain the current reduced production level through July, then revisiting output levels again then. – EIA inventory data which showed a 2.1 mln bbl fall in crude stocks.

USD index – rebounded from 97.00 (S1)– 97.50 (R1) but remains below 20-hour SMA.
EUR –falls to 1.1200 (R1) from 1.1265 highs. S1 at 1.1178.
JPY – lifted to 109.07 as USD recoup some losses.R1 at 109.10 and PP at 108.75
GBP – flattened at S1: 1.2554, after breaking the 200-hour SMA. PP at 1.2580.
AUD – found a floor at 0.6900 (200-hour SMA and below PP).
CAD – eased at low 1.3500 area, sustaining a bottom for 3 consecutive days above 200-day SMA and S1 at 1.3440.

GOLD – found its way back above 200-DAY SMA hence 1692 floor has been sustained.

TODAY: The focus is turning to the ECB meeting, with Lagarde widely expected to keep rates unchanged but strengthen the PEPP program in a way that will allow the central bank to focus on the narrowing of spreads in the Eurozone. In the US, Trade balance and Jobless Claims will remain in the spotlight.

Biggest mover – USDMXN (up by 0.57%). Mexican peso’s rally after hitting hard Support at 21.50. Currently at 21.90. Hourly RSI and MACD are positively configured suggesting further steam to the upside, however fast Stochastic already flattened in the OB zone, suggesting the potential of a pullback. Support holds at S1 at 21.88 while Resistance us at 22.00 and 22.10

Risk Warning: Trading-Leveraged Products such as Forex and Derivatives may not be suitable for all investors as they carry a high degree of risk to your capital. Please ensure that you fully understand the risks involved, taking into account your investment objectives and level of experience, before trading, and if necessary, seek independent advice.


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