FX & market recap:
The US reported 38,173 infections on Wednesday: the highest single day total yet. American’s are finally learning that social distancing, and masks help prevent COVID-19, not their Constitution. Wall Street traders bailed, driving the Dow Jones Industrial Average down 2.72%, which set the tone for Asia markets The Nikkei 225 and Australia’s ASX fell 1.22% and 2.48%, respectively. European bourses did not follow suit. Better than expected German Consumer Confidence (actual -9.7 vs forecast -12).
Today’s US data includes, Initial Jobless Claims (forecast 1.3 million), Q1 GDP (forecast 1.4%), and May Durable Goods Orders (forecast 10.6%).
Canadian dollar highlights:
USD/CAD is flexing its muscles. It climbed from 1.3490 on Tuesday, to 1.3665 in early European trading today. Prices retreated to 1.3612 at the NY open. Most of the rally can be attributed to yesterday’s shift to negative risk sentiment stemming from a surge in US coronavirus cases.
Negative risk sentiment powered USD/CAD higher, but falling oil prices and Fitch Ratings Inc, greased the skids. Fitch downgraded Canada's Long-Term Foreign Currency Issuer Default Rating to AA+; outlook stable. Oil prices slid on the back of rising US inventories and the prospect of slower growth.
European equity indices may have returned into positive territory following the German Consumer Confidence report, but that success has not translated into S&P futures which are still in the red. EUR/USD continues to drift lower and is trading at the bottom of its 1.1209-1.1259 range in NY. Risk-aversion sentiment, and the latest EU/US trade tensions are weighing on prices ahead of today’s US data dump.
British pound highlights:
GBP/USD is consolidating today’s losses in a 1.2406-1.2463 range and is trading at 1.2440. Prices are supported by the rebound in the FTSE from its earlier lows, but gains are capped by broad US dollar demand.
Asia Pacific highlights:
USD/JPY traded in a narrow range. Prices were supported by US dollar demand, but gains offset by safe-haven demand for yen and a drop in US 10-year Treasury yields from 0.725% to 0.669%.