Today’s Fundamental Focus – 18th June 2020

Today’s Market Outlook

A downbeat tone surrounded Asian stocks today, trading mostly in the red with investor sentiment stifled by concerns regarding the return of coronavirus cases. In addition to that and as if the market lacks negative news, weak data from the US together with the ongoing US-China tensions, seemed to have added more fuel to the ‘sell-off’ motivated market conditions.  

As we looked back at yesterday’s performances of currencies, the CHF particularly appreciated significantly and it’s currently trading with slight depreciative value, ahead of the SNB rate decision today. Signs of risk aversion is still unclear in other markets since major European indices traded in black yesterday while DOW futures were slightly higher. As of today, DJIA was seen trading at 26,119 area (time of analysis) which translated to a fall of 0.65% approximately so far.  

In the land Down Under, however, Australia’s ASX 200 (-1.61%) traded or more accurately plunged to 5,800 points, due to losses experienced by Australia, in nearly all sectors. This bad performance was propelled by early underperformance in the top-weighted financials together with disappointing employment. At the time of analysis, ASX is showing signs of recovery. 

Today’s High Impact Events

The times below are GMT+3

CHF SNB Rate Decisions/Monetary Policy/Conference – 07.30

SNB rate decision will be a focus in the markets today while the CHF remained rather calm as of Asian opening sessions. It’s widely expected to keep expansionary monetary policy unchanged with analysts polled by Reuters, expect the bank to leave rates unchanged at -0.75%.  

GBP BOE/MPC Vote Data /Rate Decision – 14.00 

So far in 2020, the GBP has gained its reputation as a risk-on currency behaving similarly to the traditional commodity currency. However, the likelihood of GBP breaking out to test both this theory as well as significant trend lines (and beyond) is falling. What this means is that, the probability of downside pressure is now increasing, and this could most likely be the impact of Risk Events and geopolitical factors at play. So, for today’s rate decisions, do we rely on the analysts polled by Reuters, who estimated that the 9-member committee will leave interest rates unchanged at the current record low of 0.10%? We shall wait-N-see. 

Canada Retail Sales – 15.30 (Fri) 

In Canada, retail sales have plunged 10% over a month earlier in March 2020, after rising an upwardly revised 0.4 percent in February. It was the largest drop in retail trade on record, amid business closures due to the COVID-19 pandemic. 

USD Fed Powell’s Speech – 20.00 (Fri) 

Traders are now trying to determine whether the risk rally that happened since Wednesday for the greenback, can continue to new highs or whether the post-March rally is now over.  Fed Chair Powell is giving his semi-annual testimony to Congress but continued to highlight the challenges ahead and is clearly bearish despite some of the recent improvements in data, in most of his previous speeches. 

Coronavirus Status Update 

US CDC said COVID-19 cases rose by 27,975 (Prev. 18,577) and the death toll increased by 722 (Prev. 494). NY COVID-19 cases rose 0.1% vs. 7-day avg. 0.2%; NY again reported the lowest daily hospitalisations since March and reported 17 new deaths, which is the lowest since start of pandemic. 

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