Trading Analysis – 22nd July 2020

Today’s Market Outlook

Asia shares opened slightly lower today and as expected, especially after US President Donald Trump’s comments regarding the country’s surge in new coronavirus cases, which outweighed the impact of a slight rally on Wall Street. Conversely, Shanghai Comp (+1.2%) outperformed following yesterday’s pause, whilst Hang Seng (closing stocks equalled opening price, no changes) took a breather but remained in positive territory as oil giants kept the index afloat 

ASX 200 (-1.6%) lagged as cases stayed on an upward trajectory in Australia’s second largest state of Victoria, although miners saw a boost from the rally in precious metals. Nikkei 225 (-0.5%) failed to nurse opening losses as several large-cap stocks remained in the red, whilst recent JPY strength further weighed on exporters in the index.  

Stock futures creeped lower in Europe and shares across Asia were mixed today amid uncertainty over the timing of a fresh U.S. stimulus program. The USD extended losses, while gold soared above $1,850 an ounce. The top three indices traded to the downside, in the latter part of the session as the US stimulus bill hit a bump amid differences over the size of the package and whether payroll tax cuts should be included.  

As for Oil prices today, it depreciated as industry data showed a bigger-than-expected inventory build in the United States where coronavirus cases continue to rise, potentially further damaging demand in the world’s biggest oil consumer. 

In the currency market, the USD harboured losses against most currencies, weakened by concerns over struggles by Republicans and Democrats in reaching consensus on the next round of US economic stimulus measures. 

Today’s High Impact Events

The times below are GMT+3.

15.30 – Canada BOC Consumer Price Index

Traders would keep a watch on Canada’s consumer price index for June, slated to release later today. So far on the data front, Canada’s retail sales surged 18.7% on a monthly basis in May, less than market expectations for a rise of 20.0% and compared to a revised fall of 25.0% in the previous month. On the flipside, the new housing price index rose 1.3% on an annual basis in June, compared to a rise of 1.1% in the previous month. 

  • Potential instruments to Trade: CAD crosses. 

16.15 – ECB President Lagarde Speech

Yesterday, the European Central Bank chief Christine Lagarde did praise EU leaders, for agreeing a huge recovery plan for their coronavirus-ravaged economies, saying it showed the bloc “steps up and comes together” in times of crisis. After four days and four nights of wrangling, European Union leaders sealed the deal on a €750 billion (RM3.7 trillion) rescue package that will consist of loans and grants for the hardest-hit member states. 

  • Potential instruments to Trade: EUR crosses.

Coronavirus Status Update 

US cases +57,777 (Prev. +63,201); deaths +473 (prev. +498). California cases +2.4%/+9231 (prev. +1.8%/+6,846); deaths +61 (prev. +9). Arizona cases +2.4%/+3,500 (prev. +1.1%/1,559); deaths +134 (prev. +23); ICU usage 85% (prev. 87%). Florida cases +2.6%/+9,440 (prev. +10,347, prev. 7-day average 3.5%). New York cases +855 (prev. +0.1%/+519); hospitalisations 724 (prev. 716); deaths +2 (prev. +8); positivity rate 1.29% (prev. 1.05%). 

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