Daily Market Analysis – 11th June 2020

General Market Outlook for Today  

Since yesterday, the stock markets, in particular, were generally mixed as NASDAQ seems irresistible. But other indices, in Asia, Europe, and even the US are still expected to be slow-moving. OECD noted the equal probability of having a second wave of coronavirus spread or not, which were largely ignored by investors. In the currency markets, the USD is back under pressure after the FOMC, trading as the worst performing one. It’s followed by the Canadian Dollar and the Euro. Australian Dollar and Swiss Franc are the strongest ones for now. 

European Trading Session

As we entered into both London and European sessions today, markets seemed to be firmly risk-off with Asia-Pacific indices in negative territory overall, combined with lower yields and higher levels of volatility. 

The After-effect of Yesterday’s FOMC 

The negative risk tone follows on from yesterday’s highly anticipated FOMC meeting where the Fed’s bleak economic outlook weighed on investor sentiment. There’s also a sense that the rally has gone a bit too far too fast, and while economic numbers have been getting less bad it does not mean that it’s good. 

Safe Haven Currencies 

Safe-haven currencies are leading the FX complex with CHF the strongest currency on the day, followed by JPY and USD. In contrast and leading to the downside is the high-beta currencies with AUD the session’s laggard, followed by NZD. We expect the market to remain risk-off in the sessions ahead, keeping high-beta currencies pressured and safe haven currencies supported. While this remains the case, we hold a short-term bearish bias for AUD, NZD, GBP and CAD, and a short-term bullish bias for CHF, JPY and USD. 

This Week’s Economic Data Focus

Today’s Euro Group Meeting 

This week, the focus amongst the European countries within the Euro Zone, will be on the European Commission’s proposed €750 billion package to help the EU economy recover from the damage caused by the Covid-19 pandemic. It is expected to be discussed Thursday at a meeting where the ministers of the Eurozone member. states talk about matters relating to their shared responsibilities for the Euro. The after-effect of this event, is expected to be positive for the EUR. 

Friday’s UK GDP Estimates

Consensus forecasts indicate a substantial hit from coronavirus, with a month-on-month fall of 14.7 per cent. The Bank of England’s most recent Monetary Policy Committee report compounds the gloomy picture, predicting a GDP fall of 25 per cent in the second quarter. 

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