Market Sentiment Shifts
Global markets reopen coming into Tuesday after a bank holiday and Memorial Day in the UK and US. Market sentiment appears to have shifted towards Risk on as the USD comes under pressure early in the session. At the time of writing DXY has broken below 99.50 and GBPUSD has made new two-week highs as pressure for Sterling eases temporarily.
Progression surrounding Covid-19
Progression surrounding Covid-19 remains optimistic as PM Johnson outlines new reopening measures set to take place in June; Car showrooms and outdoor markets will be able to reopen from June 1st whilst non-essential retail stores will open from June 15 th.
This comes as economies around the world start to transition into life after the lockdown. In addition to this the German government aims to end travel warnings for tourists from 31 European countries from June 15th. Vaccine related optimism also looks to add to the positivity seen across major bourses as NIH’s Fauci gives encouraging comments and the US plans for Phase 2 trials.
WTI Crude continues to offer glimmers of hope
WTI Crude continues to offer glimmers of hope for the commodity market as price presses above $34. This is amidst a number of supportive headlines which includes a recovery for demand and countries such as Saudi Arabia and India looking to resume domestic flights. Of course, WTI still has a long way back to the highs of 2020 though the current outlook looks less bleak as demand begins to pick up globally.
US China tensions still remain in play
US China tensions still remain in play as the nation announced that it will include 33 Chinese firms and institutions in an economic blacklist. This comes as the US stated that sanctions will be imposed on China if they move forward with the national security laws for Hong Kong. In amongst all of this, China have still pledged to follow through with the requirements needed to maintain the Phase one trade deal as they look to maintain the relationship with the US.
In the cryptocurrency space
In the cryptocurrency space, despite the halving Bitcoin continued to trade lower as price moved below $9,000. Price broke down to the lowest level in two weeks as price tested $8,630. Ethereum still fluctuates around $200 as investors seek to analyse the short-term pricing of Cryptoassets.
Commodities such as Gold were rangebound last week with prices trapped around $1,725/troy ounce. Should USD weakness continue investors could see Gold moving higher to retest prior highs at $1,750 followed by $1,765.
This week will continue to see Covid-19 being monitored closely as nations expand their easing programmes into the latter phases. In addition to this, the UK and EU will be looking to develop on the current trade talks as the deadline draws nearer potentially adding pressure to Sterling. Macro data wise we will have a few important releases namely GDP m/m from Canada along with a speech from FED Chair Powell.
Here is a breakdown of the high impact data releases this week
Bank Holiday – United Kingdom Memorial Day – United States
22:00 – BOC Gov Poloz Speaks. Markets to watch: CAD Crosses
02:30 Private Capital Expenditure. Markets to watch: AUD crosses 13:30 Prelim GDP q/q. Markets to watch USD Crosses
13:30 GDP m/m. Markets to watch: GBP crosses 16:00 FED Chair Powell Speaks. Markets to watch: USD Crosses