Wall street rallies as COVID-19 curve starts to flatten
Wall Street rallied yesterday as investors remained optimistic about the news that Coronavirus cases were peaking. The Dow Jones, Nasdaq, and S&P rose by more than 7% while the small-cap-heavy Russell 2000 rose by 9%. There are signs that the virus is peaking in Europe, where the daily death rate in several countries like France and Italy has been falling. Still, analysts warn that it could be too early to celebrate because these countries are in a lockdown. This means that it is not yet known whether the disease will begin to spread again after people start interacting. Meanwhile, the death toll in the US crossed the 10,000 marks yesterday.
The sterling was volatile in overnight trading after it emerged that Boris Johnson had been moved to the intensive care unit. He was taken to the ICU after his condition worsened less than two weeks after he was diagnosed with the disease. As a result, while he is still the prime minister, most of the affairs are now being run by Dominic Raab, the country’s foreign secretary. Meanwhile, the economic calendar will be a bit light today, with the only major information being the Halifax house price index, which will come a day after we received the construction PMI data from the UK.
Today we will receive the important interest rates decision by the Australian central bank, which is expected to leave interest rates unchanged. In Europe, we will get the import and export data from France and the unemployment rate data from Switzerland. Japan will release the leading index, which is an aggregated from the previous data. Most importantly, we will follow the news about crude oil, where Russia and Saudi Arabia are said to be deliberating on supply cuts.
The EUR/USD pair was little moved in the American and Asian sessions. This is partly because there was no major economic data from the two countries. The pair is trading at 1.0806, which is a few pips below last week’s high of 1.0835 and low of 1.0770. The volatility, as measured by the average true range has dropped, which means that the pair may breakout in either direction soon.
The XBR/USD pair rose in the overnight session as hopes of a deal rose. The pair is trading at 34.57, which is higher than yesterday’s low of 32.50. On the hourly chart, the price is above the short- and longer-term moving averages and above the Parabolic SAR dots. The RSI has risen and is slightly below the overbought level of 70. The pair may continue being volatile until a clear message comes from the biggest oil producers.
The XAU/USD pair declined slightly as the Coronavirus curve started to flatten in most places. The pair is trading at 1653.98, which is lower than last week’s high of 1673.95. On the 30-minute chart, the short and medium-term moving averages appear to be crossing over while the RSI has moved from the overbought level. The pair could drop and test the 23.6% Fibonacci Retracement level at 1650.