Though markets moved higher today, it wasn't as bullish a day as earlier in the week.
Copper is currently down on the day, the Australian Dollar had an up day but around half the range of recent days & oil was choppy amongst various OPEC headlines.
European equities were again the winners, with funds finding their way there (and in to the Euro), as the riots in the US continue to hit the headlines.
This is just a knee-jerk reaction and there is danger that a mis-step from the ECB tomorrow could hurt both the equity rally & the Euro's bull run- or just push funds back to the US.
The riots seem to be quieting down and this may allow COVID headlines to creep in again. Florida cases are on the rise, 2.3% new cases compared to average of 1.4% the last few days & German new cases are ticking up again too.
EURAUD HAS DONE THE ROUND TRIP
EURAUD made a bit of a bounce today after ticking below the February blast off area. It hasn't tested in to 2019 price action at all this year. If AUD can make a final push (or ECB does a decent job of keeping the Euro suppressed), this may tick EURAUD under the 1.6 area to take out some stops & would set up a decent long to play a bounce in time for a potential risk off move in to the weekend.
There's a market cliche that when there's blood on the streets, it's time to buy - and there is rarely blood on the streets in the US. As such, the market dutifully rallied, albeit to less of an extent in the US, with money flowing into European & Asian equities - perhaps, for once, seen as the less risky option.
US Equities Rallied
Though there were some early wobbles, AUD led the way with Copper, both having strong days and pointing the way for the wider market. Yen continued its weakness of the last few months.
Reports that the US government were looking to push through further stimulus helped push US equities up in the afternoon.
Governments are the largest customers for the companies in their economies; they are brandishing the largest credit cards that have ever existed & are not afraid to use them. One day, this will all come back to haunt them (and us)- but that could be some time away.
Groundhog Brexit
0530 : AUD RBA Rate Decision
Surprisingly, not any other major data due, however the Brexit negotiations resume & after GBP's run today, there could be a swift turnaround if headlines are negative.
Amid general USD weakness with the current risk-on tone, the Euro eventually broke out of its multi-month range. As long as it holds above 1.1 tomorrow, the month-end close will be strong and should open up room for another squeeze higher. 1.115 is the next key area.
EURUSD at resistance zones
While AUD & NZD were up v's USD, they notably lagged v's the Euro & Sterling. CAD was slightly down v's USD. If this pattern continues, it shows a slight risk-off tilt.
Copper, though down early in the day, rallied and is currently at the highs, with bond yields also holding up and oil at the highs as well. Risk happens slowly and then all at once, of course, but so far this market is only seeing the positives ahead.
There was a bit of technical weakness at key areas today; key areas that everyone is surely watching, which usually means one thing; the first trade is the wrong one.
AUDUSD got about 10 pips above its 2019 low before reversing, EURUSD spiked above 1.1 but couldn't hold the move (helped by the European Commission's proposal roughly along the lines of the original German/French bailout of the EZ). SP500 dipped back below the 3K mark though has since rebounded, however it still holds under the 200 DMA.
AUDUSD @ 2019's low and the 200 daily SMA
The Pound was arguably the weakest currency today, failing not around technical levels but just continuing to drift lower, with a UK spokesperson commenting that there is no change to the government's view that an extension will not be looked for, with the June deadline fast approaching.
