Mike Larson, senior analyst at Weiss Ratings, says he hasn’t seen markets this disconnected to reality in nearly a quarter-century.
As the global economy continues to recover, the Japanese Yen is likely to lose its safe-haven appeal against the U.S. Dollar.
Investors are showing little reaction to the Australian GDP report because it is stale news.
The euro topped $1.12 for the first time in 11 weeks, extending the shift in the currency market amid optimism over economic reopenings across the globe. The euro traded at $1.1226 vs. $1.1168 on Monday. The New Zealand dollar and Australian dollar also rose against the greenback, as did the British pound which flirted with the $1.26 level.
The direction of the August Comex gold futures contract on Wednesday is likely to be determined by trader reaction to $1728.70.
Renault finalised on Wednesday a 5 billion euro ($5.60 billion) loan from with the French government, strengthening the carmaker's finances in the wake of the coronavirus pandemic which has ravaged the auto industry. Renault said that the credit facility carried a guarantee from the French state - which owns a 15% stake in Renault - of up to 90% of the total amount borrowed. Banks BNP Paribas, Credit Agricole, HSBC France, Natixis and SocGen were involved in the credit deal.
It’s a bearish start to the day for the majors. Failure to break through key levels will bring support levels into play.
The dollar has sold off in early European trade Wednesday, with riskier assets in demand as investors look for more fiscal stimulus amid signs of a global economic recovery. At 3:05 AM ET (0705 GMT), the U.S. Dollar Index, which tracks the greenback against a basket of six other currencies, stood at 97.362, down 0.3%, falling to levels last seen in the middle of March. EUR/USD traded 0.5% higher at 1.1220, trading above 1.12 for the first time since mid March, on hopes policymakers will continue to support the euro zone, despite the German government's failure to agree on a second big stimulus package Tuesday.
European stock markets are set to open higher Wednesday, amid hopes for more stimulus and an economic recovery in the second half of the year despite a host of concerns from the coronavirus to growing U.S. civil unrest. At 2 AM ET (0600 GMT), the DAX futures contract in Germany traded 0.9% higher. France's CAC 40 futures were up 1.4%, while the FTSE 100 futures contract in the U.K. rose 1.1%.
The euro topped an 11-week high on Wednesday, on track for a seven-day winning streak, and the dollar fell against most currencies as the prospects of more stimulus and hopes for economic recovery led investors to buy riskier assets. Overnight euro implied volatility gauges jumped to 12%, their highest in one month, suggesting traders were preparing for moves bigger than usual in the common currency. The Australian dollar hit a five-month high of 0.6982 against the U.S. dollar <AUD=D4>, as funds sought exposure to economies expected to make the fastest recoveries from the coronavirus pandemic.
“As intense as the rally has been, this is likely set to continue as the breadth of the equity rally has now spread outside the U.S.” The greenback gained 1.06% against the Japanese yen to 108.72 yen, the highest since April 9. The dollar index against a basket of major currencies fell 0.15% to 97.73 after going as low as 97.43, the lowest since March 13. The Australian dollar jumped 1.27% to $0.6883, after reaching $0.6894, the highest since January 20.
Logically, the street protests roiling America should help gold advance or least stay around the key $1,750 per ounce level. U.S. gold futures for August settled down $16.30, or 1%, at $1,734 per ounce on Comex after a seventh day of protests across U.S. cities following the death of George Floyd. Spot gold, which tracks real-time trades in bullion, slid by $15.02, or 0.9%, to $1,724.98 by 2:32 PM ET (18:32 GMT).
The British pound rose to its highest level against the U.S. dollar in a month as investors grew more optimistic about trade negotiations between the U.K. and the European Union.
Silver met resistance below $18.50 but stays above $18.00.
Gains for the loonie show that "markets are looking toward a brighter future," said Michael Goshko, corporate risk manager at Western Union Business Solutions. Canada runs a current account deficit and is a major producer of commodities, including oil, so its economy could particularly benefit from a pickup in the global flow of trade and capital. U.S. crude oil futures <CLc1> settled 3.9% higher at $36.81 a barrel on hopes that major crude producers will agree to extend output cuts and as countries and U.S. states begin to reopen after coronavirus lockdowns.
The pound on Tuesday moved past the $1.25 level for the first time in more than a month, getting a bid as traders price in a more optimistic global environment.
The Commitments of Traders report covering positions held and changes made by money managers in the week to May 26 found that speculators maintained strong buying interest in crude oil while selling was most noticeable in natural gas, gold and the three major crops.
The euro reached an 11-week high on Tuesday as the dollar lost ground, with investors maintaining their hopes for a global economic recovery. The European Central Bank, for instance, is expected to increase its 750 billion-euro Pandemic Emergency Purchase Programme, or PEPP, on Thursday, probably by around 500 billion euros. The Bank of Japan, ECB and the Federal Reserve have increased their balance sheets by 10%, 20% and 70% respectively since the start of this year, said Kit Juckes, macro strategist at Societe Generale.
Sterling climbed above $1.25 to its highest in a month against the dollar on Tuesday, as signs Britain might be willing to compromise on sticking points in a fresh round of Brexit negotiations with the European Union provided support. Britain is expected to indicate flexibility over fisheries and trade rules if the European Union agrees to lessen its "maximalist" demands regarding regulatory alignment and fishing access, the Times newspaper reported on Tuesday, as a new round of talks kicks off. "Despite what is likely to be a period of high Brexit headline risks for UK assets in the coming weeks and months, a report that the UK may be willing to compromise in upcoming Brexit negotiations - along with broad-based US dollar weakness due to the idiosyncratic risk posed by nationwide U.S. protests - is keeping the pound underpinned against the dollar," said Viraj Patel, FX and global macro strategist at Arkera.
Demand for German government debt increased on Tuesday and yields fell across the euro zone as a whole, as Monday's global risk-on mood started to fade and investor attention focused on the European Central Bank's meeting on Thursday. The ECB is expected to increase its 750 billion-euro bond-buying programme, Pandemic Emergency Purchase Programme, or PEPP, on Thursday, probably by around 500 billion euros.
European stocks extended gains for a third day on Wednesday as investors looked past U.S. unrest to data indicating more economic strength as global pandemic lock downs unwind.