Intraday Market Thoughts

Euro & Industrials Lead Rebound

by Adam Button
Jun 29, 2020 14:58

A new record daily increase in the number of Covid19 inflections and resurfacing political US-China tensions did not stop US indices from rebounding with the exception of NASDAQ, which is the only loser of the main 3 indices after Facebook and other info tech firms lost advertizers. (More about market levels below and how thet compare to Friday's levels). The weight of growing coronavirus cases sparked risk aversion on Friday and it's tough to envision anything changing in the near-term. DOW30 leads with 1.4% higher vs NASDAQs -0.4%. EUR is the strongest currency of the day and GBP is the weakest.  CFTC FX positioning showed more bets on the yen (more below). The EURGBP premium long hit its final taret of 9070 3 weeks ago, but Ashraf continued to push for fresh longs into the pair to his WhatsApp Broadcast Group members until it reached 09170. 

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Euro & Industrials Lead Rebound - Fb (Chart 1)

US virus cases rose another 1.7% on Sunday, above the 1.5% average. But it's a few hotspots that are concerning the market. Florida, Texas, Arizona and California all hit records in the past week and high frequency data is increasingly showing fewer restaurant visits and hours worked in those states, which collectively represent almost one-third of US GDP. Formally, governors re-closed bars in Florida and Texas and cut restaurant capacity.

The mood on Friday slowly soured and that resulted in a 2.4% decline in the S&P 500 with a close below the 200-dma.

Today, DAX attempts to regain its 200-DMA of 12152, DOW30 manages to protect the 24070 base support (backed by 248300 confluence of 55 and 100 DMA) and XAUUSD remains underpinned at 1754, eyeing 1790. 

See how the levels mentioned above compare to the levels we mentioned hours ahead of Friday's close.  

In the FX market, the reaction has been uneven. Risk trades in commodity currencies are playing out more clearly but elsewhere quarter and month-end flows are a factor. GBP is also suffering on the risk trade but Brexit news and a potential COVID-lockdown in Leicester are compounding worries.

Note that China was on holiday late last week but is back to start the new week.

CFTC Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +.

EUR +118K vs +117K prior

GBP -19K vs -16K prior

JPY +27K vs +22K prior

CHF +1K vs +2K prior

CAD -21K vs -25K prior

AUD -5K vs -7K prior

NZD 0K vs -2K prior

After big moves into AUD and EUR last week, the shifts were much smaller in the last data. The lone notable shift was into JPY.


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