Forex Today: Calm before the “quadruple witching” storm amid coronavirus, economic uncertainty
|Here is what you need to know on Friday, June 19:
Markets have stabilized after as coronavirus concerns are somewhat softer while economic uncertainty remains high as the dollar is holding onto gains. The "quadruple witching" event is set to trigger high volatility as the week draws to an end.
Receding coronavirus concerns?: While cases and hospitalizations in the US Sun Belt continue rising, the lack of new acceleration is providing some calm. China's announcement that it has an outbreak in Beijing under control is also providing some relief.
On the medical front, COVID-19 news have been mixed as well. Dexamethasone, a cheap steroid, has proved effective in reducing the mortality rate, and efforts for developing a vaccine are in full swing. On the other hand, a study in Wuhan cast doubt about developing immunity.
US-Sino relations: President Donald Trump has touted "total decoupling" from China as an option. However, other officials in the administration have reiterated that Beijing is fulfilling its commitments in Phase One of the trade deal.
US jobless claims disappointed by stabilizing around 1.5 million while continuing claims did not fall from 20 million. Alongside a miss in housing starts, the shine from robust retail sales is waning.
Jerome Powell, Chairman of the Federal Reserve, will speak in a virtual panel late in the day, and will likely reiterate his caution about the recovery. Neel Kashkari, his colleague from the Minnesota Fed, said the road will likely be bumpy and the recovery "muted." White House adviser Larry Kudlow remained optimistic about a return to normal by
The focus toward the end of the week will likely be on expires of four different types of options and futures – "quadruple witching" – which tend to trigger volatility in US stocks. It may spill into currencies.
US politics: Ahead of Trump's rally in the weekend, seen by some as the firing shot in the elections campaign, a poll by Fox News showed the incumbent is trailing rival Joe Biden by 12 points. Markets are will gradually tune into the elections.
GBP/USD is licking its wounds from the Bank of England's decision on Thursday. The BOE increased its bond-buying scheme by £100 billion, the bottom of the range, and will also slow the pace of purchases. Sterling is also suffering from uncertainty about Brexit and relatively high coronavirus figures.
See BOE Quick Analysis: Three reasons to sell sterling as Bailey seems burned out
UK retail sales are set to show a rebound in May after plunging in April, the first full month of the lockdown. UK GfK Consumer Confidence bounced from the lows.
EUR/USD is trading just above 1.12 as European leaders hold a meeting to discuss the EU Fund. Germany and France are pushing to adopt the European Commission's ambitious program, while the "Frugal Four" group of rich countries rejects mutual funding. Decisions will likely be deferred to the next summit in July.
AUD/USD is stabilizing after retail sales bounced by 16.3% according to the preliminary release for May. Australian PM Scott Morrison warned that his country is suffering a cyber attack.
USD/CAD is clinging to 1.36 ahead of Canadian retail sales figures for April, projected to show a double-digit drop.
Oil prices have recovered with WTI trading around $39. The black gold is on the rise despite a lack of progress in a technical OPEC meeting.
Gold prices remain stable just under $1,730. The precious metal has been repeating a pattern of dips, followed by recoveries, and a return back to the range.
Cryptocurrencies are trading at somewhat lower ground, with Bitcoin hovering around $9,300.
More Coronavirus comeback or economic re-emergence, Which narrative will carry the day?
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