Bulls are back in charge as the USD sustains its slide

FX News Today 

Discord between Powell and US Treasury over the use of emergency funding programs (the near half a trillion dollars under the CARES Act), weighed on the investor sentiment.

• The US stock futures trade in the red as Mnuchin’s call to recollect funds allocated to Federal Reserve would limit the central bank’s ability to provide additional support to businesses at a time when the second wave of the coronavirus is accelerating. The rollback of the emergency funds is likely to threaten the global economic recovery, as the program was launched to counter the virus impact.

• This will leave the FED with no options but to boost bond purchases or implement negative rates.

• US covid-19 cases rose by a record of 185K on Thursday.

• Bloomberg – US oil storage tanks are filling up again amid the rising number of coronavirus cases and approaching levels reached following April’s oil price crash.

• Upbeat Australian retail sales data and dovish Fed expectations supported AUDUSD.

• Turkey’s new central banker hiked the one-week repo rate to 15.00% from 10.25%. – The move signals a return toward a more orthodox policy.

• China’s market rates eased, as the PBOC kept the Loan Prime Rate unchanged for a 7th straight month. At the same time the bank drained net CNY80 bln via monetary policy tools according to Bloomberg, which also suggested that the bank remains on course to taper its emergency support programs.

• Japan core inflation numbers meanwhile fell to -0.7% y/y, reviving concerns about deflation.

In the currency market meanwhile, as a risk-cautious sentiment continues in global asset markets, currencies have largely remained within recent range bounds. Base metal prices remain perky, with copper lifting to near recent trend highs while aluminium prices posting a new two-year high. Bitcoin surged to a fresh 3-year high. The USDIndex matched Wednesday’s 11-day low at 92.21 while EURUSD lifted to a 2-day high at 1.1891. USDJPY plied a sub-20 pip range in the upper 103.00s. GBPUSD traded modestly firmer, after it edged out a 2-day high at 1.3288. USDCAD has remained heavy, declining towards 1.3050 and Wednesday’s nine-day low at 1.3032. USOIL prices have come off the boil though have remained buoyant, in the  lower $40s.

Today – ECB Lagarde’s speech and German President Weidman’s speech along with Canadian Retail Sales and European Consumer Confidence.

Biggest (FX) Mover – NZDJPY (+0.30% as of 09:45) – It failed for a 7th day in a row to return to 2-years peak above 73.00. Intraday however bulls gained the control and the asset is now traded at 72.00 from 71.60. Rally, however, has stalled the past 2 hours with fast MAs and RSI flattened. MACD is positive but its signal line holds close to neutral. H1 ATR 0.103 Daily ATR 0.772.