Quarter-end directionless trading ensues in indices as the Monday Effect in Covid19-count combined with month/quarter-end effect spills on to what will be a busy and messy session. More on the Virus-Count Monday Effect below. USD is knocked over by all currencies as XAUUSD retests the 1785 high. A new Premium trade was posted yesterday at the close of the US cash session.
The breakout of a triangle in EUR/GBP on Monday and the S&P500's bounce from 3000 were tradable moves, but entirely technical. On the fundamental side, market pricing was less compelling.
The US dollar is rebounding across the board, attempting to breakout of the 97.70/80 barrier. US Crude oil deserves a close look as its $37 support remains in tandem with geeral foundation in the major indices. Yesterday, US pending home sales jumped 44.3% in another positive economic surprise, compared to +19.3% expected. There was some follow through in the market on the headlines but it's a second-tier housing indicator.
Virus-Count Monday Effects
In terms of the virus, cases in the hotspots were lower but that was surely due to the Monday effect, something we've warned about before. There is systematic undercounting and testing in many states/countries coming out of the weekend. The effect often extends through Tuesday before payback begins on Wednesday. By this point, markets should have factored that in but there were noticeable moves after the Florida numbers in particular.
There were also noticeable divergences. The S&P 500 rallied 1.5% but Treasury yields were lower and the US 5-year hit a record low of 0.27%.
It's quarter end and it's always easy to point the finger at that for hard-to-explain moves. The lesson at the moment is to watch the technicals but the keep the fundamentals in mind for the turn of the calendar.
On that front, it will be a busy few days in the US starting Tuesday with consumer confidence from The Conference Board at 1400 GMT. It's one of the best forward-looking indicators and the consensus is an improvement to 90.5 from 86.6.
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