Date: 02 Jun 2020
The US dollar continues to lose ground against other major currencies during early Tuesday trading. Financial markets have so far largely shrugged aside heightened social tensions in the US and lingering attrition with China, continuing to ride a wave of optimistic risk-on. Hopes of a swift economic recovery in the aftermath of the current COVID-19 pandemic continue to condition investors insistent on seeing a glass half-full scenario. This is why the dollar, the go to currency during the darkest days of the great lockdown, is now devaluing against other major currencies.
Ricardo Evangelista – Senior Analyst, ActivTrades
The positive sentiment that has dominated markets in the last few weeks has driven the recovery of the oil price. The progressive end of lockdown in most countries is clearly seen as a bullish element for the barrel. Moreover, investors are betting that the outcome of the imminent meeting of OPEC+ will be an extension of the current restrictions, probably for two or three months, although Saudi Arabia will have to overcome Russian resilience to this extension.
Technically the WTI price is challenging the resistance level at $36. A clear break-up would open space for further recoveries as the price could try to fill the gap down registered on the 9th of March, when OPEC+ temporarily failed to achieve a deal and price collapsed by more than 20% in a single day.
Carlo Alberto De Casa – Chief analyst, ActivTrades
Most European stocks edged higher on Tuesday despite a mixed tone registered overnight by Asian benchmarks as investors still struggle to assess the potential impact of US civil unrest to markets. While recent reassuring macro data and optimism about the reopening of economies in both Europe and the US have sustained the bullish pressure so far, investors are becoming increasingly worried about the situation in the US. Even if traders still don’t expect the current US civil unrest to last for long, these social and political events could seriously impact reopening and social distancing measures, raising fears of a second virus wave which would be disastrous to businesses and the economy as a whole. In addition to the virus threat, many think the current situation and the way President Trump is handling the issue could put his chances of a re-election in November at risk, making the short to mid-term outlook more uncertain.
All of the EU benchmarks are trading higher with the DAX-30 Index registering the best performance so far on the old continent. The price continues to rally following a pull-back move above 11,830pts earlier this morning. The bullish trend remains valid and the next targets are above 12,000pts and 12,145pts. However, the bearish divergence registered between prices and the MACD indicator may indicate a trend slow-down on a very short-term basis.
Pierre Veyret– Technical analyst, ActivTrades
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and as such is to be considered to be a marketing communication. All information has been prepared by ActivTrades PLC (“AT”). The information does not contain a record of AT’s prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of futures performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk.