• Record rise in coronavirus cases in six U.S. states
• Beijing outbreak widens
• FED will move away from ETFs and into individual bonds
• Beijing outbreak widens
• FED will move away from ETFs and into individual bonds
European indices finished mostly higher as investors welcomed more stimulus boost from central banks and governments and trial results for dexamethasone announced on Tuesday showed the death rates were cut by around a third among the most severely ill COVID-19 patients. European Commission president Ursula von der Leyen confirmed that the EU and the UK were not half-way through to reach an agreement on their future relationship, however EU will work hard in order to finalize the deal by the end of the year, but would not compromise its values in order to achieve that. DAX 30 rose 0.5% , CAC 40 added 0.9% and FTSE 100 climbed 0.2%
Wall Street launched today's session higher, and the Nasdaq 100 index was again above 10,000 pts. Data from the US housing market showed an increase compared to April, although slightly lower than expected. Sentiment worsened after the latest data on the number of new coronavirus cases in the United States hit the market. In Texas, the number of people hospitalized increased by almost 11%. It is worth noting that Texas is one of the most important industrial regions in the US, mainly due to large deposits of oil and natural gas. Of course, current situation is still not as bad as at the beginning of the pandemic in New York, when the number of hospitalizations increased day by day by up to 20%, but in Texas the number of patients increases 5 days in a row. Data from Florida and Arizona regarding the number of cases are also not optimistic. In an interview with the Financial Times, a leading member of the White House coronavirus task force doctor Anthony Fauci warned that the pandemic is far from over in the U.S., as the numbers of cases is accelerating in major states such as Texas, Florida and California. These statements seem to contradict Vice President Mike Pence comments, who argued that there would be no second wave and warned against "overblown" panics. However, until data showing a large increase in mortality appears, markets should not be turning their backs on the current improvement in the economy fueled by trillions of dollars in monetary and fiscal stimulus.
Meantime, during his second day of testimony, Federal Reserve Chairman Jerome Powell, said that the Fed will move away from buying exchange traded funds (ETFs) and invest mostly in individual corporate bonds. "Over time we’ll gradually move away from ETFs and move to buying bonds, 'Powell said, according to CNBC." It's a better tool for supporting liquidity and market functioning. "During today’s session Dow Jones is trading 0.2% higher, S&P 500 rose 0.46 %, Nasdaq added 1.05% and Russell 2000 fell 0.90 %.
China is also reporting an increase in the number of new coronavirus cases. Beijing increased its lockdown measures in order to prevent second wave of Covid-19 infections. Government has ordered schools, universities and entertainment venues to be closed, while the nearby province of Heilonjiang has also imposed a three-week quarantine period. More than 1,000 flights to or from Beijing have been cancelled, however businesses can still operate. Meanwhile soldiers from India and China fought each other with nail-studded clubs and stones on a disputed Himalayan mountain frontier this week, leading to the death of 20 Indian soldiers in the worst clash since 1967.
WTI crude futures trades around $38.1 a barrel while Brent crude prices traded around $40.9 a barrel on Wednesday, after data from EIA and API showed US crude inventories unexpected rose last week. EIA data showed US crude oil stocks increased by 1.215 million barrels in the week ended June 12th while API data showed inventories rose by 3.9 million barrels. Pressuring prices further were concerns over fuel and crude demand as a resurgence of coronavirus cases in the US and China raised fears over a second wave of infections.
There is quite a lot of data scheduled for release tomorrow. Figures from Australia's labor market and GDP data from New Zealand will be the key releases of the Asian session while SNB and BOE rate decisions will be on watch during European trading hours. Apart from that, investors will get to know weekly Jobless Claims figures from the US.
AUDUSD is testing the 100-period moving average (green line), which previously provided some support. The question remains whether it will manage to fend off the bears this time or will Aussie break lower? In case of a break lower major support can be found at 0.6767. However if bulls will manage to stay in control, then round level at 0.70 may come into play. Source: xStation5
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