Risk Markets Shrug Off Stimulus

USD Down Ahead of NFP

The US dollar has been lower again today, extending the week’s declines as the market continues to digest the Fed’s surprise rate cut earlier in the week. The US dollar has been heavily sold over the week and is now testing the 96.04 support. Later today, the market receives the latest labor market report from the US. And, in the wake of the surprise rate cut this week, any further weakness in data will weigh heavily on USD.

Traders Brace for ECB Next Week

EURUSD has been higher again today, benefiting from the drop in USD. EURUSD has now broken above the 1.1239 resistance level to trade up to its highest level since early 2019. The rally in EUR has seen price making its largest weekly gain since summer 2018 and is now testing the bearish trend line from 2017 highs.

Next week, the ECB is expected to announce further easing in line with moves from the RBA, BOC and the Fed this week, which should cap the rally in EUR.

GBP Rallies Amidst USD Weakness

GBPUSD has benefited strongly from the drop in USD this week. Price has now recovered firmly from the 1.2769 level and is now testing the bearish trend line from December 2019 highs. Despite protest from Gina Miller’s True & Fair Campaign, Andrew Bailey was approved as the new BOE governor this week. The market is now expecting the BOE to cut rates this month in line with the response seen from global central banks.

SPX500 Falls Back

Risk markets have fallen lower again today. Following some initial upside earlier in the week in response to the Fed’s surprise rate cut, equities prices have now fallen back as concerns over the continuing coronavirus outbreak continue to weigh on sentiment. The SPX500 has now fallen back below the 3025.25 level, having traded highs above 3130 earlier in the week.

JPY & Gold Rally Against USD

Safe havens have ended the week in the green with both JPY and gold trading higher against USD. USDJPY has fallen back to 105.77 last from highs last month above 112, reflecting the strong risk-off tone to recent trading. XAUUSD trades 1677.40, well on its way to retesting the current 2020 highs at 1689.39.

Crude Cascades Despite Increased OPEC Production Cuts

Oil prices have been lower again today also with price heading back down towards the week’s lows in the wake of yesterday’s OPEC meeting. OPEC announced that it will cut production by a further 1.5 million barrels per day through to the end of Q2 2020. However, with Russia and other non-OPEC members yet to agree to the deal, there are doubts over the prospect of the fresh cuts being fully implemented and fully effective. Crude trades 45.23 last.

Loonie Lower on Week

USDCAD has been a little weaker over the final trading of the day of the week so far. Despite a firm rally over the last three days, the loonie is ending the week in the red currently. The breakdown in oil prices has weighed heavily on CAD, which has also come under pressure this week from a .5% rate cut from the BOC.

Aussie Tests Resistance

The Australian dollar has been higher today benefiting from the ongoing weakness in USD as a result of the Fed’s surprise rate cut. The RBA cut rates earlier in the week ahead of the Fed’s surprise rate cut. However, in light of the heavy sell-off in the dollar, the Aussie has ended the week in the green. AUDUSD is testing the .6645 level resistance as of writing.