A new month and a new week is upon us. The global pandemic continues with a dose of mass civil unrest and curfews being imposed in several major US cities. The US and China seem to be getting further apart as Hong Kong faces new security laws from the mainland. And although many countries are beginning to open up, the real economic fall out from Covid 19 is hard to quantify. Record unemployment and economies driven to a virtual stand still do not make for good reading. Yet the S&P is above 3,000 and the Nasdaq within touching distance of 9,600. An extremely strong recovery is being rapidly priced in. Time will tell if that is to be the case.

Despite all the negative headlines, Monday would see a quiet start to the week. An initial drop in US equity futures would quickly be reversed and the theme of USD weakness we witnessed late last week would continue. EURUSD would make another attempt at resistance sitting at 1.1150 before closing near 1.1130. GBP would push over 1.2500 while AUD would trade above 0.6800. USDCAD would head the other way trading as low as 1.3560, a full 230 points off the day’s highs. Gold would close near 1,740 benefiting from the overall USD weakness and equities would also close higher, the DJ up 91 points on the day. Investors remain bullish for the US economy and the affects of a gradual re-opening. The rest of the week sees interest rate decisions in Australia, Canada and the EU as well as US NFP data on Friday. As if a pandemic and global unrest was not enough.

Going to start the week with a simple hourly EURUSD chart. As you can see we have some good resistance sitting at 1.1150. Friday we failed to break and today just a quick print above the line before backing off. On a day where the USD weakened across the board, EUR struggled to make significant headway. Watch for a break of this level over the next couple of sessions.

David Hannigan
Author

A graduate of the Cass Business School, Dave's career began with Credit Suisse as an Equity Options Trader on the London Stock Exchange, before moving into the world of FX with Chemical Bank and Citibank. 1994 saw him join National Australia Bank, first as a Senior Dealer, then Senior Vice President and Chief Dealer.

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