News

Dollar Holds Firm as US COVID19 Cases Spike

USD

The dollar index, which measures the greenback against a basket of major currencies held steady near 97.30, as COVID19 resurgence continues to support demand for safety. The new confirmed cases in several states rose significantly, which raised concerns over the economic recovery. Texas Governor declared that the state would pause its reopening plans due to the spike in new cases. On the other hand, the initial jobless claims surprised again to the upside coming in at 1.48 million versus 1.3 million expected, but the total of employees benefiting dipped below 20 million for the first time in two months. Market participants will continue to monitor the covid19 developments to assess the impact on economic recovery. Also, they will be looking forward today to one of the best gauges to the Federal Reserve, the Personal Consumption Expenditure for May, in addition to the personal spending, to have an insight into the economic activity as business activity restarted.

Equities

Major US stock index futures were almost flat during the Asian session after yesterday's late rebound. Investors are weighing in the prospects of new fiscal stimulus, but also the resurgence of COVID19 cases, which could disrupt the economic activity again, especially following the announcement of Texas Governor that the state is considering halting the reopening plans as cases rose significantly. On the other hand, the Federal Reserve annual Bank Stress test results showed that some banks could get close to their minimum capital in scenarios similar to the COVID19 outbreak. The results drove bank stocks down, trimming sharp gains earned during the session. The Dow Jones Industrial Average futures dipped to 25383, the S&P500 futures declined to 3052, and Nasdaq futures eased to 10040.

Gold

Gold prices held steady awaiting fresh fundamental drivers. The precious metal gained for the increased prospects of further stimulus to tackle the impact of COVID19 on the economy. The price of a gold ounce hovered near $1765, the price of a silver ounce recovered to $17.80, and palladium futures rebounded to $1859.

Oil

Oil prices edged higher, recovering from Wednesday's sharp losses on demand-recovery hopes. The activity is almost back to normal in many countries around the world, which would impact positively oil-demand levels. However, investors remain afraid of a serious second wave of infections, which could halt activity again, and destroy the ongoing economic recovery. The West Texas Intermediate crude August delivery rose to $39.29, and Brent Blend August delivery rallied to $41.69. Market participants are looking forward to the Baker Hughes rig count report as many producers are expected to have resumed activity following the latest surge in prices.

Major Economic Events

GMT Country Event Expectation Previous

12:30

US

 Core PCE Price Index (MoM) (May)

0.2%

-0.4%

12:30

US

 Personal Spending (MoM) (May) 

9.0%

-13.6%

14:00

US

 Michigan Consumer Expectations (Jun)

73.1

73.1

14:00

US

 U.S. Baker Hughes Oil Rig Count

-

189

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