Archives of “June 15, 2020” day

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Who Are You?

  
Analysis, Education

The following is an excerpt from an article in Naval Institute magazine – there’s a lesson not only for navigating a ship, but for traders too.

——-

Shortly after dark, the lookout on the wing of the bridge reported, “Light, bearing on the starboard bow.”

“Is it steady or moving astern?” the captain called out.

Lookout replied, “Steady, captain,” which meant we were on a dangerous collision course with that ship.

The captain then called to the signal man, “Signal that ship: We are on a collision course, advise you change course 20 degrees.”

Back came a signal, “Advisable for you to change course 20 degrees.”

The captain said, “Send, I’m a captain, change course 20 degrees.”

“I’m a seaman second class,” came the reply. “You had better change course 20 degrees.”

By that time, the captain was furious. He spat out, “Send, I’m a battleship. Change course 20 degrees.”

Back came the flashing light, “I’m a lighthouse.”

Major European indices recovered from lows and close marginally lower

  
Analysis, Global Indices

German DAX -0.3%

The major European indices are closing lower but have recovered a large chunk of the earlier declines.  A summary of the provisional closes and ranges are below:

  • German DAX, -0.3%
  • France’s CAC, -0.4%
  • UK’s FTSE 100, -0.8%
  • Spain’s Ibex, -0.3%
  • Italy’s FTSE MIB, +0.5%
The low percentage changes for the major pairs reached:
  • German DAX, -2.94%
  • France’s CAC, -3.05%
  • UK’s FTSE 100, -2.5%
  • Spain’s Ibex, -3.15%
  • Italy’s FTSE MIB, -3.1%
looking at the daily chart of the German DAX, the price low got closer to its falling 100 hour moving average at 11448.09. The low for the day reached 11597.82.
The index remains below its 200 day moving average above at 12141.01.
Trading between the 100 day moving average below and the 200 day moving average above will keep the buyers and sellers guessing. The direction will likely be contingent on the expectations for the coronavirus going forward.

Gold dragged lower as virus fears weigh

  
Analysis, Gold / Silver

Gold down $25

Gold down $25
Gold has been under steady pressure since the start of European trading. No one has forgotten how gold was anything but a safe haven in March and that’s shaking out some weak hands with equities struggling.
Technically, the range from $1660 to $1760 is strongly establishing itself and we’re square in the middle of it. I spoke to Neils Christensen of Kitco last week and laid out my thoughts on the precious metal.

Beijing announces halt to plans of reopening entertainment venues amid latest virus developments

  
  Analysis

According to Chinese state media

China has been particularly strict about the reopening of entertainment and leisure outlets amid the coronavirus crisis, and the latest happenings in Beijing will only serve to reinforce the conviction by authorities to keep these venues closed for the time being.
For some context, theaters and cinemas have remain shut throughout the last five months and this has threatened to put a lot of film companies in the country out of business.

Bundesbank said to be urged to evaluate ECB bond buying in draft legal report

  
  Analysis

Bloomberg reports, citing a draft legal report by the Bundestag

This relates to the German constitutional court ruling last month, with the lower house in parliament (Bundestag) reportedly stating that the government must comply with the constitutional court ruling on bond purchases by the ECB.

The report also adds that not responding to the ruling ‘is not an option’ and discusses a series of options allowing the Bundesbank to comply with the ruling without possibly meddling into ECB affairs.
That said, the report argues that the Bundesbank will have to ultimately take responsibility to evaluate the proportionality of the ECB bond buying programme and must cut back on existing purchases should this be the case.
There’s still time for this to run so I wouldn’t expect any major developments during the interim, but it is something worth taking note of in the coming months in case it does actually blow up into a surprise risk factor for the euro and the ECB.

Dollar, yen gains ease a little on the session

  
Analysis, Forex

EUR/USD trades flat after testing its earlier low on the day

EUR/USD H1 15-06

The dollar and yen are seeing gains pare back a little on the session as we see EUR/USD and GBP/USD trade back to flat levels on the day now. EUR/USD tested its Asia Pacific low @ 1.1227 before rebounding back to 1.1255 currently.
That said, sellers are still in near-term control as price action remains well below the key hourly moving averages @ 1.1300-20 at the moment.
Meanwhile, AUD/USD has also seen its earlier decline pared back in a move to 0.6820 from as low as 0.6777 earlier at the start of the session.
The overall risk mood is still negative but not as dire as it was at the opening with European indices keeping near 2% declines and US futures also keeping losses around 2.7% from being as much as nearly 3.5% lower a few hours back.

Japan says that there is no change to plans for further reopening on 19 June

  
  Analysis

Japan economy minister, Yasutoshi Nishimura, reaffirms the government’s plans to continue with reopening plans

Japan

This comes amid the backdrop of a rise in the number of new coronavirus infections in Tokyo (47 cases yesterday, another 50 new cases today), although local officials are attributing it to “more active testing” instead.

From 19 June onwards, the Japanese pro baseball league will be allowed to resume and Universal Studios will also officially reopen (soft reopening was already on 8 June).
I will repeat that governments will find it more difficult now to reimpose restrictions even if new cases start popping up, because of the economic damage associated.
That means we are likely not to see a major global economic carnage as we saw back in March to April, but this threatens any recovery process and is still a major setback nonetheless. In turn, that will have a say in impacting risk assets – like today – as well.
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