COVID-19 patients respond well to Gilead's Remdesivir
Erik Bregar of Exchange Bank of Canada - InsideFutures.com - Mon Apr 20, 10:03AM CDT

ANALYSIS

USDCAD

Global risk sentiment got off to a rip roaring start in late NY/early Asian trade last night following a report from STAT that suggested 125 COVID-19 patients, with severe symptoms in a Chicago hospital, responded favorably to a new antiviral treatment from Gilead Sciences called Remdesivir. Full reporthere.

This lit a fire under Gileads stock price, the S&P futures, US bond yields (when the cash market re-opened later in the evening) and practically every major currency versus the US dollar. Dollar/CADs decline was made worse by a bearish NY close all the way back down below the 1.4100-1.4120 resistance band we introduced yesterday.

A healthy dose of skepticism emerged at the start of European trade today, which saw the US 10yr yield completely retrace its rally in Asia. The USD also fully retraced its losses across the board. One could make the argument that the 11pmET release of Chinas horrible GDP print for Q1 2020 played a part in this reversal as well(-6.8% vs -6.5% expected). Traders have since dialed back some of this negativity too however, which is now squashing volatility as we head into a relatively quiet North American calendar for this Friday.

So where does USDCAD go from here? Unfortunately, nowhere near term in our opinion. The market has pretty much respected the 1.3900-1.4200 range we predicted in late March (on a closing basis) and theres nothing to suggest on the charts that we break out of that price range for now. Dollar/CAD has some mild upward momentum to it now because of Wednesdays surge higher, but this is still very much a range trade. Given the upward sloping nature of the trend-lines that capped the market in late March/early April, we think the top end of the range could possibly extend to the 1.4230-50s if we see broad USD buying momentum continue next week.


USDCAD DAILY

USDCAD DAILY

USDCAD HOURLY

USDCAD HOURLY

MAY CRUDE OIL DAILY

MAY CRUDE OIL DAILY


EURUSD

Its been a very choppy 24hrs for euro/dollar. Yesterdays mixed US data set gave the buyers enough reason to give up on their attempt at the 1.09 handle, and that began a quick move lower through the 1.0850s to the next chart support level in the 1.0820s. Broad USD buying flows, before and after the London close, exacerbated this move lower in EURUSD and we thought the news of lockdown extensions for the UK and New York created a mild risk-off tone. This negativity started to reverse during the NY afternoon after President Trump announced a major news conference at 6pmET to unveil economic re-opening guidelines, and after he said there may be a $2 trillion infrastructure package.

The STAT headline then saw EURUSD regain the 1.0850s in early Asia but it appears Chinas Q1 GDP got everybody in a bad mood again heading into Europe. The market is now trying to hold a bounce off the 1.0820s yet again this morning, and we think todays 10amET option expiries (1.9blnEUR between 1.0835 and 1.0850) will likely keep prices stuck around here.


EURUSD DAILY

EURUSD DAILY

EURUSD HOURLY

EURUSD HOURLY

SPOT GOLD DAILY

SPOT GOLD DAILY


GBPUSD

Sterling/dollar has been a mirror image of euro/dollar once again over the last 24hrs. All the headline catalysts we outlined above apply here as well, and GBPUSD just so happened to have similar chart support/resistance levels in play (ie. GBPUSD bounced off its 1.2430s support when EURUSD bounced off its 1.0820s support). The complete lack of volatility in the EURGBP cross rate this week demonstrates the tight EURUSD/GBPUSD correlation were observing. We still believe the 1.2430-1.2520s is the markets pivotal price range heading into next week.


GBPUSD DAILY

GBPUSD DAILY

GBPUSD HOURLY

GBPUSD HOURLY

EURGBP DAILY

EURGBP DAILY

AUDUSD

The Aussie definitely got a dose of good news early last night off the Gilead COVID-19 treatment headlines, but it didnt come soon enough in our opinion to create a positive-looking NY close on the charts. The price gains in AUDUSD came afterward and they then got dialed back by trend-line resistance in the 0.6360s and the horrible-lookingChinese GDP headline.

North American FX traders seem like they're in aslightly better mood this morning as they now push the dollar broadly lower. This is leading AUDUSD to re-challenge the 0.6360s resistance level. The major currency pairs are still arguably trading in ranges though, and so we think the Australian dollar will follow suit as well. US bond traders are not in a good mood this morning, which is worthy to note.


AUDUSD DAILY

AUDUSD DAILY

AUDUSD HOURLY

AUDUSD HOURLY

USDCNH DAILY

USDCNH DAILY


USDJPY

Dollar/yen is becoming hard and harder to analyze as it continues to display positive and negative correlations with risk sentiment, sometimes flipping back and forth in the span of one trading session. We saw this yesterday with USDJPYs US-yield driven (risk-off) drop lower at the start of NY trade, only to be followed by broad USD buying (risk-off) flows around the London close. Were seeing the same flip flopping today, albeit with risk-on headlines. Last nights STAT headline saw USDJPY pop higher with US equity futures but this mornings broad USD selling (risk-on?) flows are now seeing the market move lower.

It feels like the battle of the safe-havens (USD vs JPY) will continue a little longer still. The market capped out at chart resistance just above the 108.00 level in early Asian trade and its now slipping back down below the 107.60-80 support level once again. Over 2blnUSD in options expire at the 107.00 strike at 10amET.


USDJPY DAILY

USDJPY DAILY

USDJPY HOURLY

USDJPY HOURLY

US 10 YR YIELD DAILY

US 10 YR YIELD DAILY

Charts: Reuters Eikon

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