29.05.2020: USD at crossroads (USDХ, DJIA, BTC/USD, USD/CAD)
Wall Street opened with a decline. The US dollar is on track for a weekly loss against major currencies. Today investors are focused on a press conference by Donald Trump and a speech by Jerome Powell. Traders prefer to lock in profits leaving for the weekend because they are braced for unexpected developments.
The benchmark US stock indexes are closing May with gains boosted by hopes that the US economy is on the path to recovery following the pandemic-driven crisis. Nevertheless, the market is trading with mixed sentiment due to escalating jitters between the US and China. Investors could lose their confidence anytime soon.
Ahead of the press conference by Donald Trump, futures on the US stock indexes were trading mainly lower. The Dow Jones Industrial Average shed 0.78% to trade at 25,257. Futures on the S&P 500 lost 0.53% to 3,022. Thus, the index is running a risk to lose its latest achievement – growth above the 200-period moving average.
The Nasdaq rose 0.29% in the early New York trade and later went into the negative territory. Twitter’s stocks have come under the spotlight today as Donald Trump unveiled his plan to ban the popular social network. Twitter was accused of its interference in the US presidential elections of 2020.
The US dollar is extending the downtrend. Today it touched the level of 98 but trimmed losses ahead of the New York trade. Today traders are alert to a speech by the Fed’s Chairman. The market expects Jerome Powell to state his viewpoint on a soaring number of unemployment claims. Another burning issue is how the central bank is going to cushion the crisis-stricken national economy. Investors brought up the issue of negative interest rates in light of the second estimate of the US GDP. The Department of Commerce downgraded the US GDP to minus 5% for the first quarter.
Market participants want to figure out how negative interest rates will affect the US dollar as a safe haven asset and a reserve currency. In this context, investors are not able to express sentiment on the US currency.
Traders need to digest these events and evaluate a series of macroeconomic data.
The Canadian dollar has been trapped in the range against the American peer for the third day in a row. The USD/CAD pair has been hovering at about 1.37. Despite this sideways trading, the overall outlook for the loonie remains bearish.
Analysts warn of further weakness of the Canadian dollar. Deficit of Canada’s current account came in higher than the forecast. Besides, Canada’s GDP data for the first quarter and March wrecked any signs of optimism. Canada’s gross domestic product slumped to minus 7.2% in March from April. Economists had projected a steeper drop to minus 9%.
Bitcoin has not been able to reach the target level of 10,000 US dollars per token. Today it is trading at near 9,400 dollars. Crypto analysts say that bitcoin is ready to exit the consolidation stage. Afterwards, it could develop a rapid rally.
The most popular cryptocurrency has been able to recover in full following a sharp plunge in March despite price gyrations in the halving period. Now bitcoin has regained footing being ready to conquer the psychological level of 10,000 dollars.
On Friday, large volumes of futures contracts and options are due to expire at the CME group that could trigger higher volatility. The market is braced for such volatility even at the weekend. If bitcoin holds firmly above the level of 9,000 dollars, the door will be open to the level of 10,500 dollars next week.
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