Coronavirus Drove Markets, Second Wave Concern Offset by Treatment Optimism

Action Insight Weekly Report 7-12-20

Coronavirus Drove Markets, Second Wave Concern Offset by Treatment Optimism

Development of coronavirus pandemic was the main driver in rather dull markets last week. Just when it looked like risk-off was back on second wave of infections, markets were saved by news from Gilead Sciences regarding the test results on redmesivir. NASDAQ has extended its record run, helping treasury yields and other stock index rebounded on Friday.

The picture in the currency markets were relatively mixed. Sterling ended as the strongest one, followed by New Zealand dollar and then Yen. Canadian Dollar was the weakest, followed by Dollar and then Aussie. Price actions in most dollar and Yen pairs are corrective looking. Some more time is still needed for the markets to sort out a clear direction.

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USD/CAD Weekly Outlook

USD/CAD dipped to as low as 1.3490 last week but recovered since then. Near term bullishness is retained after defending 1.3485 support. Initial bias stays mildly on the upside for 1.3715 resistance first. Break will resume the rebound form 1.3315 to 38.2% retracement of 1.4667 to 1.3315 at 1.3831. On the downside, however, break of 1.3485 will argue that the rebound has completed and turn bias back to the downside for retesting 1.3315 low.

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