FOREX
The euro is on the back foot against other major currencies during early Tuesday trading in Europe. The single currency failed to join the risk party despite an improvement in market sentiment following appeasing words towards China, from a senior US official, and an increasing number of countries announcing the easing of their lockdowns.
The euro could once again be coming under pressure as the German Constitutional Court prepares to issue a rule on the legality of the European Central Bank’s purchase program, potentially limiting the German Bundesbank’s ability to participate in the program and restricting the range of action the ECB can take at a time when it may be needed the most.
Ricardo Evangelista – Senior Analyst, ActivTrades
OIL
Oil looks to be able to see light at the end of the tunnel with all WTI futures rebounding, including June expiry. Investors’ renewed optimism, which could yet prove premature, is based on expectations that not all US tanks will have “No Vacancies”. Traders have readied themselves by increasing storage capacities as well as other specific measures to allow them to receive crude oil and avoid what happened on the 20th of April, when the WTI expiry of May finished its life in negative. Furthermore, investors are expecting the global economy to bounce back relatively quickly and increase oil demand. These changes are unlikely to see the oil price easily rush back to $50, but should at least keep the prices $20-$30. Of course, a strong second wave of the virus could change the scenario once again, but at this stage investors are not betting on further lockdowns of economies.
Carlo Alberto De Casa – Chief analyst, ActivTrades
