Traders Limit Risk Ahead Of Weekend Break - Forex News by FX Leaders

Traders Limit Risk Ahead Of Weekend Break

Posted Friday, June 26, 2020 by
Shain Vernier • 1 min read

Throughout the COVID-19 pandemic, Fridays have been rough for equities bulls. More times than not, traders have cut risk exposure ahead of the weekend news cycle ― today has been no different. At the halfway point of the Wall Street session, the DJIA DOW (-525), S&P 500 SPX (-52), and NASDAQ (-163) are all negative. It looks like the U.S. resurgence of COVID-19 is playing hell on sentiment.

The key news driving today’s bearish action are reports that Florida and Texas are rolling back their COVID-19 reopenings due to a spike in new cases. Both states are showing a massive uptick in the virus, with each setting records in the past 48-hours. For now, it looks like additional shutdowns are on the way for hard-hit regions in the U.S.

On the economic news front, today was relatively mute. Personal Consumption Expenditures (May) grew month-over-month, but the UM Sentiment Index (June) came in lower than expected. The figure threw a curveball to traders, hitting 78.1, beneath expectations (79.0) and the previous release (78.9). Most analysts, including this one, expected the COVID-19 reopen to boost consumer morale ― this assertion proved categorically false.

Traders Bail On Stocks, Lean Toward Safe-Havens

Following last night’s ho-hum Tokyo CPI (June) report, the USD/JPY has fallen slightly. However, given the exodus from risk assets, the USD/JPY may extend session losses before the close.

USD/JPY, Weekly Chart

Overview: At this point, the key level traders are watching in the USD/JPY is the 50% COVID-19 Retracement (106.44). As long as rates hold above this area, a slight bullish bias is warranted. Still, given the market’s sudden “risk-off” attitude, this pair may be positioned for a plunge as June draws to a close.

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About the author

Shain Vernier // US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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