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·         EUR/USD Price Analysis: Snaps three-day losing streak to regain 1.0900

EUR/USD takes the bids to 1.0911, up 0.14% on a day, during Tuesday’s Asian session. In doing so, the quote recovers from a confluence of 21 and 50-day SMA while snapping the previous three-day losing streak.

That said, the pair currently aims to visit 38.2% Fibonacci retracement of March month fall, around 1.0965, whereas Thursday’s top near 1.1010 could lure the bulls next.

It should, however, be noted that the quotes’ upside past-1.1010 will be dependent upon how well it manages to stay beyond 1.1020.

Meanwhile, a daily closing under 1.0880/75 support confluence can quickly fetch EUR/USD prices to 23.6% Fibonacci retracement level of 1.0838.

Though, an ascending trend line from March 23, currently around 1.0805, could challenge the bears afterward.

·         Treasury yields rise as coronavirus vaccine hopes drive risk-on sentiment

U.S. government debt prices were lower on Tuesday in a holiday-shortened week, with mounting optimism about a coronavirus vaccine driving some risk-on sentiment from investors.

At around 2:10 a.m. ET, the yield on the benchmark 10-year Treasury note was up at 0.6916% and the yield on the 30-year Treasury bond rose to 1.4050%. Yields move inversely to prices.

American biotech company Novavax said Monday that it had started the first human study of its experimental coronavirus vaccine, with initial results on safety and immune responses expected in July.

As states look to tentatively reopen their economies, the U.S. has now confirmed more than 1.6 million cases of the virus, resulting in more than 98,000 deaths, according to Johns Hopkins University.

Investors will also keep an eye on a flaring of trade tensions between the U.S. and China, with disputes over blame for the coronavirus pandemic and new Hong Kong security laws threatening to derail the landmark “phase one” trade agreement signed in January.

·         Endgame of US-China rivalry is ‘lose-lose,’ says Harvard professor

Relations between the U.S. and China — the world’s top two economies — look set to worsen, and the endgame is a “lose-lose” situation for both sides, said a political science professor from Harvard University.

That comes as leaders from the two countries — U.S. President Donald Trump and Chinese President Xi Jinping — seek to maintain control domestically as the coronavirus pandemic ravages both economies, said Graham Allison, Harvard’s Douglas Dillon professor of government.

The rivalry between the two economic giants could result in the collapse of the so-called phase one trade deal and a continuation of the blame game over the origins of the coronavirus, the professor explained.

In addition to Allison, other experts have warned, before the coronavirus outbreak, that Beijing would face difficulties fulfilling its commitment in the phase one trade deal — which requires China to buy an additional $200 billion in U.S. goods and services by 2021 on top of 2017 levels. The pandemic has made that even more difficult, experts said.

Some have also warned that rising U.S.-China tensions could lead to a Cold War. But Cheng Li, a researcher from Brookings Institution, said neither country is ready for that even though relations have deteriorated much faster than expected.

·         China’s new proposed security law for Hong Kong is terrible news for pro-democracy activists, but it’s unlikely to have a significant impact on foreign companies and investors, according to an U.S.-based risk consultancy.

The move has sparked concerns that it will give Beijing more control over the Asian financial hub and reduce the rights and freedoms Hong Kongers enjoy but which are denied to mainland Chinese. It’s seen inciting further pro-democracy protests, after months of increasingly violent demonstrations last year.

“For those kind of clients they may see relatively little impact because the kind of legal disputes they get involved in, and where they take advantage of Hong Kong’s highly independent and high quality judiciary, are not the kind of disputes where Beijing tends to intervene and wield its heavy hand because there’s not any particular political implications to those disputes,” Wildau said. “For those groups, they can rest easier.”

·         A Chinese city has unveiled proposals to permanently track a person’s health through an app that gives them a score based on factors such as how much alcohol they drank and the amount of sleep they got.

·         China will strengthen its economic policy and continue efforts to lower interest rates on loans, central bank Governor Yi Gang said, reinforcing expectations of further support measures to revive an economy ravaged by the coronavirus pandemic.

·         Singapore plans $23.2 billion fourth stimulus package to support coronavirus-hit economy

Singapore’s government on Tuesday announced another 33 billion Singapore dollars ($23.2 billion) to support its economy which has been severely hit by the coronavirus pandemic.

That’s the fourth stimulus package that the Southeast Asian country has announced since the outbreak. It came after Singapore’s Ministry of Trade and Industry slashed its forecasts for gross domestic product. It now expects GDP to shrink by between 4.0% and 7.0% in 2020 — its third downgrade in economic projections this year.

·         Bank of Japan Governor Haruhiko Kuroda said on Tuesday the central bank may take more steps to cushion the economic impact from the coronavirus pandemic, maintaining his gloomy outlook even as a state of emergency was lifted in the capital Tokyo.

·         ECB’s coronavirus stimulus must remain flexible, Banque de France governor says

The European Central Bank (ECB) should not need to take into account the size of a country’s economy when buying government bonds as part of its stimulus program, a member of the central bank has told CNBC.

The comments by Banque de France Governor François Villeroy de Galhau come after the German constitutional court said earlier this month that the ECB should keep that link to avoid the risk of distorting markets.

The ECB has been buying large amounts of government bonds as part of its wider effort to mitigate the economic fallout from the coronavirus crisis. Its Pandemic Emergency Purchase Program (PEPP), announced in March, will see it buy 750 billion euros ($818 billion) by the end of the year. However, the program is different from other bond-buying initiatives, where the central bank links its monthly purchases to the size of a country’s economy.

Speaking to CNBC Tuesday, de Galhau said the stimulus program should remain flexible.

·         Australia will not open the country’s borders “anytime soon”, Prime Minister Scott Morrison said on Tuesday, but added the country will continue its discussions with neighbouring New Zealand for a trans-Tasman safe travel zone.

·         Saudi Arabia will end curfew in June, except in Mecca

The Saudi state news agency said the kingdom will lift curfew everywhere starting June 21 except in the holy city of Mecca, Reuters reported. Curfew times are set to be revised starting this week and bans on domestic travel, going to workplaces and holding prayers in mosques will be lifted at the end of the month, according to the news wire. Curfew time in Mecca will be adjusted from 3 p.m. to 6 a.m. and prayers would be allowed to be held in mosques from June 21, Reuters said.

·         Oil prices rose on Tuesday, supported by growing confidence in the market that producers will come good on commitments to cut crude supply while demand picks up with more cars back on the road as coronavirus lockdowns eased around the world.

 

U.S. West Texas Intermediate (WTI) crude futures gained 3.4%, or $1.12, to $34.37 a barrel as of 0652 GMT, just off an intra-day high of $34.54.

There was no WTI settlement on Monday because of the U.S. Memorial Day holiday.

 

Brent crude futures were up nearly 1.7%, or 61 cents to $36.14, adding to a 1.1% gain on Monday in thin holiday trading.

 

The market was buoyed by comments from Russia reporting its oil output had nearly dropped to its target of 8.5 million barrels per day (bpd) for May and June under its supply cut deal with the Organization of the Petroleum Exporting Countries (OPEC) and other leading producers, a grouping known as OPEC+.

 

Reference: CNBC, Reuters, Worldometers, FX Street