Posted at 20 August 2020 / Categories Market Roundups
Market Roundup
Economic Data Ahead
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DXY: The dollar index surged, extending its rebound from an over 2-year low, after the minutes from Federal Reserve's last policy meeting showed policymakers considering tweaks to monetary policy that could result in the U.S. central bank sticking with aggressive stimulus measures far longer than under its previous rubric. The greenback against a basket of currencies traded 0.1 percent up at 93.06, having touched a low of 92.13 on Tuesday, its lowest since May 2018.
EUR/USD: The euro steadied after tumbling from an over 2-year peak in the previous session as a Reuters survey showed a full recovery from the euro zone’s deepest recession on record will take two years or more, although there is a high risk the job recovery underway reverses by the end of 2020. The European currency traded 0.1 percent higher at 1.1847, having touched a high of 1.1965 on Tuesday, its highest since May 2018. Investors’ attention will remain on a series of data from the Eurozone economies, EZ construction output, and ECB monetary policy meeting accounts, ahead of the U.S. unemployment benefit claims and Philadelphia Fed Manufacturing Survey. Immediate resistance is located at 1.1881, a break above targets 1.1916. On the downside, support is seen at 1.1800, a break below could drag it below 1.1778 (21-DMA).
USD/JPY: The dollar eased after rebounding from a near 3-week low in the prior session, as minutes from last month’s U.S. Federal Reserve meeting gave few clues about whether an even more dovish shift in its policy framework is possible in the autumn. The major was trading 0.1 percent up at 106.02, having hit a low of 105.10 on Wednesday, its lowest since July 31. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. unemployment benefit claims and Philadelphia Fed Manufacturing Survey. Immediate resistance is located at 106.43 a break above targets 106.62 (78.6% retracement of 107.05 and 105.10). On the downside, support is seen at 105.70, a break below could take it near at 105.54.
GBP/USD: Sterling steadied as Britain reiterated that it still hopes for a post-Brexit trade deal to be achieved in September. On Wednesday, the pair rallied to a 7-1/2 month peak above the 1.3200 handle on a weaker U.S. dollar, however, it closed 1.1 percent lower at 1.3090 after the Financial Times reported Brussels has rejected the UK’s opening demands for continued wide-ranging access to the EU for British truckers. The major traded flat at 1.3092, having hit a high of 1.3267 the day before, it’s highest since December 31, 2019. Investors’ attention will remain on the geopolitical developments, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3185, a break above could take it near 1.3238. On the downside, support is seen at 1.3037, a break below targets 1.3005. Against the euro, the pound was trading 0.1 percent down at 90.45 pence, having hit a low of 90.70 on Monday, it’s lowest since July 30.
AUD/USD: The Australian dollar eased, drifting further away from a 1-1/2 year peak scaled in the prior session on concern that ties with China will worsen further after a report that Australian regulators will reject acquisitions by a Chinese company. Earlier in the day, China kept its benchmark lending rate for corporate and household loans steady as expected for the fourth straight month at its August fixing. The Aussie trades 0.1 percent down at 0.7170, having hit a high of 0.7275 on Wednesday, it’s highest since Feb 2019. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate resistance is located at 0.7208 a break above could take it near 0.7239. On the downside, support is seen at 0.7134, a break below targets 0.7109.
Equities Recap
Asian shares tumbled, weighed down by the U.S. Federal Reserve’s cautious view of the economy and tensions with China.
MSCI’s broadest index of Asia-Pacific shares outside Japan declined 1.25 percent.
Tokyo's Nikkei fell 0.9 percent to 22,884.80 points, Australia's S&P/ASX 200 index slumped 0.8 percent to 6,115.50 points. South Korea's KOSPI plunged 3.2 percent to 2,284.48 points.
Shanghai composite index declined 1.1 percent to 3,370.69 points, while CSI 300 index traded 1.1 percent down at 4,687.07 points.
Hong Kong’s Hang Seng traded 2.1 percent lower at 24,637.66 points. Taiwan shares shed 3.3 percent to 12,362.64 points.
Commodities Recap
Crude oil prices declined as major producers warned of a risk to the recovery in demand if the coronavirus crisis prolonged, while U.S. crude inventories dropped less than expected. International benchmark Brent crude was trading 0.4 percent down at $44.99 per barrel by 0444 GMT, having hit a high of $45.76 last week, its highest since August 5. U.S. West Texas Intermediate was trading 0.2 percent lower at $42.68 a barrel, after rising as high as $43.01 on Wednesday, its highest since August 5.
Gold prices rebounded from a 1-week low hit in the previous session after the U.S. Federal Reserve raised concerns that a recovery from the coronavirus-induced economic slump faced a highly uncertain path. Spot gold was trading 1.11 percent higher at $1,951.02 per ounce by 0447 GMT, having declined more than 3.5 percent to hit a low of $1924.77 on Wednesday, its lowest since August 13. U.S. gold futures fell 0.9 percent to $1,952.90.
Treasuries Recap
The U.S. Treasury yields declined, with the benchmark 10-year note yield trading at 0.664 percent.