Posted at 01 September 2020 / Categories Market Roundups
Market Roundup
Economic Data Ahead
Key Events Ahead
FX Beat
DXY: The dollar index slumped to an over 2-year trough as the Federal Reserve’s new policy framework continued to fuel bets that U.S. rates will stay lower for longer than other countries. The greenback against a basket of currencies traded 0.4 percent down at 91.80, having touched a low of 91.78 earlier, its lowest since April 2018.
EUR/USD: The euro rallied to an over 2-year peak after European Central Bank board member Isabel Schnabel stated that the central bank has no reason for now to add to its stimulus measures and also played down concerns over recent euro strength. The European currency traded 0.5 percent higher at 1.1991, having touched a high of 1.1997 earlier, its highest since May 2018. Investors’ attention will remain on a series of data from the Eurozone economies, EZ Markit Manufacturing PMI and consumer price index, ahead of the U.S. manufacturing PMI by both Markit and ISM, construction spending and Fed Brainard's speech. Immediate resistance is located at 1.2025, a break above targets 1.2055. On the downside, support is seen at 1.1903, a break below could drag it below 1.1880.
USD/JPY: The dollar declined, reversing some of its previous session gains as investors turned cautious due to increasing tension between the United States and China in the run up to this year’s U.S. presidential election in November. On Monday, the United States said it was establishing a new bilateral economic dialogue with Taiwan, a decision that could escalate tensions further with Beijing, because China claims Taiwan as its own territory. The major was trading 0.2 percent down at 105.73, having hit a low of 105.20 on Friday, its lowest since August 19. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. manufacturing PMI by both Markit and ISM, construction spending and Fed Brainard's speech. Immediate resistance is located at 106.20, a break above targets 106.44. On the downside, support is seen at 105.40, a break below could take it near at 105.10.
GBP/USD: Sterling advanced to an 8-1/2 month peak against the dollar after Japan's foreign minister said a broad agreement on a Japan-UK trade deal is close. However, against the euro the pound extended losses amid growing Brexit uncertainty. The major traded 0.3 percent higher at 1.3409, having hit a high of 1.3415 earlier, it’s highest since mid December 2019. Investors’ attention will remain on the geopolitical developments, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3446, a break above could take it near 1.3472. On the downside, support is seen at 1.3333, a break below targets 1.3307. Against the euro, the pound was trading 0.1 percent down at 89.38 pence, having hit a high of 89.08 on Friday, it’s highest since May 15.
AUD/USD: The Australian dollar surged after the country's central bank unexpectedly boosted the size and term for cheap funding to lenders to prop up the economy. The Reserve Bank of Australia kept the cash rate on hold at 0.25 percent for the sixth month in a row and said it would increase the size of its term funding facility to around A$200 billion ($148.08 billion) at a fixed rate of 25 basis points for three years. The Aussie trades 0.4 percent higher at 0.7401, having hit a high of 0.7413 earlier, it’s highest since August 2018. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate resistance is located at 0.7430, a break above could take it near 0.7483. On the downside, support is seen at 0.7350 (23.6% retracement of 0.7135 and 0.7413), a break below targets 0.7326.
NZD/USD: The New Zealand dollar advanced to an over 1-year peak as the greenback plunged on bets that U.S. interest rates would stay lower for a longer period. The Kiwi trades 0.3 percent higher at 0.6756, having touched a high of 0.6766 earlier, its highest level since July 2019. Moreover, investor risk sentiment slightly improved after data showed the Caixin/Markit Manufacturing Purchasing Managers’ Index(PMI) showed China’s factory activity expanded at the fastest rate in nearly a decade in August. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6790, a break above could take it near 0.6820. On the downside, support is seen at 0.6702, a break below could drag it below 0.6682.
Equities Recap
Asian shares nudged higher after strong readings on China’s manufacturing sector offset the weak lead from a softer Wall Street session.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.2 percent.
Tokyo's Nikkei surged 0.05 percent to 23,151.73 points, Australia's S&P/ASX 200 index declined 1.4 percent to 5,972.90 points. South Korea's KOSPI gained 1.2 percent to 2,354.25 points.
Shanghai composite index fell 0.05 percent to 3,394.48 points, while CSI 300 index traded 0.05 percent up at 4,817.43 points.
Hong Kong’s Hang Seng traded 0.1 percent higher at 25,199.63 points. Taiwan shares added 0.9 percent to 12,703.28 points.
Commodities Recap
Crude oil prices regained some ground, erasing overnight losses, as investors await the release of U.S. stockpile data from the American Petroleum Institute industry group. U.S. crude stocks are expected to fall by about 2 million barrels in the week to Aug. 28, while gasoline inventories are seen falling by 3.6 million barrels. International benchmark Brent crude was trading 0.3 percent up at $45.74 per barrel by 0453 GMT, having hit a high of $46.50 on Monday, its highest since March 6. U.S. West Texas Intermediate was trading 0.4 percent up at $42.97 a barrel, after rising as high as $43.75 on Wednesday, its highest since March 6.
Gold prices rallied to their highest level in nearly 2-weeks, as the dollar declined to multi-year lows on speculation that U.S. interest rates would stay lower for a longer period after the Federal Reserve’s new policy framework. Spot gold was trading 0.9 percent at $1,986.44 per ounce by 0446 GMT, having hit a high of $1989.67 earlier in the session, its highest since August 19. U.S. gold futures rose 0.6 percent to $1,990.
Treasuries Recap
The U.S. Treasury yields steadied, with the benchmark 10-year note yield trading at 0.715 percent.