Posted at 22 September 2020 / Categories Market Roundups
Market Roundup
Economic Data Ahead
Key Events Ahead
FX Beat
DXY: The dollar index rallied after the Federal Reserve Chair Jerome Powell said that the central bank remains committed to use all the tools at its disposal to help the U.S. economy recover from the effects of the coronavirus pandemic. Investors now await Powell’s appearance with Treasury Secretary Steven Mnuchin at a congressional committee later in the day for their next cues. The greenback against a basket of currencies traded 0.2 percent up at 93.70, having touched a high of 93.78 on Monday, its highest since August 12.
EUR/USD: The euro declined, hovering towards a 1-1/2 month low hit in the prior session, after Bundesbank research suggested that the European Central Bank has a large and growing influence on the single currency through its policy and communication despite its protest that it does not intend to steer the euro’s exchange rate. Four Bundesbank studies published on Monday suggested that the ECB’s influence over the exchange rate was large and had increased since the financial crisis. The European currency traded 0.1 percent down at 1.1758, having touched a low of 1.1731 on Friday, its lowest since August 12. Investors’ attention will remain on a series of data from the Eurozone economies, ahead of the U.S. existing home sales, Richmond Fed Manufacturing Index and Fed Powell's speech. Immediate resistance is located at 1.1805, a break above targets 1.1837 (21-DMA). On the downside, support is seen at 1.1730, a break below could drag it below 1.1710.
USD/JPY: The dollar eased after rebounding from a 6-1/2 month low in the previous session, as the U.S. Congress has for weeks remained deadlocked over the size and shape of a fifth coronavirus-response bill. This week the U.S. Congress considers legislation to fund the federal government through mid-December, but a dispute over farm aid raised doubts about whether lawmakers can avoid a government shutdown ahead of the Nov. 3 elections. The major was trading 0.1 percent down at 104.55, having hit a low of 104.00 on Monday, its lowest since March 12. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. existing home sales, Richmond Fed Manufacturing Index and Fed Powell's speech. Immediate resistance is located at 104.90, a break above targets 105.20. On the downside, support is seen at 104.25, a break below could take it near at 104.09.
GBP/USD: Sterling slumped, extending losses for the third straight session, as rising COVID-19 cases prompted Britain to consider a second national lockdown. UK has the biggest official COVID-19 death toll in Europe at 41,777 people, with new COVID-19 cases rising by at least 6,000 per day in Britain, and hospital admissions doubling every eight days. The major traded 0.2 percent down at 1.2788, having hit a low of 1.2775 on Monday, it’s lowest since September 14. Investors’ attention will remain on the geopolitical developments, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2879, a break above could take it near 1.2911 (5-DMA). On the downside, support is seen at 1.2760, a break below targets 1.2720. Against the euro, the pound was trading 0.05 percent up at 91.83 pence, having hit a high of 90.82 on Thursday, it’s highest since September 10.
AUD/USD: The Australian dollar plunged to a 4-week low after Reserve Bank of Australia's Deputy Governor Guy Debelle said that the central bank is assessing various monetary policy options including currency market intervention and negative rates to meet its inflation and employment targets. Debelle said foreign exchange intervention is another policy option and a lower exchange rate would benefit the economy. The Aussie trades 0.5 percent down at 0.7190, having hit a low of 0.7189 earlier, it’s lowest since August 26. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate resistance is located at 0.7248 (38.2% retracement of 0.7345 and 0.7189), a break above could take it near 0.7266 (50% retracement). On the downside, support is seen at 0.7173, a break below targets 0.7150.
NZD/USD: The New Zealand dollar tumbled to a 1-1/2 week trough ahead of the Reserve Bank of New Zealand monetary policy meeting due tomorrow. The RBNZ is expected to keep the cash rate at 0.25 percent, but likely to provide insights on any move on its OCR, forward guidance and LSAP. The Kiwi traded 0.3 percent lower at 0.6652, having touched a low of 0.6650 earlier, its lowest level since September 11. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6693 (10-DMA), a break above could take it near 0.6723 (5-DMA). On the downside, support is seen at 0.6628, a break below could drag it below 0.6600.
Equities Recap
Asian shares slumped as possible delays in expanded U.S. stimulus and concerns about fresh pandemic lockdowns in Europe dented investor risk sentiment.
MSCI’s broadest index of Asia-Pacific shares outside Japan slumped 0.7 percent.
Australia's S&P/ASX 200 index dropped 0.7 percent to 5,784.10 points. South Korea's KOSPI eased 2.3 percent to 2,332.59 points.
Shanghai composite index fell 1.3 percent to 3,273.79 points, while CSI 300 index traded 1.2 percent down at 4,633.78 points.
Hong Kong’s Hang Seng traded 0.9 percent lower at 23,712.96 points. Taiwan shares shed 1.2 percent to 12,645.51 points.
Commodities Recap
Crude oil prices declined, extending previous session losses, on growing worries about fuel demand, and persisting flare-ups in coronavirus cases. International benchmark Brent crude was trading 0.5 percent down at $41.49 per barrel by 0503 GMT, having hit a high of $43.77 on Friday, its highest since September 4. U.S. West Texas Intermediate was trading 0.4 percent lower at $39.58 a barrel, after rising as high as $41.46 on Friday, its highest since September 4.
Gold prices steadied after tumbling to a near 6-week low in the prior session on a broader market sell-off driven by uncertainty over more U.S. fiscal stimulus. Spot gold was trading 0.1 percent up at $1,914.33 per ounce by 0509, having hit a low of $1882.42 on Monday, its lowest since August 12. U.S. gold futures rose 0.5 percent at 1,919.15.
Treasuries Recap
The U.S. Treasury yields declined, with the benchmark 10-year note yield trading at 0.661 percent.