Posted at 23 September 2020 / Categories Market Roundups
Market Roundup
Economic Data Ahead
Key Events Ahead
FX Beat
DXY: The dollar index rallied to a 2-month high, supported by concerns about a second wave of coronavirus infections in Europe and Britain, although uncertainty about this year’s U.S. presidential election limited upside. Additionally, U.S. economic policymakers opened the door to further aid for small businesses hit by the coronavirus. The greenback against a basket of currencies traded 0.2 percent up at 94.14, having touched a high of 94.19 earlier, its highest since July 27.
EUR/USD: The euro slumped to a near 2-month low, as growing worries about surging coronavirus infections in countries like France and Spain increased the risk of lockdowns. Many euro zone countries have reintroduced travel restrictions, forcing airlines to scale back passenger services although most governments appear keen to avoid the type of hard lockdowns seen in early spring. The European currency traded 0.2 percent down at 1.1679, having touched a low of 1.1674 earlier, its lowest since August 12. Investors’ attention will remain on a series of data from the Eurozone economies and Markit PMI's, ahead of the U.S. housing price index, Markit PMI's and Fed officials speech. Immediate resistance is located at 1.1731, a break above targets 1.1752. On the downside, support is seen at 1.1655, a break below could drag it below 1.1626.
USD/JPY: The dollar rallied to a 1-week peak, supported by positive U.S. economic data, although comments from a prominent Federal Reserve official sent mixed signals. Data released yesterday showed showing U.S. home sales surged to their highest level in nearly 14 years in August. Chicago Federal Reserve President Charles Evan stated that the U.S. economy risks a longer, slower recovery and recessionary dynamics if Congress fails to pass a fiscal package to support unemployed Americans and state and local governments. The major was trading 0.2 percent up at 105.12, 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. housing price index, Markit PMI's and Fed officials speech. Immediate resistance is located at 105.33 (10-DMA), a break above targets 105.54. On the downside, support is seen at 104.64, a break below could take it near at 104.40.
GBP/USD: Sterling eased, hovering towards a 2-month low hit in the prior session after British Prime Minister Boris Johnson unveiled long-lasting restrictions to tackle a second wave of the coronavirus. Johnson warned that new measures, which included extending the use of face masks, curfews on pubs, bars and restaurants and larger fines for rule-breakers, could be in place for six months. The major traded 0.1 percent down at 1.2723, having hit a low of 1.2710 on Tuesday, it’s lowest since July 23. Investors’ attention will remain on the geopolitical developments, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2770, a break above could take it near 1.2815. On the downside, support is seen at 1.2703, a break below targets 1.2673. Against the euro, the pound was trading 0.1 percent up at 91.82 pence, having hit a low of 92.20 on Tuesday, it’s lowest since September 15.
AUD/USD: The Australian dollar slumped to a 1-1/2 month low after economists at Westpac changed their view and said they expect the Reserve Bank of Australia to slash interest rates to 0.10 percent from 0.25 percent at a meeting on October 6. The change in view follows as RBA Deputy Governor Guy Debelle signalled the prospect of more monetary easing in his recent speech. The Aussie trades 0.5 percent down at 0.7133, having hit a low of 0.7115 earlier, it’s lowest since August 12. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate resistance is located at 0.7202 (38.2% retracement of 0.7345 and 0.7115), a break above could take it near 0.7230 (50% retracement). On the downside, support is seen at 0.7105, a break below targets 0.7076.
NZD/USD: The New Zealand dollar plunged to a 4-week trough below the 0.6600 handle after the Reserve Bank of New Zealand held its policy rate at 0.25 percent, but hinted at further easing to help the economy. RBNZ warned of job losses and business closures, reinforcing expectations it would move to negative interest rates in coming months. The Kiwi traded 0.3 percent lower at 0.6614, having touched a low of 0.6598 earlier, its lowest level since August 26. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6664, a break above could take it near 0.6694 (10-DMA). On the downside, support is seen at 0.6588, a break below could drag it below 0.6576.
Equities Recap
Asian shares traded in a volatile market as persistent worries about the global economic recovery kept investors cautious.
MSCI’s broadest index of Asia-Pacific shares outside Japan steadied.
Tokyo's Nikkei eased 0.5 percent to 23,348.67 points, Australia's S&P/ASX 200 index rallied 2.6 percent to 5,933.30 points. South Korea's KOSPI surged 0.4 percent to 2,340.87 points.
Shanghai composite index rose 0.4 percent to 3,287.70 points, while CSI 300 index traded 0.6 percent up at 4,663.79 points.
Hong Kong’s Hang Seng traded 0.05 percent lower at 23,713.97 points. Taiwan shares shed 0.5 percent to 12,583.88 points.
Commodities Recap
Crude oil prices declined after an industry group reported a surprise rise in U.S. crude, adding to demand worries. International benchmark Brent crude was trading 0.6 percent down at $41.42 per barrel by 0452 GMT, having hit a high of $43.77 on Friday, its highest since September 4. U.S. West Texas Intermediate was trading 0.8 percent lower at $39.42 a barrel, after rising as high as $41.46 on Friday, its highest since September 4.
Gold prices plunged to a 1-1/2 month low as the dollar surged to a near 2-month peak, although uncertainties surrounding global economic recovery limited the safe-haven metal's downside. Spot gold was trading 0.7 percent down at $1,887.03 per ounce by 0456, having hit a low of $1882.40 earlier, its lowest since August 12. U.S. gold futures were down 0.5 percent to $1,898.
Treasuries Recap
The U.S. Treasury yields eased, with the benchmark 10-year note yield trading at 0.672 percent.