Market Trading News and Research from 19 September 2020

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18.09.2020
19:54
Key events for next week: RBNZ and the SNB interest rate decision, Germany, Eurozone, Britain and the United States PMI, US new home sales, Germany IFO business climate index.

On Monday, at 10:00 GMT, in Germany the Bundesbank's monthly report will be released. At 12:30 GMT, Canada will release the new home price index for August, and the US will release the Chicago Federal national activity index for August. At 12: 45 GMT ECB chief Lagarde will deliver a speech. At 14:00 GMT, the head of the Fed Powell will speak.

On Tuesday, at 07:30 GMT Bank of England Governor Bailey will deliver a speech. At 10:00 GMT, Britain will publish the balance of industrial orders according to the CBI for September. At 14:00 GMT, the US will present the Fed-Richmond manufacturing index for September and report changes in existing home sales for August. Also at 14:00 GMT, the Euro zone will release a consumer confidence indicator for September. In addition, at 14:30 GMT, the head of the Fed Powell will make a speech.

On Wednesday, at 00:30 GMT, Japan will publish the manufacturing PMI and the service sector PMI for September. At 02:00 GMT in New Zealand, the RBNZ's interest rate decision will be announced. At 04:30 GMT, Japan will present an index of activity in all sectors of the economy for July. At 05:35 GMT Bank of Japan Governor Kuroda will deliver a speech. At 06:00 GMT, in Germany the Gfk consumer climate index for October will be released. Then the focus will be on the manufacturing and services business activity indices for August: at 07:15 GMT, France will report, at 07:30 GMT - Germany, at 08: 00 GMT-the Eurozone, and at 08:30 GMT - Britain. Also at 08:00 GMT, Switzerland will publish an index of Swiss investor expectations, according to ZEW and Credit Suisse, for September. At 13:00 GMT, the US will release the housing price index for July, and at 13:45 GMT- the index of business activity in the manufacturing sector and the PMI for the services sector for September. At 14:00 GMT, the head of the Fed Powell will make a speech. At 14:30 GMT, the US will announce changes in oil reserves according to the Ministry of energy. At 22:45 GMT, New Zealand will report a change in the foreign trade balance for August. At 23:50 GMT, in Japan the minutes of the Bank of Japan's monetary policy meeting will be released.

On Thursday, at 07:30 GMT in Switzerland, the SNB's interest rate decision will be announced. At 08:00 GMT, Germany will publish the IFO business environment indicator, the IFO current situation assessment indicator, and the IFO economic expectations indicator for September. At 08:00 GMT, in eurozone the ECB's economic bulletin will be released. At 10:00 GMT, Britain will release the retail sales index according to the Confederation of British Industrialists for September. At 12:30 GMT, the US will announce a change in initial applications for unemployment benefits. At 13:00 GMT, Belgium will publish the business sentiment index for September. At 14:00 GMT, the US will report changes in new home sales for August. At 14:00 GMT Bank of England Governor Bailey will deliver a speech.

On Friday, at 08:00 GMT, the Euro zone will announce changes in the aggregate M3 of money supply and private sector lending for August. At 11: 00 GMT in Britain the Bank of England quarterly bulletin will be released. At 12:30 GMT, the US will announce a change in orders for durable goods for August. At 17:00 GMT, in the US, the Baker Hughes report on the number of active oil drilling rigs will be released 

19:00
DJIA -1.06% 27,605.87 -296.11 Nasdaq -1.54% 10,742.57 -167.70 S&P -1.37% 3,311.05 -45.96
17:00
U.S.: Baker Hughes Oil Rig Count, September 179
16:01
European stocks closed: FTSE 100 6,007.05 -42.87 -0.71% DAX 13,116.25 -91.87 -0.70% CAC 40 4,978.18 -61.32 -1.22%
14:59
Gold: Politics to be a driver for the precious metal - TDS

NFXStreet notes that gold is trading at around $1,950, off the post-Fed lows but below the levels seen prior to the event. The yellow metal also depends on the next round of fiscal stimulus and economists at TD Securities see politics influencing the precious metals.

“As the Fed disappointment in fringe expectations filters out of market positioning, gold market participants will turn their attention back towards conventional market drivers considering that the positioning slate remains void of extremes or 'weak hands'.”

“Continued signs pointing to recovery should support gold higher as inflation expectations firm. Using this lens, however, reveals that conventional factors may inadvertently be driven by the US election. While central banks have the willingness to let inflation run hot, there is considerable debate surrounding whether they have the ability to stimulate inflation...”

“Markets currently expect that a Democrat victory could reinforce the weaker dollar narrative and thereby support gold, but the inflation tail risk may be more elevated regardless of under an undivided government that could be successful in producing more fiscal packages.”

14:38
U.S. Leading Economic Index rises slightly less than forecast in August

The Conference Board announced on Friday its Leading Economic Index (LEI) for the U.S. rose 1.2 percent m-o-m in August to 106.5 (2016 = 100), following a revised 2.0 percent m-o-m advance in July (originally a 1.4 percent m-o-m gain).

Economists had forecast an increase of 1.3 percent m-o-m.

“While the US LEI increased again in August, the slowing pace of improvement suggests that this summer’s economic rebound may be losing steam heading into the final stretch of 2020,” noted Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board. “Despite the improvement, the LEI remains in recession territory, still 4.7 percent below its February level. Weakening in new orders for capital goods, residential construction, consumers’ outlook, and financial conditions point to increasing downside risks to the economic recovery. Looking ahead to 2021, the LEI suggests that the US economy will start the new year under substantially weakened economic conditions.”

The report also revealed the Conference Board Coincident Economic Index (CEI) for the U.S. went up 0.6 percent m-o-m in August to 100.8, following a 1.2 percent m-o-m rise in July. Meanwhile, its Lagging Economic Index (LAG) for the U.S. declined 0.6 percent m-o-m in August to 107.6, following a 0.6 percent m-o-m fall in July.

14:17
St. Louis Fed president Bullard: Overwhelming majority of businesses have adjusted to COVID

  • Credit markets are open and people can get loans
  • Looks like rates going to stay low for quite a while

14:13
U.S. consumer sentiment index increases much more than expected in early September

A report from the University of Michigan revealed on Friday the preliminary reading for the Reuters/Michigan index of consumer sentiment increased 6.5 percent m-o-m to 78.9 in early September. This was the highest reading since March.

Economists had expected the index would rise to 75.0 this month from August’s final reading of 74.1.

According to the report, the index of current U.S. economic conditions surged 5.5 percent m-o-m to 87.5 in September from 82.9 in the previous month. Meanwhile, the index of consumer expectations climbed 7.0 percent m-o-m to 73.3 this month from 68.5 in August.

“While the recent gain was consistent with an unchanged flat trend, the data indicated that the election has begun to have an impact on expectations about future economic prospects”, noted Surveys of Consumers chief economist, Richard Curtin. “Over the next several months, there are two factors that could cause volatile shifts and steep losses in consumer confidence: how the election is decided and the delays in obtaining vaccinations. While the end of the recession will depend on these non-economic factors, the hardships endured by consumers can only be offset by renewed federal relief payments,” he added. 

14:04
Canada’s wholesale sales rise more than anticipated in July

Statistics Canada reported on Friday the wholesale sales rose 4.3 percent m-o-m to CAD64.97 million in July, following an unrevised 18.5 percent m-o-m climb in June.

Economists had forecast a 3.5 percent m-o-m increase for July.

According to the report, sales increased in six of seven subsectors. The motor vehicle and motor vehicle parts and accessories (+19.3 percent m-o-m) subsector contributed the most to the growth in July. Excluding this subsector, wholesale sales rose 1.8 percent m-o-m.

In y-o-y terms, wholesale sales increased 0.7 percent in July.

Meanwhile, wholesale inventories dropped 0.4 percent m-o-m in July. Inventories decreased in five of seven subsectors, with the machinery, equipment and supplies (-2.5 percent m-o-m) and the motor vehicle and motor vehicle parts and accessories (-3.0 percent m-o-m) subsectors recording the largest declines. The inventory-to-sales ratio declined from 1.45 in June to 1.39 in July, the lowest level since October 2018. 

14:00
U.S.: Leading Indicators , August 1.2% (forecast 1.3%)
14:00
U.S.: Reuters/Michigan Consumer Sentiment Index, September 78.9 (forecast 75)
13:49
Minneapolis Fed president Kashkari: Fed should have adopted more forceful forward guidance to return U.S. economy to full strength - Reuters

  • Says he wanted Fed to vow to delay interest rate hikes until core inflation had stayed at 2% for roughly a year
  • Not raising rates for roughly a year after core inflation first crosses 2 percent is consistent with strategy of aiming for modest overshoot in order to achieve average inflation of 2 percent
  • I would have preferred the Committee make stronger commitment to not raising rates until we were certain to have achieved our dual mandate objectives
  • Says Fed should not tie rate hikes at all to readings of the labor market
  • Says he dissented during Fed's last round of rate hikes

13:34
U.S. Stocks open: Dow -0.05%, Nasdaq +0.34%, S&P +0.10%
13:24
Before the bell: S&P futures +0.21%, NASDAQ futures +0.52%

U.S. stock-index futures rose on Friday, as shares of major technology companies tried to recover after a sharp two-day sell-off, while concerns about growing global coronavirus cases and a patchy economic recovery weighed on investors’ sentiment. 


Global Stocks:

Index/commodity

Last

Today's Change, points

Today's Change, %

Nikkei

23,360.30

+40.93

+0.18%

Hang Seng

24,455.41

+114.56

+0.47%

Shanghai

3,338.09

+67.65

+2.07%

S&P/ASX

5,864.50

-18.70

-0.32%

FTSE

6,021.09

-28.83

-0.48%

CAC

5,016.28

-23.22

-0.46%

DAX

13,234.54

+26.42

+0.20%

Crude oil

$40.70


-0.66%

Gold

$1,958.20


+0.43%

12:57
Wall Street. Stocks before the bell

(company / ticker / price / change ($/%) / volume)


3M Co

MMM

173.25

0.87(0.50%)

1840

ALCOA INC.

AA

13.55

0.10(0.74%)

13137

ALTRIA GROUP INC.

MO

41.24

0.38(0.93%)

10223

Amazon.com Inc., NASDAQ

AMZN

3,031.50

22.77(0.76%)

57942

Apple Inc.

AAPL

110.8

0.46(0.42%)

2591418

AT&T Inc

T

29.19

0.12(0.41%)

45976

Boeing Co

BA

167.53

-0.00(-0.00%)

46098

Caterpillar Inc

CAT

155

1.13(0.73%)

1924

Chevron Corp

CVX

78.6

-0.19(-0.24%)

11871

Cisco Systems Inc

CSCO

40.24

-0.13(-0.32%)

62451

Citigroup Inc., NYSE

C

45.5

-0.03(-0.07%)

53759

Deere & Company, NYSE

DE

221.83

1.89(0.86%)

1232

E. I. du Pont de Nemours and Co

DD

61

0.23(0.38%)

1494

Exxon Mobil Corp

XOM

37.84

0.04(0.11%)

25863

Facebook, Inc.

FB

259

4.18(1.64%)

338105

FedEx Corporation, NYSE

FDX

245.61

1.53(0.63%)

9356

Ford Motor Co.

F

7.35

0.07(0.96%)

181274

Freeport-McMoRan Copper & Gold Inc., NYSE

FCX

17.22

0.19(1.12%)

74549

General Electric Co

GE

7.01

-0.04(-0.57%)

1122587

General Motors Company, NYSE

GM

31.97

0.05(0.16%)

25690

Goldman Sachs

GS

195.67

0.84(0.43%)

9933

Google Inc.

GOOG

1,501.00

5.47(0.37%)

4176

Home Depot Inc

HD

277.51

-2.45(-0.88%)

15607

HONEYWELL INTERNATIONAL INC.

HON

171.07

0.73(0.43%)

983

International Business Machines Co...

IBM

125.2

0.28(0.22%)

4089

International Paper Company

IP

42.88

-0.01(-0.02%)

745

Johnson & Johnson

JNJ

147.6

0.43(0.29%)

3239

JPMorgan Chase and Co

JPM

98.5

-0.06(-0.06%)

32881

McDonald's Corp

MCD

222.98

0.40(0.18%)

1832

Merck & Co Inc

MRK

85.83

0.19(0.22%)

422

Microsoft Corp

MSFT

204.1

1.19(0.59%)

133351

Nike

NKE

117.53

1.17(1.01%)

8640

Pfizer Inc

PFE

37

0.18(0.49%)

57439

Procter & Gamble Co

PG

138

0.48(0.35%)

2858

Starbucks Corporation, NASDAQ

SBUX

86.89

0.14(0.16%)

7934

Tesla Motors, Inc., NASDAQ

TSLA

442.79

19.36(4.57%)

2013477

The Coca-Cola Co

KO

50.88

0.33(0.65%)

4748

Travelers Companies Inc

TRV

112.7

0.10(0.09%)

132

Twitter, Inc., NYSE

TWTR

39.4

0.05(0.13%)

14702

UnitedHealth Group Inc

UNH

305.41

0.43(0.14%)

393

Verizon Communications Inc

VZ

60.9

0.31(0.51%)

1410

Visa

V

206.05

0.78(0.38%)

4571

Wal-Mart Stores Inc

WMT

136.65

-0.04(-0.03%)

133658

Walt Disney Co

DIS

130.3

0.08(0.06%)

12298

Yandex N.V., NASDAQ

YNDX

60.77

-0.14(-0.23%)

9599

12:54
Target price changes before the market open

NIKE (NKE) target raised to $135 from $110 at Telsey Advisory Group 

Tesla (TSLA) target raised to $515 from $480 at Piper Sandler

12:53
Downgrades before the market open

Home Depot (HD) downgraded to Perform from Outperform at Oppenheimer

Lowe's (LOW) downgraded to Perform from Outperform at Oppenheimer; target lowered to $180

12:52
U.S. current account deficit widens more than expected in Q2

The Department of Commerce reported on Friday that the current account (C/A) gap in the U.S. widened by 52.9 percent q-o-q to $170.5 billion in the second quarter of 2020 from a revised $111.5 billion gap in the previous quarter (originally -$104.2 billion). That was the highest level since the third quarter of 2008.

The deficit was 3.5 percentage of current-dollar GDP in the second quarter, up from 2.1 percent in the first quarter.

Economists had forecast a deficit of $157.9 billion.

According to the report, the $59.0 billion widening of the C/A deficit in the second quarter mostly reflected an expanded deficit on goods and reduced surpluses on primary income and on services.

Exports of goods declined $114.6 billion, to $288.9 billion, mostly reflecting decreases in industrial supplies and materials (mainly petroleum and products), in capital goods (mainly civilian aircraft, engines, and parts) and in automotive vehicles, parts, and engines (mainly parts and engines and passenger cars). At the same time, imports of goods dropped $87.1 billion, to $508.2 billion, mostly reflecting decreases in automotive vehicles, parts, and engines (mainly parts and engines and passenger cars) and in industrial supplies and materials (mostly petroleum and products).

Exports of services went down $46.3 billion, to $155.8 billion, while imports of services declined $35.4 billion, to $101.3 billion. The decreases in both exports and imports mostly reflected declines in travel, primarily other personal travel, and in transport, primarily air passenger transport.

Receipts of primary income declined $47.1 billion, to $209.4 billion, mostly reflecting decreases in portfolio investment income, primarily income on equity securities, and in direct investment income, primarily earnings.

Elsewhere, receipts of secondary income fell $1.2 billion, to $33.9 billion, mostly reflecting a decrease in private transfers, primarily private sector fines and penalties.

12:36
Canada’s retail sales rise less than forecast in July

Statistics Canada announced on Friday that the Canadian retail sales rose 0.6 percent m-o-m to CAD52.86 billion in July, following an unrevised 23.7 percent m-o-m surge in June.

Economists had forecast a 1.0 percent m-o-m advance for July.

According to the report, sales increased in 6 of 11 subsectors in July, accounting for 48.6 percent of total retail sales. The motor vehicle and parts dealers subsector contributed the most to the sales advance in July, climbing 3.3 percent m-o-m.

Excluding motor vehicle and parts dealers, retail sales fell 0.4 percent m-o-m in July compared to an unrevised 15.7 percent m-o-m climb in June and economists’ forecast for a 0.5 percent m-o-m gain. Excluding motor vehicle and parts dealers and gasoline stations, retail sales decreased 1.2 percent m-o-m in July.

In y-o-y terms, Canadian retail sales grew 2.7 percent in July, following an unrevised 3.8 percent increase in June.

12:31
Canada: Retail Sales, July 2.7% y/y
12:30
Canada: Retail Sales ex Autos, m/m, July -0.4% (forecast 0.5%)
12:30
Canada: Wholesale Sales, July 4.3% m/m (forecast 3.5%)
12:30
Canada: Retail Sales, July 0.6% m/m (forecast 1%)
12:30
U.S.: Current account, Quarter II -170.5 bln (forecast -157.9)
12:10
S&P 500: Resistance at 3396 continues to cap with support seen at 3310 - Credit Suisse

FXStreet notes that S&P 500 has extended its rejection from resistance at 3426/27 and with a small bearish “reversal day” in place there remains the risk for a deeper corrective setback to test the key medium-term 63-day average, now at 3291, which analysts at Credit Suisse look to then try and hold.

“S&P 500 has gapped lower after being capped at its 13-day exponential average, 38.2% retracement of its fall and price resistance at 3426/27 and with a small bearish ‘reversal day’ in place the market stays seen at risk to a lengthier corrective setback/consolidation.” 

“Support moves to 3329 initially, below which should see a move back to the 3310 recent low. Beneath here can then see a test of our ‘ideal’ correction target of the 63-day average, now at 3291. With further clusters of price support seen stretching down to 3260/59, we continue to look for a floor here.” 

11:48
BoJ sticks to its steady stance - UOB

FXStreet reports that Alvin Liew, Senior Economist at UOB Group, assessed the latest BoJ monetary policy meeting.

“In its scheduled Monetary Policy Meeting (MPM) on Thursday (17 Sep), the Bank of Japan (BOJ) as widely expected, kept all of its existing monetary policy easing measures unchanged.”

“The BOJ will also maintain the existing fund-provisioning measures to support financing mainly of small and medium-sized firms/enterprises (SME)...”

“We have not changed our view and we still expect the BOJ to do more and enhance its monetary easing stance further in 2H20, most likely through increasing its JGB purchases and expanding its lending facilities to Japanese corporates and SMEs while the ETF and corporate bond buying program may be enhanced (at a later date). However, we no longer expect the BOJ to cut policy rate further into the negative territory.”

11:28
European session review: GBP mostly higher, supported by UK’s retail sales data

TimeCountryEventPeriodPrevious valueForecastActual
06:00GermanyProducer Price Index (YoY)August-1.7%-1.4%-1.2%
06:00GermanyProducer Price Index (MoM)August0.2%-0.1%0%
06:00United KingdomRetail Sales (YoY) August1.4%3%2.8%
06:00United KingdomRetail Sales (MoM)August3.7%0.7%0.8%
08:00EurozoneCurrent account, unadjusted, bln July17.3 25.5

GBP rose against most other major currencies in the European session on Friday, as investors cheered the data, which showed that the UK’s retail sales rose for the fourth consecutive month in August, surpassing the February’s pre-pandemic level. 

The Office for National Statistics (ONS) reported the UK’s retail sales volume increased 0.8 percent m-o-m in August, following an upwardly revised 3.7 percent m-o-m surge in July. It was the fourth straight monthly increase in retail sales and exceeded economists’ forecast for a 0.7 percent m-o-m gain. When compared with February’s level, total retail sales were 4.0 percent higher in volume terms. In y-o-y terms, retail sales grew 2.8 percent after increasing 1.4 percent in July. However, this was slightly weaker than economists' forecast of a 3 percent advance.

However, the further gains of the pound remained capped by the increased probability of a no-deal Brexit, prospects of negative interest rates, growing coronavirus cases, and concerns over a rise in unemployment.

11:13
USD/CAD: Critical 1.3254/72 resistance area caps with support seen at 1.3128 - Credit Suisse

FXStreet reports that economists at Credit Suisse note that the USD/CAD pair has seen a sharp rejection from the crucial resistance at 1.3254/72 with support seen at 1.3128.

“USD/CAD has not managed to follow through on the upside as expected and has seen weakness take over again in line with our medium-term bearish bias. With this in mind, we see support initially at 1.3137, beneath which would see a move back to 1.3128 and 1.3119. Beyond here would see a test of the back of the broken March downtrend at 1.3055. A close below here would further reinforce the view that the medium -term downtrend is taking back over. Support is seen next at 1.3047/38, removal of which would reinforce the bearish bias further for a fall to 1.2994, then medium -term support at 1.2952.” 

10:44
FOMC meeting: Low rates for longer - UOB

FXStreet reports that Senior Economist at UOB Group Alvin Liew reviewed the key FOMC event.

“In a significantly re-worded FOMC policy statement, the Federal Reserve in September 2020 kept policy rates unchanged... This reflects the Fed’s recent review and adopting of a new strategy of Average Inflation Targeting (AIT) and putting emphasis on "broad and inclusive" employment.”

“According to its updated September summary of economic projections, the FOMC will keep its policy rates at 0.0%-0.25% range (Median at 0.1%) until at least 2023.”

“The FOMC’s latest economic projections showed a significant improvement to its 2020 GDP and unemployment projections.”

“Going forward, as Powell has said that the guidance given in the September FOMC is “durable”, the Fed will likely maintain this accommodative monetary policy and economic outlook for now and we believe Fed policy will likely stay out of the limelight ahead of the 3 November US Presidential elections.”

10:26
USD: Dollar gains fading - ING

Petr Krpata, an FX strategist at ING, notes that cyclical currencies have stabilised overnight following their post-FOMC decline.

"Given the strong narrative of low US negative real rates for longer, we don’t expect periods of USD gains to be pronounced and long-lived."

"The recent move in oil prices higher should also help cyclical FX vs USD today. Although there was no change to the OPEC+ deal yesterday, the Saudis put renewed pressure on members who are falling short of the deal, to be compliant as well as compensate for their lack of compliance so far."

"The UAE committed to make up for its previous non-compliance. In the short-term, this should give support to oil-exporting currencies such as NOK, CAD, MXN and RUB benefiting."

09:59
NZD/USD: Upside momentum resumes to test a key cluster of resistances at 0.6756/91 – Credit Suisse

FXStreet reports that NZD/USD has recovered strongly from yesterday’s intraday setback, breaking above the key 0.6756 December high, per Credit Suisse. 

“NZD/USD has recovered strongly from yesterday’s setback, breaking above the key 0.6756 December high and prodding also above the pivotal the July 2019 and January 2020 highs at 0.6789/91. Although we might not see a closing break here at the first attempt, our bias remains for a break higher in due course, which would complete a medium-term base to significantly reinforce our broader bullish outlook, with short-term resistance then seen subsequently at 0.6800/06 – a psychological barrier and 78.6% retracement of the December/March fall – where we would expect to see another initial attempt to hold. Beyond here would see trend resistance at 0.6836/37 next and higher over the medium term.” 

09:42
EUR/USD maintains the sideways range with resistance seen at 1.1868 – Credit Suisse

FXStreet reports that EUR/USD has failed to see a follow-through to the downside below support at 1.1754, reinforcing the sideways range from late July, the Credit Suisse analyst team informs. 

“EUR/USD has reversed its albeit brief move below the 1.1754 lows of late August and September and uptrend from May and the sharp recovery and break above 1.1825 keeps the market in its sideways range from late July.”

“Immediate resistance moves to 1.1868, above which should see a move back to the high of last week (and this week) at 1.1901/18. Beyond here is now needed to suggest the ranging phase has been resolved higher and core uptrend resumed with resistance the seen initially at 1.1952/62, then the 1.2011 high. Bigger picture, we maintain our core long-held 1.2145/55 target.”

09:21
Will work closely with new government to combat COVID-19 pain - Bank of Japan Governor

Reuters reports that Bank of Japan Governor Haruhiko Kuroda said the central bank will work closely with the new government led by Yoshihide Suga to combat the pain inflicted on the economy by the coronavirus pandemic.

"Japan's economy will likely follow an improving trend. But the pace of improvement will only be moderate as the impact of COVID-19 remains worldwide," Kuroda said.

"The BOJ will continue supporting the economy in cooperation with the new government," he added.

09:00
USD/CNH remains offered and looks to 6.7165 – UOB

FXStreet reports that FX Strategists at UOB Group noted USD/CNH remains within the oversold territory, although a move to the 6.7165 level looks unlikely for the time being.

Next 1-3 weeks: “Two days ago (15 Sep, spot at 6.7980) we highlighted that the negative phase that started in mid-August ‘has received a new lease of life’. We added, the next level to focus on is at 6.7660 followed by 6.7500. USD subsequently dropped at a furious pace and it cracked 6.7500 yesterday (low of 6.7429). Over the past 3 days, USD has lost a whopping -1.28%, its biggest 3-day loss in 20 months. It is not surprising that the rapid decline is oversold now. That said, downward momentum remains robust and the outlook for USD still remains weak. However, the pace of any further decline is likely to be slower and the next major support at 6.7165 may be out of reach this time round (there is a minor support 6.7300). Overall, only a break of 6.8100 (‘strong resistance’ level previously at 6.8230) would indicate that the current month-long negative phase has run its course.”

08:41
Stocks enjoy biggest weekly inflows since March 2018 - BofA

Reuters reports that BofA research showed that equity funds sucked in more than $26 billion in the week to Sept. 16, as investors chased U.S. stocks after a sharp selloff earlier in the month led by technology stocks.

In a "frenzy into U.S. stocks", investors pumped nearly $24 billion into equities in the world's top economy, the largest such inflows since March 2018, said BofA.

In a recent fund manager survey by BofA, it found that a "tech bubble" is now the second biggest tail risk after a COVID-19 "second wave" as long U.S. tech remained "the most crowded trade" for the fifth straight month. Still, the rally rumbles on with the Nasdaq 100 up 27% year-to-date.

A whopping $58.9 billion left cash funds and gold saw its first outflow in four months of $400 million.

Meanwhile, emerging market equity funds saw $2.5 billion outflows but developing debt funds enjoyed an eleventh straight week of inflows.

08:19
Eurozone current account surplus rose in July - ECB

According to the report from European Central Bank, in July 2020 the current account of the euro area recorded a surplus of €17 billion, compared with a surplus of €21 billion in June 2020. Surpluses were recorded for goods (€30 billion) and services (€5 billion). Deficits were recorded for secondary income (€11 billion) and primary income (€6 billion).

In the 12 months to July 2020, the current account recorded a surplus of €259 billion (2.2% of euro area GDP), compared with a surplus of €304 billion (2.6% of euro area GDP) in the 12 months to July 2019. The decline was mainly driven by a reduction in the surplus for services (down from €86 billion to €30 billion), but also by a reduction in the surplus for primary income (down from €86 billion to €53 billion). These developments were partly offset by an increase in the surplus for goods (up from €293 billion to €323 billion) and a decrease in the deficit for secondary income (down from €160 billion to €147 billion).

In the financial account, euro area residents made net acquisitions of foreign portfolio investment securities totalling €487 billion in the 12-month period to July 2020 (up from €160 billion in the 12 months to July 2019). Over the same period, non-residents made net acquisitions of euro area portfolio investment securities amounting to €406 billion (up from €188 billion).

08:00
Eurozone: Current account, unadjusted, July 25.5 bln
07:41
UBS is ‘very bullish on gold,’ says prices could stay high longer

CNBC reports that gold prices could rise further and remain high as global uncertainties persist, according to Swiss banking giant UBS.

“We are very bullish on gold. We think that the prices will go higher and what is interesting is we think it will stay higher for longer than expected,” Yeoh Choo Guan, the bank’s head of Asean global markets, told.

She said the bank has raised its forecast for gold next year from $1,850 to $2,100 per ounce.

An environment of negative real interest rates and global uncertainties, such as the upcoming U.S. presidential election, are among the reasons that have pushed investors to build up their gold holdings, said Yeoh.

“So recently we have a retracement in the equity market. What was interesting is that gold was very resilient despite the equity’s pullback, suggesting that there’s ongoing buying support,” she said.

“On top of that, gold is also a very attractive portfolio diversifier. I think a lot of investors have been piling into bonds and REITs (real estate investment trusts), so gold is viewed as an alternative to that, in case that particular segment gives you pressure,” she added.

07:19
Asian session review: the US dollar traded stable against major currencies

TimeCountryEventPeriodPrevious valueForecastActual
06:00GermanyProducer Price Index (YoY)August-1.7%-1.4%-1.2%
06:00GermanyProducer Price Index (MoM)August0.2%-0.1%0%
06:00United KingdomRetail Sales (YoY) August1.4%3%2.8%
06:00United KingdomRetail Sales (MoM)August3.7%0.7%0.8%


During today's Asian trading, the US dollar was almost unchanged against major currencies.

The focus was on data for Japan. Consumer prices excluding the cost of fresh food in Japan in August decreased by 0.4% compared to the same month last year, according to data from the Ministry of internal Affairs and communications of the country. The last time the indicator fell by this amount was almost four years ago-in November 2016. In June and July, prices did not change in annual terms. The August figure coincided with the forecast.

At the end of trading on Thursday, the yen reached its highest in 7 months against the background of US statistical data that did not meet forecasts and uncertainty about the economic outlook.

The ICE index, which tracks the dynamics of the US dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona), fell by 0.10%.

The pound rose slightly against the US dollar, helped by UK data. The volume of retail sales in the UK in August increased by 0.8% compared to the previous month, according to data from the Office for National Statistics (ONS). This is the lowest rate of growth over the past four months. In annual terms, sales increased by 2.8%. Analysts on average predicted an increase in the first indicator by 0.7% and the second-by 3%.

07:02
Risks for the EUR into the coming month - MUFG

eFXdata reports that MUFG Research adopts a neutral bias on the EUR in the medium-term.

"Upside risks for the euro include 1) further evidence showing that the global economy and European economies continue to recover faster than expected from the COVID shock, and 2) the Fed quickly backs up its new dovish policy goals by announcing new easing measures helping to keep downward pressure on US real yields and the US dollar more broadly".

"Downside risk for the euro include: 1) a further acceleration in COVID case growth in Europe followed by a pick-up in deaths and hospitalizations which prompts national governments to re-impose lockdown measures, 2) the ECB pushes back more aggressively against the stronger euro and below target inflation by clearly opening the door to further easing later this year, and 3) Brexit trade talks breakdown acrimoniously resulting in another sharp reappraisal of No Deal Brexit risks,"

06:52
Options levels on friday, September 18, 2020 EURUSD GBPUSD

EUR/USD

Resistance levels (open interest**, contracts)

$1.1961 (3699)

$1.1934 (2471)

$1.1912 (510)

Price at time of writing this review: $1.1860

Support levels (open interest**, contracts):

$1.1800 (902)

$1.1777 (1180)

$1.1749 (2980)


Comments:

- Overall open interest on the CALL options and PUT options with the expiration date September, 4 is 63373 contracts (according to data from September, 17) with the maximum number of contracts with strike price $1,1700 (4456);


GBP/USD

Resistance levels (open interest**, contracts)

$1.3235 (781)

$1.3163 (603)

$1.3087 (664)

Price at time of writing this review: $1.2964

Support levels (open interest**, contracts):

$1.2860 (708)

$1.2833 (855)

$1.2803 (528)


Comments:

- Overall open interest on the CALL options with the expiration date September, 4 is 14021 contracts, with the maximum number of contracts with strike price $1,3600 (1201);

- Overall open interest on the PUT options with the expiration date September, 4 is 16180 contracts, with the maximum number of contracts with strike price $1,3150 (2619);

- The ratio of PUT/CALL was 1.15 versus 1.10 from the previous trading day according to data from September, 17

 

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.

06:46
Nearly 50% of UK firms plan to cut recruitment - CBI

RTTNews reports that according to an annual survey conducted by the Confederation of British Industry, nearly half of the UK firms plan to either reduce or not recruit at all over the coming year.

About 47% plan to maintain or increase recruitment, compared to 45% of respondents who expect to reduce recruitment or stop hiring altogether. Further, a balance of +7% of respondents expect that their workforce will be larger in 12 months' time, compared to a balance of +28% in last year's survey.

With ongoing social distancing, higher costs, lower demand, local lockdowns and fears of a second wave, firms are tempering their recruitment plans, Matthew Fell, CBI chief UK policy director, said.

Businesses are focusing on bolstering their efforts to protects jobs and livelihoods, from cutting hours and reducing bonuses to restructuring, he said. 

06:30
UK retail sales rose more than forecast in August

According to the report from Office for National Statistics, in August 2020, retail sales volumes increased by 0.8% when compared with July; this is the fourth consecutive month of growth, resulting in an increase of 4.0% when compared with February’s pre-pandemic level. Economists had expected a 0.7% increase in August.

In August, retail sales values increased by 0.7% when compared with July and 2.5% when compared with February. 

In August, there was a mixed picture within the different store types as non-store retailing volumes were 38.9% above February, while clothing stores were still 15.9% below February’s pre-pandemic levels.

Spending for home improvements continued to rise in August as sales volumes within household goods stores increased by 9.9% when compared with February.

Online retail sales fell by 2.5% in August when compared with July, but the strong growth experienced over the pandemic has meant that sales were still 46.8% higher than February’s pre-pandemic levels.

06:15
German producer price index continued to decline in August

According to the report from Federal Statistical Office (Destatis), in August 2020 the index of producer prices for industrial products decreased by 1.2% compared with the corresponding month of the preceding year. In July the annual rate of change all over had been –1.7%. Compared with the preceding month July the overall index remained unchanged in August 2020 (+0.2% in July).

Energy prices as a whole decreased by 3.9%. On an annual basis, prices of petroleum products were down 14.4%, prices of natural gas (distribution) decreased by 9.9%.

The overall index disregarding energy was 0.4% down on August 2019.

Prices of intermediate goods decreased by 2.0% compared to August 2019. Prices decreased especially regarding secondary raw materials (-16.8%) as well as basic iron, steel and ferro-alloys (-8.7%) and basic chemicals (-6.4%). Prices of cereal flour were down 2.9%. By contrast, prices of precious metals increased by 26.3% compared to August 2019. Prices of ready-mixed concrete rose by 4.5%.

Prices of non-durable consumer goods increased by 0.3% compared to August 2019. The price of sugar increased by 19.2%. Prices of meat and poultry meat products rose by 2.4%. Pork prices were down 12.6% compared to August 2019.

Prices of capital goods increased by 1.0% compared to August 2019, durable consumer goods by 1.5%.

06:02
Germany: Producer Price Index, August 0% m/m (forecast -0.1%)
06:01
United Kingdom: Retail Sales, August 2.8% y/y (forecast 3%)
06:00
Germany: Producer Price Index, August -1.2% y/y (forecast -1.4%)
06:00
United Kingdom: Retail Sales, August 0.8% m/m (forecast 0.7%)
02:30
Commodities. Daily history for Thursday, September 17, 2020
Raw materials Closed Change, %
Brent 43.09 2.47
Silver 27 -0.48
Gold 1944.047 -0.77
Palladium 2324.5 -2.71
00:30
Stocks. Daily history for Thursday, September 17, 2020
Index Change, points Closed Change, %
NIKKEI 225 -156.16 23319.37 -0.67
Hang Seng -384.78 24340.85 -1.56
KOSPI -29.75 2406.17 -1.22
ASX 200 -72.9 5883.2 -1.22
FTSE 100 -28.56 6049.92 -0.47
DAX -47.25 13208.12 -0.36
CAC 40 -34.92 5039.5 -0.69
Dow Jones -130.4 27901.98 -0.47
S&P 500 -28.48 3357.01 -0.84
NASDAQ Composite -140.19 10910.28 -1.27
00:30
Schedule for today, Friday, September 18, 2020
Time Country Event Period Previous value Forecast
06:00 Germany Producer Price Index (YoY) August -1.7% -1.4%
06:00 Germany Producer Price Index (MoM) August 0.2% -0.1%
06:00 United Kingdom Retail Sales (YoY) August 1.4% 3%
06:00 United Kingdom Retail Sales (MoM) August 3.6% 0.7%
08:00 Eurozone Current account, unadjusted, bln July 17.3  
12:30 Canada Wholesale Sales, m/m July 18.5% 3.5%
12:30 Canada Retail Sales YoY July 3.8%  
12:30 Canada Retail Sales, m/m July 23.7% 1%
12:30 U.S. Current account, bln Quarter II -104.2 -157.9
12:30 Canada Retail Sales ex Autos, m/m July 15.7% 0.5%
14:00 U.S. Leading Indicators August 1.4% 1.3%
14:00 U.S. Reuters/Michigan Consumer Sentiment Index September 74.1 75
17:00 U.S. Baker Hughes Oil Rig Count September 180  
00:15
Currencies. Daily history for Thursday, September 17, 2020
Pare Closed Change, %
AUDUSD 0.73078 0.11
EURJPY 124.075 0.08
EURUSD 1.18421 0.24
GBPJPY 135.824 -0.16
GBPUSD 1.29659 0.01
NZDUSD 0.67453 0.25
USDCAD 1.31581 -0.11
USDCHF 0.90803 -0.09
USDJPY 104.729 -0.19

FOREIGN EXCHANGE MARKET NEWS

CURRENCY MARKET DEFINITION
The concept of currency market has several definitions:

  • Currency market is the sphere of economic relations that are manifested in the purchase and sale of currency values (foreign currency, securities in foreign currency), as well as operations related to the investment of capital in foreign currency;
  • Currency market is a financial center where currency purchase and sale transactions based on supply and demand for them are concentrated;
  • Curency market is a whole of authorized banks, investment companies, brokerages, exchanges, and foreign banks that perform foreign exchange operations.
  • Currency market is a whole of communications systems that link banks in different countries that conduct international currency transactions.

Simply put, currency market is the market where currency transactions are made, that is, the currency of one country is exchanged for the currency of another country at a certain exchange rate. The exchange rate is the relative price of currencies of two countries or the currency of one country expressed in another country's monetary units.

Currency market is part of the global financial market, where many operations related to the global movement of capital take place.

TYPES OF MARKETS. RUSSIAN AND INTERNATIONAL CURRENCY MARKETS
There are international and domestic currency markets.

Domestic currency market — is a market within a single country.

The international currency market — is a global market that covers currency markets of all countries in the world. It does not have a specific site where trading is carried out. All operations within it are carried out through a system of cable and satellite channels that link the world's regional currency markets. Regional markets today include the Asian (with centers in Tokyo, Hong Kong, Singapore, and Melbourne), the European (London, Frankfurt am Main, and Zurich), and the American (New York, Chicago, and Los Angeles) markets.

Currency trading on the international currency market is carried out on the basis of market exchange rates, which are set on the basis of supply and demand in the market and under the influence of various macroeconomic data. Forex is the international currency market.

Currency markets can also be divided into exchange and over-the-counter markets. Exchange currency market is an organized market where trading is carried out through an exchange—a special company that sets trading rules and provides all the conditions for organizing trading under these rules.

Over-the-counter currency market — is a market where there are no certain trading rules, and purchase and sale operations are not linked to a specific place of trade, as opposed to the case of an exchange.

As a rule, an over-the-counter currency market is organized by special companies that provide services for the purchase and sale of currencies, which may or may not be members of the currency exchange. Trading operations in this market are now carried out mainly via the Internet.

The over-the-counter currency market is much larger than the exchange market in terms of trading volume. The Forex international over-the-counter currency market is considered the most liquid in the world. It operates around the clock in all financial centers of the world (from New York to Tokyo).

CURRENCY MARKET FUNCTIONS
Currency market— is the most important platform for ensuring the normal course of all global economic processes.

The main macroeconomic functions of the currency market are:

  • creating conditions for the subjects of foreign exchange relations to make timely international current and capital payments and thereby promoting the development of foreign trade;
  • providing conditions and mechanisms for the implementation of monetary and economic policy of the state;
  • diversifying foreign exchange reserves;
  • forming the exchange rate under the influence of supply and demand;

NEWS IMPACT
Various currencies are the main trading tool in the currency market. Exchange rates are formed under the influence of supply and demand in the market.

In addition to that, currency rates are influenced by many fundamental factors related to the global economic situation, events in national economies, and political decisions.

News about these factors can be found in various sources:

  • Reports showing a country´s level of economic development.

The more stable an economy is developing, the more stable its currency is. Accordingly, it is possible to predict how the currency will behave in the near future, based on statistical data published in official sources of countries with a certain regularity.
This data includes:

  • GDP
  • unemployment;
  • return on equity;
  • consumer price index;
  • industrial price index;
  • propensity to consume;
  • salaries outside of the agricultural sector;
  • residential construction, etc.

Interest rate level, set by national authorities regulating credit policy, is an equally important indicator. In the European Union, this is ECB–the European Central Bank, in the US, this is the Federal Reserve System, in Japan—the Bank of Japan, in the UK—the Bank of England, in Switzerland—the Swiss national Bank, etc.

The interest rate level is determined at meetings of the national central bank. Then, the decision on the rate is published in official sources. If the central bank of a country reduces the interest rate, the money supply in the country increases, and the national currency depreciates against other world currencies. If the interest rate increases, the national currency will strengthen.

  • Speeches of country leaders, leading economists and analysts.

A speech or even a separate statement by a country's leader can reverse a trend. Speeches on these topics may change the currency exchange rate:

  • analysis of the situation on the currency market;
  • changes in monetary or economic policy;
  • adoption of a budget policy;
  • forecasts of the economic situation, etc.

All this news is published in various sources. Major international news is more or less easy to find in Russian, but news related to the domestic economic policy and the economy of foreign countries is much less common in the Russian press. Mostly, such news is published by the national media and in the language of the country where the news is published.

It is very difficult for one person to follow all the news at once, and they are likely to miss some important event that can turn the whole situation on the market upside down. Guided by our main principle—to create the best trading conditions for our customers—we try to select the most important news from all over the world and publish them on our website.

The TeleTRADE Department of Analytics monitors news on most national and international news sources on a daily basis and identifies those that can potentially affect exchange rates. These are the main news items that are included in our news feed.

In addition, all our clients have free access to the Dow Jones news feed. This is a joint project of Dow Jones Newswires, the world's largest news agency, and the leading Russian news agency Prime-TASS. The news feed is created specifically for currency traders and those who are interested in getting information about the world's currency markets.

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Risk Disclosure

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