CFD Markets News and Forecasts — 17-09-2020

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17.09.2020
23:30
Japan: National Consumer Price Index, y/y, August 0.2%
23:30
Japan: National CPI Ex-Fresh Food, y/y, August -0.4% (forecast -0.4%)
19:50
Schedule for tomorrow, 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  
19:00
DJIA -0.87% 27,787.26 -245.12 Nasdaq -1.79% 10,852.15 -198.32 S&P -1.31% 3,341.22 -44.27
16:01
European stocks closed: FTSE 100 6,049.92 -28.56 -0.47% DAX 13,208.12 -47.25 -0.36% CAC 40 5,039.50 -34.92 -0.69%
14:52
European Commission president Von Der Leyen says EU-UK trade deal is still possible - FT reports
14:44
Gold to see a deeper dip to $1765 - Credit Suisse

FXStreet notes that gold is still expected to see a lengthier consolidation within its long-term uptrend. Strategists at Credit Suisse see a slide to $1765 if the weakness extends in the short-term but they expect an eventual rise above $2075.

“Gold continues its expected consolidation following the move to our base case objective of $2075/80.” 

“Should weakness extend, we would see scope for a deeper setback to $1765, potentially $1726.” 

“We look for an eventual move above $2075 with resistance seen next at $2175, then $2300. Whilst we would look for a fresh consolidation at this latter level, a direct break can see potential trend resistance at $2417, with scope seen for $2700/20 over the longer-term.”

14:17
BOE: No policy change but keeping its options open - ING

ING's strategists note that BOE voted unanimously to leave policy unchanged today and further preparation for negative rates is likely to be taken as a vindication of market expectations and brings more downside risk to gilt yields. The same can be said for GBP as Brexit-related pressures compound.

"The Bank of England unanimously decided to keep the Bank Rate at 0.1% and the size of its asset purchase facility (APF) unchanged today."

"The absence of any dovish dissent in favour of an increase in the APF might have come as a surprise to some, but it is consistent with a committee that saw overall slightly less adverse economic developments than it expected in August. Risks, it noted, remain skewed to the downside."

"There was little in this assessment to validate near-term expectations of more easing at the November meeting. The central bank's main scenario is premised on the UK signing a comprehensive trade deal with the EU before 2021. In light of recent developments, this assumption is likely to be challenged by investors, thus resulting in more dovish pricing than today's MPC might imply."

"We remain confident that an increase in the APF is more likely in the near-term but, in its minutes, the MPC noted that the Bank is exploring plans to take interest rates below zero if necessary. It added that 'The Bank of England and the Prudential Regulation Authority will begin structured engagement on the operational considerations in 2020 Q4'."

"From the point of view of the rates markets, the escalation in the Bank's communication around negative interest rates policy (NIRP) is likely to be seen as a vindication of existing expectations. The timeframe for the implementation/operational study and engagement confirm that these would be more of a 2021 story."

"GBP took a hit as official discussed the effectiveness of negative interest rates. The market has already been pricing a modest chance of negative rates and today’s meeting confirms this bias."

"While clearly negative for GBP, we continue to see the UK-EU trade negations as the chief driving factor of GBP in coming weeks, with the success or the failure to agree on a (reasonable) trade deal also determining the odds of BoE negative interest rates."

"This means that the potential GBP negative from the failed UK-EU trade negotiations would be further exaggerated by the BoE likely moving rates into negative."

14:03
House Speaker Pelosi reportedly will not meet with White House today regarding stimulus

  • She will not meet with airline executives either regarding their request for funding

13:54
Philadelphia-area manufacturing activity continues to expand in September but at slower pace

The Manufacturing Business Outlook Survey, released by the Federal Reserve Bank of Philadelphia on Thursday, revealed the region's manufacturing activity continued to expand in September, albeit at a slower pace than in the previous month.

According to the survey, the diffusion index for current general activity fell from 17.2 in August to 15.0 this month, recording its fourth positive reading after reaching long-term lows in the spring.

Economists had forecast the index to decrease to 15.0.

A reading above 0 signals expansion, while a reading below 0 indicates contraction.

According to the report, the new orders index rose 6.5 points to 25.5, while the current shipments index surged 27.2 points to 36.6 and the current employment index rose 6.7 points to 15.7, remaining in positive territory for the third consecutive month. In addition, most of the future indicators of the survey grew, suggesting more widespread optimism among firms about growth over the next six months.

13:32
U.S. Stocks open: Dow -1.15%, Nasdaq -2.00%, S&P -1.51%
13:18
Before the bell: S&P futures -1.48%, NASDAQ futures -2.30%

U.S. stock-index futures fell on Thursday, as official data revealed that weekly jobless claims continued to remain at elevated levels, adding to concerns about an economic recovery.


Global Stocks:

Index/commodity

Last

Today's Change, points

Today's Change, %

Nikkei

23,319.37

-156.16

-0.67%

Hang Seng

24,340.85

-384.78

-1.56%

Shanghai

3,270.44

-13.49

-0.41%

S&P/ASX

5,883.20

-72.90

-1.22%

FTSE

6,053.89

-24.59

-0.40%

CAC

5,024.78

-49.64

-0.98%

DAX

13,155.33

-100.04

-0.75%

Crude oil

$39.86


-0.75%

Gold

$1,951.10


-0.98%

13:11
USD/CAD: Resistance area at 1.3254/72 caps to see weakness resume again - Credit Suisse

FXStreet reports that in the opinion of the Credit Suisse analyst team, USD/CAD saw a sharp jump higher on Wednesday, with 1.3254/72 ideally capping for a move back lower and to avoid a small base. In fact, the loonie is trading around 1.3180 after posting a daily high of 1.3247.

“USD/CAD has seen a sharp rebound higher, breaking out of its near term consolidation range to see a test of the crucial 1.3254/72 resistance area (in line with daily MACD still moving higher). Our bias remains for this area to cap though and for weakness to resume, with support seen initially at 1.3227, then 1.3208/00. Removal of here would see a move back to 1.3128 and 1.3119, beneath which would see a fresh test of the back of the broken March downtrend at 1.3067. A close below here would then 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.” 

12:55
Wall Street. Stocks before the bell

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


3M Co

MMM

167.07

-2.44(-1.44%)

6516

ALCOA INC.

AA

13.72

-0.18(-1.30%)

2713

ALTRIA GROUP INC.

MO

41.5

-0.26(-0.62%)

26638

Amazon.com Inc., NASDAQ

AMZN

3,012.57

-65.53(-2.13%)

103471

American Express Co

AXP

104.8

-1.18(-1.11%)

24319

AMERICAN INTERNATIONAL GROUP

AIG

29

-0.77(-2.59%)

4290

Apple Inc.

AAPL

109.53

-2.60(-2.32%)

3812581

AT&T Inc

T

29.2

-0.04(-0.14%)

44768

Boeing Co

BA

164.81

-2.65(-1.58%)

95927

Caterpillar Inc

CAT

149.75

-1.36(-0.90%)

3717

Chevron Corp

CVX

77.65

-0.91(-1.15%)

13525

Cisco Systems Inc

CSCO

39.7

-0.72(-1.78%)

130377

Citigroup Inc., NYSE

C

45.22

-0.80(-1.74%)

135878

Deere & Company, NYSE

DE

215.46

0.06(0.03%)

427

E. I. du Pont de Nemours and Co

DD

59.4

-0.77(-1.28%)

1701

Exxon Mobil Corp

XOM

37.2

-0.61(-1.61%)

58048

Facebook, Inc.

FB

259.15

-4.37(-1.66%)

260966

FedEx Corporation, NYSE

FDX

244.1

-6.20(-2.48%)

34256

Ford Motor Co.

F

7.11

0.09(1.28%)

576263

General Electric Co

GE

6.82

0.07(1.04%)

3434847

General Motors Company, NYSE

GM

31.4

-0.39(-1.23%)

60632

Goldman Sachs

GS

198.55

-2.13(-1.06%)

34592

Google Inc.

GOOG

1,496.36

-24.54(-1.61%)

30021

Hewlett-Packard Co.

HPQ

19.32

-0.09(-0.46%)

251

Home Depot Inc

HD

278.35

-3.28(-1.16%)

9648

HONEYWELL INTERNATIONAL INC.

HON

168.75

-1.25(-0.74%)

1834

Intel Corp

INTC

49.5

-0.87(-1.73%)

192715

International Business Machines Co...

IBM

122.6

-1.62(-1.30%)

3036

JPMorgan Chase and Co

JPM

98.43

-1.27(-1.27%)

46345

McDonald's Corp

MCD

223.21

-1.60(-0.71%)

5730

Merck & Co Inc

MRK

84.7

-0.87(-1.02%)

1309

Microsoft Corp

MSFT

201.12

-3.93(-1.92%)

401236

Nike

NKE

117

-1.59(-1.34%)

13628

Pfizer Inc

PFE

36.87

0.09(0.24%)

85623

Procter & Gamble Co

PG

137.1

-0.60(-0.44%)

4286

Starbucks Corporation, NASDAQ

SBUX

86.99

-1.39(-1.57%)

93901

Tesla Motors, Inc., NASDAQ

TSLA

417.7

-24.06(-5.45%)

2286366

The Coca-Cola Co

KO

50.54

-0.25(-0.49%)

8536

Travelers Companies Inc

TRV

112.28

-0.89(-0.79%)

1129

Twitter, Inc., NYSE

TWTR

38.83

-0.77(-1.94%)

37743

UnitedHealth Group Inc

UNH

304.03

-2.49(-0.81%)

933

Verizon Communications Inc

VZ

60.16

-0.21(-0.35%)

3236

Visa

V

202.04

-3.09(-1.51%)

12450

Wal-Mart Stores Inc

WMT

135.1

-1.16(-0.85%)

39122

Walt Disney Co

DIS

130

-2.09(-1.58%)

33955

Yandex N.V., NASDAQ

YNDX

60.64

-0.89(-1.45%)

36373

12:52
Target price changes before the market open

Apple (AAPL) target raised to $135 from $116.25 at Jefferies

12:46
U.S. housing starts and building permits decrease in August

The Commerce Department reported on Thursday the housing starts declined by 5.1 percent m-o-m in August to a seasonally adjusted annual pace of 1.416 million, while building permits dropped by 0.9 percent m-o-m to an annual rate of 1.470 million.

Economists had forecast housing starts decreasing to a pace of 1.478 million units last month and building permits rising to a pace of 1.520 million units.

Data for July was revised to show homebuilding growing to a pace of 1.492 million units, instead of increasing at a rate of 1.496 million units as previously reported.

12:38
U.S. weekly jobless claims total 860,000 mln

The data from the Labor Department revealed on Thursday the number of applications for unemployment decreased last week but exceeded economists’ forecast, as the U.S. labor market is trying to recover from its biggest shock in history, caused by the COVID-19 pandemic. 

According to the report, the initial claims for unemployment benefits totaled 860,000 for the week ended September 12. That was the third straight week with claims below 1 million.

Economists had expected 850,000 new claims last week.

Claims for the prior week were revised upwardly to 893,000 from the initial estimate of 884,000.

Meanwhile, the four-week moving average of claims fell to 912,000 from an upwardly revised 973,000 in the previous week.

Continuing claims decreased to 12,628,000 million from an upwardly revised 13,544,000 in the previous week.

12:31
U.S.: Philadelphia Fed Manufacturing Survey, September 15.0 (forecast 15)
12:30
U.S.: Initial Jobless Claims, September 860 (forecast 850)
12:30
U.S.: Housing Starts, August 1.416 (forecast 1.478)
12:30
U.S.: Continuing Jobless Claims, September 12 (forecast 13000)
12:30
U.S.: Building Permits, August 1.47 (forecast 1.52)
12:19
S&P 500: Cluster of resistances at 3417/27 caps to maintain the risk for a corrective setback - Credit Suisse

FXStreet reports that economists at Credit Suisse inform that S&P 500 has been capped at resistance at 3426/27 and the completion of a small bearish “reversal day” still maintains the risk for a deeper corrective setback towards 3280/60.

“The S&P 500 rebound has been capped at its 13-day exponential average, 38.2% retracement of its fall and price resistance at 3417/27 and the subsequent sharp fall post the Fed has seen a small bearish ‘reversal day’ established to maintain the view the market stays seen at risk to a deeper corrective setback/consolidation.”

“Support remains seen at 3375 initially, with a break below 3341/39 needed to maintain the threat of further corrective weakness and a move back to 3310 then our “ideal” correction target of a cluster of supports seen starting at the 63-day average at 3287 and stretching down to 3260/59.” 


11:59
AUD/EUR set to trade at 0.62 by year-end - Westpac

FXStreet reports that according to economists at Westpac, increased European Central Bank (ECB) grumbling about euro rise and rapid QE contrast with more cautious Reserve Bank of Australia (RBA) though a sustained break of 0.6200 could take some effort. The AUD/EUR pair has been thoroughly rangebound over the past three months, trading mostly 0.6050 to 0.6200.

“Officials are careful to insist that their concern is the inflation impact of a strong euro rather than trying to help exports. At last week’s meeting, President Lagarde played down EUR concerns but there is little breathing room on the inflation outlook, with ECB forecasting core inflation only at 1.1% by 2022.”

“RBA balance sheet expansion is comparatively muted and the RBA views A$ appreciation as in line with the strength of commodity prices. Our AUD/EUR end-2020 forecast is 0.6200 but near-term we would not be surprised to see a period of trade nearer 0.6250.”

11:41
EUR/JPY marks a top below 124.44 with support seen at 123.19 - Credit Suisse

FXStreet reports that analysts at Credit Suisse note that EUR/JPY has confirmed a top beneath the twin 124.44 lows with support seen next at the 50% retracement at 123.19 and then more importantly at the 38.2% retracement of the entire rally from May at 122.27/23.

“EUR/JPY has brushed aside key support from the twin 124.44 lows of late August and earlier this month to see the warned of top established, with support from the 55-day average and 38.2% retracement of the rally from late June also removed with ease. This should confirm an important turn lower has taken place with support seen next at the 50% retracement at 123.19, ahead of price support at 122.84 and then more importantly at 122.27/23 - the 38.2% retracement of the entire rally from May and 61.8% retracement of the rally from late June. With the ‘“measured top objective’ seen not far below here at 121.80, we would look for a fresh floor here.”

11:28
BoE leaves Bank Rate at 0.1%; maintains its asset purchase program at GBP745 billion

The Bank of England (BoE) announced its Monetary Policy Committee (MPC) voted 9-0 to maintain Bank Rate at 0.1 percent at its September meeting, as widely expected.

The MPC also voted unanimously to continue with its existing programmes of UK government bond and sterling non-financial investment-grade corporate bond purchases, maintaining the target for the total stock of these purchases at £745 billion.

In its statement, the BoE notes:

  • Outlook for economy remains unusually uncertain; direct impact of Covid-19 on economy would dissipate gradually
  • Sterling exchange rate index has fallen by around 2%, in part reflecting recent Brexit developments
  • Consumption has continued to recover during the summer and is now at around its start-of-year level in aggregate, stronger than expected in August
  • Number of paid employees has fallen by around 700,000 between February and August
  • Investment intentions have remained very weak and uncertainties among businesses are elevated
  • For Q3, Bank staff expect GDP to be around 7% below its 2019 Q4 level, less weak than had been expected in August.
  • CPI inflation is expected to remain below 1% until early 2021, albeit slightly higher than expected in August
  • Path of growth and inflation will depend on the evolution of the pandemic and measures taken to protect public health, as well as the nature of, and transition to, new trading arrangements between EU and UK; it will also depend on responses of households, businesses and financial markets to these developments
  • Recent domestic economic data have been little stronger than Committee expected in August
  • Recent increases in Covid-19 cases have potential to weigh further on economic activity, albeit probably on lesser scale than seen earlier in the year
  • Committee will continue to monitor situation closely and stands ready to adjust monetary policy accordingly to meet its remit.
  • MPC will keep under review range of actions that could be taken to deliver its objectives
  • Committee does not intend to tighten monetary policy until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2% inflation target sustainably
  • Committee judged that existing stance of monetary policy remains appropriate.

11:10
European session review: USD mostly higher after improved 2020 economic forecast from the Fed

TimeCountryEventPeriodPrevious valueForecastActual
06:00SwitzerlandTrade BalanceAugust2.49 3.4
09:00EurozoneConstruction Output, y/yJuly-4.8% -3.8%
09:00EurozoneHarmonized CPIAugust-0.4%-0.4%-0.4
09:00EurozoneHarmonized CPI ex EFAT, Y/YAugust1.2%0.4%0.4%
09:00EurozoneHarmonized CPI, Y/YAugust0.4%-0.2%-0.2%
11:00United KingdomAsset Purchase Facility 745745745
11:00United KingdomBoE Interest Rate Decision 0.1%0.1%0.1%
11:00United KingdomBank of England Minutes    


USD rose slightly against most other major currencies in the European session on Thursday after the U.S. Federal Reserve left its key interest rates near zero and forecast the U.S. economy to recover from the coronavirus crisis faster than previously expected. 

At its latest policy meeting, the outcomes of which were announced on Wednesday afternoon, the Fed left the fed funds rate unchanged at 0%-0.25% as widely expected. Projections from the Fed’s policymakers also indicated that interest rates could be kept low through at least 2023,  when the labour market is likely to reache “maximum employment” and inflation is on track to “moderately exceed” the 2% inflation target. However, some traders were disappointed by the Fed’s decision to leave its monetary policy settings unchanged as they had bet on a more dovish take. 

In addition to the rate decision, the Fed’s officials also provided updated forecasts for the U.S. economy, inflation and unemployment for the coming years. They considerably improved the forecast for this year's GDP, projecting it to contract by 3.7% compared to a 6.5% decline seen in June. However, the growth forecasts for 2021 and  2022 were lowered to 4% from 5% and to 3% from 3.5%, respectively. In 2023,  GDP is expected to grow by 2.5%.

Outlook for 2020 unemployment rate was also lowered, to 7.6% from 9.3% seen in June, while the inflation projection for 2020 was increased to 1.2% from 0.8%.

11:00
United Kingdom: Asset Purchase Facility, 725 (forecast 745)
11:00
United Kingdom: BoE Interest Rate Decision, 0.1% (forecast 0.1%)
10:39
AUD/USD to test the 0.74 level over the next month - Westpac

FXStreet reports that economists at Westpac notes that equity and iron ore wobbles are providing dips to buy into, with soft USD and lack of Reserve Bank of Australia (RBA) concern suggesting another retest of 0.7400 multi-week for the AUD/USD pair which is flat on the week.

“The nervous market mood snuffed out the A$ bounce on Australia’s much stronger than expected labour data.”

“Commodities have wobbled in recent days but our base case is that the Fed’s aggressive easing stance (QE running around $120 B/mth) will weigh on USD and support risk assets over time. Look for AUD/USD to find buyers ahead of 50-DMA now at 0.7182, with another test of 0.7400 likely over the next month.”

10:20
BoE Preview: Growing downside risks to send GBP/USD to 1.2840 - TDS

FXStreet reports that economists at TD Securities expect the dovish tint offers GBP some headwinds, but they do not expect a large directional reaction. Here are three different scenarios at its implications for the GBP/USD and EUR/GBP pairs.

“Hawkish (15%): Confident in August forecasts. Policy unchanged with a 9-0 vote. Minutes show that while ‘some’ MPC members see downside risks to the growth projections laid out in August, the majority of the MPC still views the forecasts as a reasonable base case. GBP/USD 1.3015 EUR/GBP 0.9115” 

“Base Case (60%): Growing downside risks. Policy unchanged with a 9-0 vote. Minutes show growing concern around downside risks to August growth outlook, and less confidence that recovery will be as swift as had been expected... GBP/USD 1.2840 EUR/GBP 0.9235”

“Dovish (25%): Some dissent to extend QE. Policy unchanged with 7-2/6-3 vote as Saunders, Haskel, and possibly Vlieghe vote for an additional £50 B QE. GBP/USD 1.2795 EUR/GBP 0.9270”.

10:12
ECB's Vice President De Guindos: Relatively brisk and intense fluctuation in exchange rate affects inflation expectations and conditions that determine inflation

  • Exchange is fundamental economic variable which affects imports, exports, imported inflation or deflation
  • ECB could not be happy with its own forecast for 1.3% inflation rate in 2022

10:00
EU shouldn't 'fall into trap' by ending Brexit talks now, France says

Reuters reports that France's European affairs minister said that the EU is right to continue talking to Britain for now, and should not overreact to British tactics that could be aimed at pushing Brussels to break off negotiations over a Brexit trade deal.

The British government won initial approval in parliament this week for a bill that would give ministers the power to breach the Brexit divorce treaty agreed last year.

The EU has demanded Britain scrap those parts of the bill by the end of September, and said that if not, there will be no trade deal at the end of the year when a transition period expires.

Asked in parliament whether the EU should stop talks on the trade deal immediately, the French minister, Clement Beaune, said: "At this stage, we're right to continue to discuss with the British."

09:41
Eurozone construction output continued to decline in July

According to the report from Eurostat, in July 2020 the seasonally adjusted production in the construction sector rose by 0.2% in the euro area and fell by 0.1% in the EU, compared with June 2020. In June 2020, production in construction increased by 5.1% in the euro area and by 3.8% in the EU. In July 2020 compared with July 2019, production in construction decreased by 3.8% in the euro area and by 3.9% in the EU.

In the euro area in July 2020, compared with June 2020, civil engineering increased by 1.1% while building construction remained stable. In the EU, building construction decreased by 0.3% while civil engineering increased by 1.2%.

In the euro area in July 2020, compared with July 2019, building construction decreased by 4.3% while civil engineering increased by 0.4%. In the EU, building construction decreased by 4.2% and civil engineering by 0.4%.

09:21
Eurozone annual inflation down to -0.2% in August - Eurostat

According to the report from Eurostat, in August 2020, a month in which COVID-19 containment measures continued to be lifted, the euro area annual inflation rate was -0.2%, down from 0.4% in July. A year earlier, the rate was 1.0%. Core figures rose by 0.4% versus +0.4% previous and +0.4% expectations. European Union annual inflation was 0.4% in August 2020, down from 0.9% in July. A year earlier, the rate was 1.4%.

The lowest annual rates were registered in Cyprus (-2.9%), Greece (-2.3%) and Estonia (-1.3%). The highest annual rates were recorded in Hungary (4.0%), Poland (3.7%) and Czechia (3.5%). Compared with July, annual inflation fell in sixteen Member States, remained stable in five and rose in six.

In August, the highest contribution to the annual euro area inflation rate came from food, alcohol & tobacco (+0.33 percentage points, pp), followed by services (+0.30 pp), non-energy industrial goods (-0.03 pp) and energy (-0.77 pp).

09:01
Eurozone: Construction Output, July -3.8% y/y
09:00
Eurozone: Harmonized CPI, August -0.4% m/m (forecast -0.4%)
09:00
Eurozone: Harmonized CPI, August -0.2% m/m (forecast -0.2%)
09:00
Eurozone: Harmonized CPI ex EFAT, August 0.4% y/y (forecast 0.4%)
08:39
SocGen says now sees an 80% probability of a no deal between UK and EU

Reuters reports that Societe Generale analysts said they now see an 80% chance that Britain and the EU will fail to strike a trade deal before the end of the year.

British Prime Minister Johnson has unveiled legislation that would break parts of the Brexit divorce treaty relating to Northern Ireland. The EU says any breach of the Brexit treaty could sink trade talks.

SocGen analysts said that whether or not the planned legislation, the Internal Market Bill, is passed in a form that maintains this feature, the level of trust between Britain and the EU had been “gravely damaged”.

“With PM Johnson likely to continue his high-stakes negotiating strategy, we no longer think a deal can be struck before year-end. We now see an 80% probability of a No Deal,” they said in a note.

08:23
USD/CNH: Further downside remains on the cards – UOB

FXStreet reports that USD/CNH is still expected to remain on the defensive although a move to 6.7165 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.”

08:00
Fed dovish forward guidance to add downward pressure to the dollar – MUFG

FXStreet reports that the US dollar has strengthened following the latest FOMC meeting. The Federal Reserve has strengthened forward guidance but lacked urgency to meet to new goals, per MUFG Bank.

“The price action is interesting as it suggests some degree of disappointment that the Fed did not go further and announce even more aggressive easing. It is another indication that a lot of the bad news is now priced into the US dollar at the current juncture which has helped it to consolidate at sharply lower levels since the end of July. It keeps us wary of the risk of a short-term correction higher for the US dollar in light of building US dollar short positions and bearish sentiment.”

“The Fed backed up their recent updated policy goals by strengthening their forward guidance. The new goals revealed that the Fed will place more importance on achieving full employment and tolerate a moderate inflation overshoot for some time thereby signalling that policy will remain looser for longer than normal during the economic recovery.”

“While the dovish forward guidance wasn’t sufficient to trigger further US dollar weakness in the near-term, it will continue to place downward pressure on the US dollar in the coming years by helping to anchor nominal yields and encouraging higher inflation expectations and lower real yields during the economic recovery.”

07:39
World Bank's IFC warns of Asia-Pacific 'financial crisis'

Reuters reports that a senior official from the World Bank Group's private sector arm said that the Asia-Pacific region risks a damaging financial crisis from a surge of non-performing loans caused by rising insolvencies.

Alfonso Garcia Mora, Vice President for Asia and the Pacific of the International Finance Corp (IFC), said bankruptcies were expected to rise by 30% because of the economic crisis caused by the new coronavirus pandemic.

While many firms have been given moratoriums on their loan repayments, many central banks are not requiring financial institutions to regularly monitor these firms' solvency. This, said Garcia Mora, was "very dangerous".

"What can happen is that when the bank opens their books in six months, or in 12 months, they will realise that their non-performing loans ratio is not 2% but 20%," he said.

About 50% of firms will not have enough income to service their loans in the coming year, Garcia Mora said, citing an analysis by the World Bank and the Bank for International Settlements.

With a few exceptions, Garcia Mora said the region's judicial systems were unprepared for a leap in insolvency cases. There was also a lack of simplified methods for smaller firms to declare bankruptcy and start again, he said.

07:20
Asian session review: the US dollar rose on the background of the results of the Fed meeting

TimeCountryEventPeriodPrevious valueForecastActual
01:30AustraliaRBA Bulletin    
01:30AustraliaChanging the number of employedAugust119.2-50111
01:30AustraliaUnemployment rateAugust7.5%7.7%6.8%
03:00JapanBoJ Interest Rate Decision -0.1%-0.1%-0.1%
06:00SwitzerlandTrade BalanceAugust2.49 3.4


During today's Asian trading, the US dollar rose against major currencies after the end of the two-day meeting of the US Federal reserve system.

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), rose 0.16%.

The Fed kept the interest rate on federal loan funds in the range from 0% to 0.25% per annum. Most Fed officials expect the benchmark interest rate to remain in the current range until the end of 2023.

The Fed also improved its forecast for US GDP for 2020, but lowered its forecasts for 2021-2022. According to the Federal reserve's September forecast, US GDP will fall by 3.7% this year, grow by 4% in 2021 and by 3% in 2022. In June, the Fed expected GDP to fall by 6.5% in 2020 and grow by 5% and 3.5% respectively in the next two years.

Meanwhile, the Bank of Japan at the end of the next meeting, which ended on Thursday, kept ultra-soft parameters of monetary policy, as predicted by most experts. The short-term interest rate on deposits of commercial banks is left at -0.1% per annum, the target yield of ten-year government bonds of Japan is about zero.

Today, traders are waiting for the publication of final data on changes in consumer prices in the euroarea in August. According to preliminary data, consumer prices in the region last month decreased by 0.2% in annual terms. The decline was observed for the first time since may 2016.

The Bank of England will announce the results of its September meeting today. Most economists and market analysts believe that the regulator will refrain from adjusting monetary policy at the moment.

07:01
USD/JPY: Outlook remains negative for the time being – UOB

FXStreet reports that a deeper move to the 104.00 region looks unfavoured for the time being despite the negative outlook in USD/JPY, suggested FX Strategists at UOB Group.

Next 1-3 weeks: “Yesterday (16 Sep, spot at 105.40), we indicated that USD ‘is expected to remain weak and a break of 105.20 would shift the focus to 105.00’. The pace and extent of the subsequent decline exceeded our expectation as USD dropped to a low of 104.78 before settling on a weak note at 104.94 (-0.46%). While the outlook remains weak and the next major support is at the July’s low of 104.16, severely oversold short-term conditions suggest this level may be out of reach this time round. Note that there is another support level at 104.50. All in, the negative phase in USD that started earlier this week (see annotations in the chart below) is deemed as intact as long as USD does not move above 105.70 (‘strong resistance’ level was at 106.00 yesterday). Meanwhile, oversold short-term conditions could lead to a couple of days of consolidation first.”

06:48
Options levels on thursday, September 17, 2020 EURUSD GBPUSD

EUR/USD

Resistance levels (open interest**, contracts)

$1.1920 (2432)

$1.1893 (528)

$1.1872 (151)

Price at time of writing this review: $1.1766

Support levels (open interest**, contracts):

$1.1728 (2970)

$1.1699 (2327)

$1.1665 (4416)


Comments:

- Overall open interest on the CALL options and PUT options with the expiration date September, 4 is 63146 contracts (according to data from September, 16) with the maximum number of contracts with strike price $1,1700 (4416);


GBP/USD

Resistance levels (open interest**, contracts)

$1.3173 (593)

$1.3115 (324)

$1.3071 (203)

Price at time of writing this review: $1.2955

Support levels (open interest**, contracts):

$1.2842 (710)

$1.2816 (851)

$1.2786 (520)


Comments:

- Overall open interest on the CALL options with the expiration date September, 4 is 13891 contracts, with the maximum number of contracts with strike price $1,3600 (1190);

- Overall open interest on the PUT options with the expiration date September, 4 is 15319 contracts, with the maximum number of contracts with strike price $1,3150 (2619);

- The ratio of PUT/CALL was 1.10 versus 1.10 from the previous trading day according to data from September, 16

 

* - 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.

06:41
Europe's passenger car sales logged a double-digit decline in August

According to the report from European Automobile Manufacturers Association (ACEA), in July 2020, registrations of new passenger cars in the European Union saw a relatively small decline of 5.7% compared to the same month last year. During the month of August, however, the EU car market posted a stronger decline (-18.9%) again, although less dramatic than earlier in the year. With the exception of Cyprus (+14.1%), all countries in the region recorded losses compared to August 2019. Looking at the four major EU markets, Italy performed best, with a slight drop of 0.4%, while the strongest declines were seen in Germany (-20.0%) and France (-19.8%).

Over the first eight months of 2020, EU demand for passenger cars contracted by 32.0%. In total, 6,123,852 new cars were registered across the European Union from January to August, almost 2.9 million less than during the same period last year. Among the EU’s largest markets, Spain saw the biggest decline (-40.6%) so far this year, followed by Italy (-38.9%), France (-32.0%) and Germany (-28.8%).

06:19
Goldman Sachs sees the Chinese yuan strengthening to 6.5 per dollar over the next 12 months

CNBC reports that according to Timothy Moe, co-head of Asia macro research and chief Asia-Pacific equity strategist at Goldman Sachs,  we expect the onshore Chinese yuan to strengthen to 6.5 per dollar over the next 12 months, 

“We’ve recently firmed up … in particular, our Chinese renminbi forecast from 6.7 to 6.5 on a 12 month view,” Moe told CNBC, adding that it was one of the firm’s “strongest views” for Asian currencies.

Both the onshore and offshore Chinese yuan saw a dramatic strengthening this week from levels above 6.8 against the greenback. That came as data from China’s National Bureau of Statistics showed the country’s first positive retail sales report for 2020 in August.

Moe said the strength of the Chinese currency would serve a “tailwind” for stocks in the country.

“Historical evidence is very, very clear that a strengthening currency is generally supportive for the equity market,” he said.

In particular, the more domestic-oriented parts of the market are likely to benefit as the external-facing sectors “become incrementally less competitive” against the backdrop of a stronger currency, the strategist said.

06:02
Switzerland: Trade Balance, August 3.4 b
02:54
Japan: BoJ Interest Rate Decision, -0.1% (forecast -0.1%)
02:30
Commodities. Daily history for Wednesday, September 16, 2020
Raw materials Closed Change, %
Brent 42.05 4.06
Silver 27.14 0.22
Gold 1959.017 0.29
Palladium 2391.09 -0.22
01:30
Australia: Unemployment rate, August 6.8% (forecast 7.7%)
01:30
Australia: Changing the number of employed, August 111 (forecast -50)
00:30
Stocks. Daily history for Wednesday, September 16, 2020
Index Change, points Closed Change, %
NIKKEI 225 20.64 23475.53 0.09
Hang Seng -7.13 24725.63 -0.03
KOSPI -7.66 2435.92 -0.31
ASX 200 61.3 5956.1 1.04
FTSE 100 -27.06 6078.48 -0.44
DAX 37.7 13255.37 0.29
CAC 40 6.49 5074.42 0.13
Dow Jones 36.78 28032.38 0.13
S&P 500 -15.71 3385.49 -0.46
NASDAQ Composite -136.63 11053.69 -1.22
00:30
Schedule for today, Thursday, September 17, 2020
Time Country Event Period Previous value Forecast
01:30 Australia RBA Bulletin    
01:30 Australia Changing the number of employed August 114.7 -50
01:30 Australia Unemployment rate August 7.5% 7.7%
03:00 Japan BoJ Interest Rate Decision -0.1% -0.1%
06:00 Switzerland Trade Balance August 2.58  
09:00 Eurozone Construction Output, y/y July -5.9%  
09:00 Eurozone Harmonized CPI August -0.4% -0.4%
09:00 Eurozone Harmonized CPI ex EFAT, Y/Y August 1.2% 0.4%
09:00 Eurozone Harmonized CPI, Y/Y August 0.4% -0.2%
11:00 United Kingdom Asset Purchase Facility 745 745
11:00 United Kingdom BoE Interest Rate Decision 0.1% 0.1%
11:00 United Kingdom Bank of England Minutes    
12:30 U.S. Continuing Jobless Claims September 13385 13000
12:30 U.S. Housing Starts August 1.496 1.478
12:30 U.S. Building Permits August 1.483 1.52
12:30 U.S. Philadelphia Fed Manufacturing Survey September 17.2 15
12:30 U.S. Initial Jobless Claims September 884 850
23:30 Japan National CPI Ex-Fresh Food, y/y August 0.0% -0.4%
23:30 Japan National Consumer Price Index, y/y August 0.3%  
00:15
Currencies. Daily history for Wednesday, September 16, 2020
Pare Closed Change, %
AUDUSD 0.72996 0.02
EURJPY 123.973 -0.73
EURUSD 1.18133 -0.28
GBPJPY 136.038 0.14
GBPUSD 1.29647 0.6
NZDUSD 0.67287 0.3
USDCAD 1.31725 -0.07
USDCHF 0.90886 0.12
USDJPY 104.931 -0.45

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