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 |
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.”
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."
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.
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 | $1,951.10 | -0.98% |
FXStreet reports that in the opinion of the Credit Suisse analyst team, USD/CAD saw a sharp jump higher on Wednesday, with 1.3254/72 ideally capping for a move back lower and to avoid a small base. In fact, the loonie is trading around 1.3180 after posting a daily high of 1.3247.
“USD/CAD has seen a sharp rebound higher, breaking out of its near term consolidation range to see a test of the crucial 1.3254/72 resistance area (in line with daily MACD still moving higher). Our bias remains for this area to cap though and for weakness to resume, with support seen initially at 1.3227, then 1.3208/00. Removal of here would see a move back to 1.3128 and 1.3119, beneath which would see a fresh test of the back of the broken March downtrend at 1.3067. A close below here would then further reinforce the view that the medium-term downtrend is taking back over. Support is seen next at 1.3047/38, removal of which would reinforce the bearish bias further for a fall to 1.2994, then medium-term support at 1.2952.”
(company / ticker / price / change ($/%) / 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 |
Apple (AAPL) target raised to $135 from $116.25 at Jefferies
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.
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.
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.
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.”
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.”
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.”
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:
Time | Country | Event | Period | Previous value | Forecast | Actual |
---|---|---|---|---|---|---|
06:00 | Switzerland | Trade Balance | August | 2.49 | 3.4 | |
09:00 | Eurozone | Construction Output, y/y | July | -4.8% | -3.8% | |
09:00 | Eurozone | Harmonized CPI | August | -0.4% | -0.4% | -0.4 |
09:00 | Eurozone | Harmonized CPI ex EFAT, Y/Y | August | 1.2% | 0.4% | 0.4% |
09:00 | Eurozone | Harmonized CPI, Y/Y | August | 0.4% | -0.2% | -0.2% |
11:00 | United Kingdom | Asset Purchase Facility | 745 | 745 | 745 | |
11:00 | United Kingdom | BoE Interest Rate Decision | 0.1% | 0.1% | 0.1% | |
11:00 | United Kingdom | Bank 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%.
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.”
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”.
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."
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%.
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).
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.
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.”
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.”
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.
Time | Country | Event | Period | Previous value | Forecast | Actual |
---|---|---|---|---|---|---|
01:30 | Australia | RBA Bulletin | ||||
01:30 | Australia | Changing the number of employed | August | 119.2 | -50 | 111 |
01:30 | Australia | Unemployment rate | August | 7.5% | 7.7% | 6.8% |
03:00 | Japan | BoJ Interest Rate Decision | -0.1% | -0.1% | -0.1% | |
06:00 | Switzerland | Trade Balance | August | 2.49 | 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.
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.”
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.
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%).
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.
Raw materials | Closed | Change, % |
---|---|---|
Brent | 42.05 | 4.06 |
Silver | 27.14 | 0.22 |
Gold | 1959.017 | 0.29 |
Palladium | 2391.09 | -0.22 |
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 |
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% |
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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