CFD Markets News and Forecasts — 24-07-2020

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24.07.2020
19:00
DJIA -0.66% 26,476.37 -175.96 Nasdaq -0.93% 10,363.90 -97.51 S&P -0.65% 3,214.51 -21.15
18:59
Key events for next week: Australia and the eurozone consumer price index, US consumer confidence indicator, Fed's interest rate decision, US and Canadа GDP, China PMI indexes

On Monday, at 04:30 GMT, Japan will present the index of activity in all sectors of the economy for May, and at 05: 00 GMT - the Bank of Japan consumer price index for June. At 06:00 GMT, Japan will publish the Nationwide house price index for July. At 08:00 GMT, Germany will release the IFO business environment indicator, the IFO current situation assessment indicator, and the IFO economic expectations indicator for July. Also at 08:00 GMT, the Euro zone will announce changes in the volume of lending to the private sector and the aggregate M3 of money supply for June. At 10:00 GMT in Germany, the Bundesbank's monthly report will be released. At 12:30 GMT, the US will report a change in the durable goods orders for June.

On Tuesday, at 10:00 GMT, Britain will publish the retail sales index according to the Confederation of British Industrialists for July. At 13:00 GMT, the US will present the S&P/Case-Shiller housing price index for May, and at 14:00 GMT, the consumer confidence indicator and the Fed-Richmond manufacturing index for July.

On Wednesday, at 01:30 GMT, Australia will release the consumer price index for the 2nd quarter. At 08:00 GMT, Switzerland will publish an index of expectations of dwiss investors, according to data from ZEW and Credit Suisse for July. At 08:30 GMT, Britain will announce changes to the M4 money supply aggregate, the number of approved mortgage applications and the volume of net loans to individuals for June. At 12:30 GMT, the US will report on the change in the balance of foreign trade in goods for June. At 14:00 GMT, the US will announce a change in pending home sales for June. At 14: 30 GMT, the US will announce changes in oil reserves according to the Ministry of energy. At 18:00 GMT in the US, the FOMC interest rate decision will be announced. At 18:30 GMT, the FOMC will hold a press conference. At 22:45 GMT, New Zealand will report changes in the volume of construction permits issued for June. At 23:50 GMT, Japan will announce a change in retail sales for June.

On Thursday. At 01:00 GMT, New Zealand will publish ANZ's business confidence indicator for July. At 01:30 GMT, Australia will release the import price index for the 2nd quarter and report changes in the volume of construction permits issued for June. At 06:00 GMT, Germany will announce the change in GDP for the 2nd quarter. At 07:00 GMT, Switzerland will present the KOF index of leading economic indicators for July. At 07:55 GMT, Germany will report changes in the unemployment rate and the number of unemployed for July. At 09:00 GMT, the Euro zone will announce the change in the unemployment rate for June. At 10: 00 GMT, the Euro zone will present the consumer confidence index, the index of economic sentiment, the index of business optimism in industry and the index of business sentiment for July. At 12:00 GMT, Germany will release the consumer price index for July. At 12: 30 GMT, the US will announce changes in the volume of GDP for the 2nd quarter and the number of initial applications for unemployment benefits. At 23:30 GMT, Japan will report a change in the unemployment rate for June, and at 23:50 GMT - a change in industrial production for June.

On Friday, at 01:00 GMT, China will present the manufacturing PMI and non-manufacturing activity index for July. At 01:30 GMT, Australia will release the producer price index for the 2nd quarter and report changes in private sector lending for June. At 05:00 GMT, Japan will publish a consumer confidence indicator for July and announce a change in the housing starts for June. At 05:30 GMT, France will announce the change in GDP for the 2nd quarter. At 06:00 GMT Germany will report the change of volume of retail trade for June. At 06:30 GMT, Switzerland will announce changes in real retail trade volume for June. At 06:45 GMT, France will announce changes in consumer spending for June and release the consumer price index for July. At 09:00 GMT, the Euro zone will present the consumer price index for July. At 09:00 GMT, the Euro zone will report changes in GDP for the 2nd quarter. At 12:30 GMT, Canada will announce the change in GDP for May and release the producer price index for June. Also at 12: 30 GMT, the US will publish the PCE price index ex food, energy for June and the index of labor costs for the 2nd quarter, and will report changes in personal income and expenses for June. At 13:45 GMT, the US will release the Chicago purchasing managers ' index for July, and at 14: 00 GMT, the Reuters/Michigan consumer sentiment index for July. At 17:00 GMT in the US, the Baker Hughes report on the number of active oil drilling rigs will be released.

17:04
U.S.: Baker Hughes Oil Rig Count, July 181
16:00
European stocks closed: FTSE 100 6,123.77 -87.67 -1.41% DAX 12,838.06 -265.33 -2.02% CAC 40 4,956.43 -77.33 -1.54%
14:57
Return of inflation to be associated with neoliberal capitalism end - Natixis

FXStreet reports that analysts at Natixis note that neo-liberal capitalism has led to disinflation, linked to the choices made to increase profitability and very low real interest rates, which mean wealth accumulation. A shift to another equilibrium, with higher inflation, interest rates close to the growth rate and reduced wealth inequality would require an end to neo-liberal capitalism.

“The objective of neo-liberal capitalism is mainly to increase corporate profitability to obtain a high return on equity for the shareholder. With this objective, neo-liberal capitalism has implemented: skewing of income distribution against wage earners and, therefore, low wages; offshoring to low-labour-cost emerging countries in order to reduce production costs; tax competition between countries, with lower taxes on profits in particular; strong investment in fossil fuels, the cost of which is low and corporate concentration enabling monopoly rents to be obtained.”

“While corporate concentration is inflationary, all the other characteristics of neo-liberal capitalism are disinflationary. Disinflation has enabled central banks to keep interest rates very low and also allowed real interest rates to remain very low, which explains a second characteristic of neo-liberal capitalism: wealth accumulation due to a rise in asset prices and increased wealth inequality.”

14:36
Eurozone PMIs paint an optimistic picture - ING

Bert Colijn, Senior Economist at ING, notes that the composite PMI increased from 48.5 to 54.8 in July - a significant jump that continues to signal improvements in business activity as the eurozone leaves lockdowns behind.

"We're reluctant to consider the reading of the index very literally, instead, we think the direction of the index is more useful in these uncertain times."

"The significant improvement indicates that demand is bouncing back as economies reopen, which confirms our view of a very strong 3Q growth figure. Also important is the speed of the recovery of German exporters which showed some signs of life as demand from China has been picking up in July, but also internal eurozone demand too."

"For the eurozone’s strongest exporter, this is positive news and it is an early indication that trade might have also started a cautious recovery."

"Even though output is recovering, businesses are still reducing jobs at a considerable pace. This is in line with our expectations as short-time work schemes have kept unemployment artificially low throughout the lockdown and we expect unemployment to continue to rise for quite some time."

"This will be a key factor hampering the recovery after the first phase of rapid growth post-lockdown is over."

14:22
U.S. new home sales climb more than forecast in June

The U.S. Commerce Department announced on Friday that the sales of new single-family homes climbed 13.8 percent m-o-m to a seasonally adjusted annual rate of 776, 000 units in June. That was the highest level since July 2007.

Economists had forecast the sales pace of 700,000 last month.

May’s sales pace was revised up to 682,000 units from the originally reported 676,000 units.

According to the report, new home sales in the South, the largest area, increased 7.2 percent m-o-m in June, while sales in the Northeast surged 89.7 percent m-o-m, sales in the West climbed 18.0 percent m-o-m and sales in the Midwest rose 10.5 percent m-o-m.

14:10
U.S. private sector business activity stabilizes in July - IHS Markit's survey

Preliminary data released by IHS Markit on Friday pointed to stabilization of business activity at the start of the third quarter in July.

According to the report, the Markit flash manufacturing purchasing manager's index (PMI) came in at 51.3 in July, up from 49.8 in June, indicating the first improvement in operating conditions since February. Economists had expected the reading to increase to 51.5. A reading above 50 signals an expansion in activity, while a reading below this level signals a contraction. According to the report, growth was driven by the first upturns in both output and new orders for five months, while employment was broadly unchanged.

Meanwhile, the Markit flash services purchasing manager's index (PMI) rose to 49.6 in July from 47.9 in the prior month, pointing to the weakest contraction in services activities in six months. Economists had expected the reading to rise to 51.0. According to the report, new business fell at a slightly quicker rate in July due to the resurgence in the virus outbreak and weaker client demand, while pressure on capacity led to a slight increase in workforce numbers.

Overall, IHS Markit Flash U.S. Composite PMI Output Index came in at 50.0 in July, up from 47.9 in June, signaling a stabilization in private sector output after five straight months of decline.

Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at HIS Markit, noted: “While the stabilization of business activity in July is welcome news, the lack of growth is a disappointment. Moreover, a renewed acceleration in the rate of loss of new business raises concerns that demand is faltering. Many companies, notably in consumer-facing areas of the service sector, linked falling sales to re-imposed lockdowns.”

14:01
U.S.: New Home Sales, June 0.776 (forecast 0.7)
13:46
U.S.: Manufacturing PMI, July 51.3 (forecast 51.5)
13:46
U.S.: Services PMI, July 49.6 (forecast 51)
13:35
U.S. Stocks open: Dow -0.59%, Nasdaq -1.47%, S&P -0.68%
13:28
Before the bell: S&P futures -0.47%, NASDAQ futures -1.11%

U.S. stock-index futures fell on Friday, as investors assessed negative-sounding reports on the U.S.-China relations and COVID-19 response legislation negotiations, as well as mixed corporate earnings reports.


Global Stocks:

Index/commodity

Last

Today's Change, points

Today's Change, %

Nikkei

-

-

-

Hang Seng

24,705.33

-557.67

-2.21%

Shanghai

3,196.77

-128.34

-3.86%

S&P/ASX

6,024.00

-70.50

-1.16%

FTSE

6,133.09

-78.35

-1.26%

CAC

4,967.24

-66.52

-1.32%

DAX

12,867.82

-235.57

-1.80%

Crude oil

$41.39


+0.78%

Gold

$1,901.20


+0.59%

13:01
Belgium: Business Climate, July -13.9 (forecast -14)
12:57
Wall Street. Stocks before the bell

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


3M Co

MMM

159.9

0.61(0.38%)

6218

ALCOA INC.

AA

12.59

-0.12(-0.94%)

11768

ALTRIA GROUP INC.

MO

41.55

-0.03(-0.07%)

3429

Amazon.com Inc., NASDAQ

AMZN

2,952.00

-34.55(-1.16%)

72635

American Express Co

AXP

95.75

-0.92(-0.95%)

41267

AMERICAN INTERNATIONAL GROUP

AIG

31.92

0.05(0.16%)

814

Apple Inc.

AAPL

366.1

-5.28(-1.42%)

693291

AT&T Inc

T

29.82

-0.08(-0.27%)

82913

Boeing Co

BA

175.4

-1.05(-0.60%)

245662

Chevron Corp

CVX

91.45

0.44(0.48%)

19813

Cisco Systems Inc

CSCO

47.48

0.07(0.15%)

80262

Citigroup Inc., NYSE

C

52

-0.08(-0.15%)

60268

Exxon Mobil Corp

XOM

43.61

-0.09(-0.21%)

39634

Facebook, Inc.

FB

230.93

-1.67(-0.72%)

151764

FedEx Corporation, NYSE

FDX

165.05

-0.94(-0.57%)

1198

Ford Motor Co.

F

6.95

-0.03(-0.43%)

221721

Freeport-McMoRan Copper & Gold Inc., NYSE

FCX

13.05

-0.27(-2.03%)

88046

General Motors Company, NYSE

GM

26.57

-0.19(-0.71%)

16067

Goldman Sachs

GS

204.69

1.67(0.82%)

70565

Google Inc.

GOOG

1,501.65

-14.03(-0.93%)

11420

Home Depot Inc

HD

264.81

1.00(0.38%)

23692

HONEYWELL INTERNATIONAL INC.

HON

155

1.27(0.83%)

32019

Intel Corp

INTC

51.99

-8.41(-13.92%)

6268409

International Business Machines Co...

IBM

127.2

-0.13(-0.10%)

12632

Johnson & Johnson

JNJ

150

0.39(0.26%)

15456

JPMorgan Chase and Co

JPM

99.7

0.72(0.73%)

109985

McDonald's Corp

MCD

197.39

-0.16(-0.08%)

23642

Merck & Co Inc

MRK

78.07

0.01(0.01%)

8334

Microsoft Corp

MSFT

201.25

-1.29(-0.64%)

626409

Nike

NKE

98

-0.30(-0.31%)

28015

Pfizer Inc

PFE

38.25

-0.16(-0.42%)

253679

Procter & Gamble Co

PG

126.58

0.42(0.33%)

7121

Starbucks Corporation, NASDAQ

SBUX

75.4

0.04(0.05%)

13724

Tesla Motors, Inc., NASDAQ

TSLA

1,440.00

-73.07(-4.83%)

498301

The Coca-Cola Co

KO

48.17

-0.11(-0.23%)

34132

Travelers Companies Inc

TRV

119.11

0.50(0.42%)

3618

Twitter, Inc., NYSE

TWTR

38.1

-0.34(-0.88%)

166480

UnitedHealth Group Inc

UNH

304.17

1.20(0.40%)

18949

Verizon Communications Inc

VZ

56.2

0.35(0.63%)

120895

Visa

V

196.01

-1.42(-0.72%)

14091

Wal-Mart Stores Inc

WMT

131

-0.64(-0.49%)

23455

Walt Disney Co

DIS

115.8

-2.32(-1.96%)

65676

Yandex N.V., NASDAQ

YNDX

55.8

-0.41(-0.73%)

1368

12:54
Downgrades before the market open

Intel (INTC) downgraded to Under Perform from Market Perform at Northland Capital

Intel (INTC) downgraded to Neutral from Buy at ROTH Capital

Tesla (TSLA) downgraded to Neutral from Outperform at Daiwa Securities

12:53
Upgrades before the market open

JPMorgan Chase (JPM) upgraded to Buy from Neutral at Goldman

12:42
Gold to end the year at $1900 supported by lower real yields - Capital Economics

FXStreet notes that the gold price has risen by nearly 20% this year, as real yields have fallen. Strategists at Capital Economics have become more positive on the outlook for the yellow metal price as they think the backdrop will remain supportive, limiting any downside, even if some of the steam comes out of the gold price rally next year.

“We have raised our forecast for the gold price, as we expect real yields to drift a little lower and remain low for some time. We now think that the price of gold will finish the year at $1,900 per ounce ($1,600 previously) and will remain elevated over the next couple of years.”

“In the near-term, we reckon that inflation breakevens will drift higher, back to pre-pandemic levels, as economies recover from their lockdown-induced slumps. And although we expect nominal 10-year Treasury yields to inch up too, they will not rise by as much. The net effect of these moves will be to drag real yields lower by end-2020. As a result, we expect the gold price to push a little higher by year-end. This view is supported by our forecast that the US dollar will weaken in the second half of 2020.”

“We think there could be clusters of investors – concerned about the potential for runaway inflation owing to ultra-loose monetary policy – who will seek refuge in the gold market. In the near-term, weak demand should hold back the inflationary effects of supply constraints and policy stimulus. And in the medium-term, we think that firms are more likely to shore up their balance sheets than embark on an inflationary spending spree. As such, demand for inflation hedges should fade.”

12:34
European session review: USD mixed following some negative-sounding updates regarding U.S.-China relations and COVID-19 response legislation negotiations
TimeCountryEventPeriodPrevious valueForecastActual
06:00United KingdomRetail Sales (MoM)June12.3%8%13.9%
06:00United KingdomRetail Sales (YoY) June-12.9%-6.4%-1.6%
07:15FranceServices PMIJuly50.752.357.8
07:15FranceManufacturing PMIJuly52.353.252
07:30GermanyServices PMIJuly47.350.556.7
07:30GermanyManufacturing PMIJuly45.24850
08:00EurozoneManufacturing PMIJuly47.45051.1
08:00EurozoneServices PMIJuly48.35155.1
08:30United KingdomPurchasing Manager Index Manufacturing July50.15253.6
08:30United KingdomPurchasing Manager Index ServicesJuly47.151.556.6


USD traded mixed against other major currencies in the European session on Friday as investors assessed the latest developments in the U.S.-China relations and next coronavirus relief bill negotiations. USD rose against AUD, NZD and CAD, but fell against EUR, JPY, GBP and CHF.

China ordered the U.S. to close its consulate in the city of Chengdu. That came days after Washington ordered the closure of the Chinese consulate in Houston following allegations of spying. The U.S. Secretary of State Mike Pompeo said U.S. policy towards China needed to be mistrusted and verified. The new wave of escalation again raised the question about the fate of the so-called Phase 1 trade deal between the world's two biggest economies.

The New York Times reported that Senate Republicans and the Trump administration are still at odds on how to extend unemployment benefits, thus delaying the bill's publication until Monday. 

11:53
Company News: Verizon (VZ) quarterly results beat analysts’ forecasts

Verizon (VZ) reported Q2 FY 2020 earnings of $1.18 per share (versus $1.23 per share in Q2 FY 2019), beating analysts’ consensus estimate of $1.15 per share.

The company’s quarterly revenues amounted to $30.400 bln (-5.2% y/y), beating analysts’ consensus estimate of $29.976 bln.

VZ fell to $55.70 (-0.27%) in pre-market trading.

11:20
Foreign investors concerned about the situation in the US - Natixis

Foreign investors concerned about the situation in the US - Natixis

FXStreet reports that analysts at Natixis suggest that to prevent a US financial crisis, foreign investors must have confidence in the US and buy financial assets issued in the country. However, foreign investors may be concerned about Joe Biden's economic programme, Donald Trump’s conflict policy and the negative effects of protectionism, economic damage caused by a lasting health crisis and social and political tensions in the US.

“The programme presented by Joe Biden is not positive for financial markets: sharp increase in the minimum wage and therefore in inflation and in long-term interest rates, and therefore, in anticipation, sales of US bonds; sharp tax increases (on corporate earnings, household income, wealth and capital gains), which is negative for equity and corporate bond markets.”

“The growing tension between the United States on the one hand, and China and Europe on the other, as a result of Donald Trump's policies, is worrying investors. They have understood in particular that protectionism is negative for the United States: it triggered a decline in equity markets in late 2018 when Trump introduced multiple tariffs.”

“Non-US investors may also be concerned that a long-lasting health crisis in the US is going to worsen the US economy markedly: permanent loss of growth, persistently high unemployment and bankruptcies.”

“Social and political tension in the United States (between Republicans and Democrats, between the black community and the Republican right, etc.) may worry foreign investors.”

11:13
Company News: American Express (AXP) quarterly earnings beat analysts’ forecast

American Express (AXP) reported Q2 FY 2020 earnings of $0.29

 per share (versus $2.07 per share in Q2 FY 2019), beating analysts’ consensus estimate of $0.02 per share.

The company’s quarterly revenues amounted to $7.675 bln (-29.2% y/y), missing analysts’ consensus estimate of $8.252 bln.

AXP fell to $96.25 (-0.43%) in pre-market trading.

11:00
S&P 500: Bearish reversal day raises the risk of a correction lower - Credit Suisse

FXStreet reports that analysts at Credit Suisse note that the S&P 500 Index has completed a bearish reversal day after again failing to hold above the beginning of the large February gap at 3260 and the risk for a swing lower within the broader range has grown sharply, with a move below 3198 seen marking a near-term top.

“The S&P 500 has retested and rejected near-term resistance at 3279/81 and not only is the market yet again back below the lower end of its large February price gap at 3260, but yesterday saw a bearish ‘reversal day’ complete.” 

“With Nasdaq 100 still holding its bearish ‘reversal day’ from the beginning of last week and with growing signs of ‘risk-off’ elsewhere, the risk is seen building again for a retracement lower here. Key near-term support is seen at its 13-day average at 3215/11, with a break below 3200/3198 needed to confirm a near-term top. This would then open the door to a swing lower within the broader sideways range with support seen next at 3173, ahead of 3154 and then more importantly 3127.” 

“Resistance is seen at 3248 initially, above which can see a move back to 3266. Above 3279/81 though is needed to reassert an upward bias again, with the top of the February gap seen at 3328/38.”

10:53
Company News: Honeywell (HON) quarterly results beat analysts’ expectations

Honeywell (HON) reported Q2 FY 2020 earnings of $1.26 per share (versus $2.10 per share in Q2 FY 2019), beating analysts’ consensus estimate of $1.24 per share.

The company’s quarterly revenues amounted to $7.477 bln (-19.1% y/y), beating analysts’ consensus estimate of $7.279 bln.

HON fell to $153.50 (-0.15%) in pre-market trading.

10:45
Crude Oil Futures hold at four-month highs - Charles Schwab

FXStreet notes that September Crude Oil futures have continued their impressive price rebound reaching four and a half month highs this week as have nearly doubled from the lows climbing above the $40 mark. The EU stimulus package and a weaker USD have lent support to the black gold. Technically, September WTI contract (CLU20) faces first resistance at the $44.41 200-DMA, per Charles Schwab.

“A number of factors have contributed to the bull camp confidence. First, Crude has seen a boost as the U.S. Dollar has continued its tailspin dropping to 4-month lows this week. In addition, the EU concluded a 4-day meeting earlier this week passing a 750 billion-euro stimulus package.” 

“The gap created by the early March price plunge was filled at the 42.50 level Tuesday. Next resistance is waiting at the 200-day moving average crossing today at the 44.41 mark today. Beyond the 48.97 level offers the next resistance.” 

“Pullbacks will find support at Monday’s 39.97 low, followed by the 38.77 and 37.32 marks. Longer-term support comes in at the bottom of the current $7 wide channel established since the end of May at the $35 mark.”

“The 14-day RSI is sitting at 61 and bears watching for overbought conditions developing.”

10:41
Company News: Intel (INTC) quarterly results beat analysts’ estimates

Intel (INTC) reported Q2 FY 2020 earnings of $1.23 per share (versus $1.06 per share in Q2 FY 2019), beating analysts’ consensus estimate of $1.11 per share.

The company’s quarterly revenues amounted to $19.728 bln (+19.5% y/y), beating analysts’ consensus estimate of $18.551 bln.

The company also issued mixed guidance for Q3 FY 2020, projecting EPS of approx. $1.10 versus analysts’ consensus estimate of $1.14 and revenues of approx. $18.20 bln versus analysts’ consensus estimate of $17.94 bln.

For FY 2020, it sees EPS of approx. $4.85 versus analysts’ consensus estimate of $4.78 and revenues of approx. $75.00 bln versus analysts’ consensus estimate of $73.83 bln.

In addition, Intel said its 7nm-based CPU product timing is delayed.

INTC fell to $53.20 (-11.92%) in pre-market trading.

10:20
Japan's PM Abe: Current situation does not call for state of emergency declaration

  • Coronavirus cases are rising, government is watching closely

09:58
USD/CNH faces strong hurdle at 7.04 – UOB

FXStreet reports that in opinion of FX Strategists at UOB Group, USD/CNH is expected to meet a tough resistance in the 7.04 area.

24-hour view: “Our expectation for USD to move higher yesterday was incorrect as it traded in a relatively quiet manner between 6.9930 and 7.0175 before closing little changed at 7.0130 (-0.05%). Momentum indicators are turning neutral and for today, USD is likely to consolidate and trade between 6.9900 and 7.0160.”

Next 1-3 weeks: “We have expected USD to weaken since early this month (see annotations in the chart below) and in our latest update yesterday (22 Jul, spot at 6.9720), we indicated that ‘the odds for a move to 6.9500 have increased’. USD subsequently eked out a fresh low of 6.9645 before staging a dramatic reversal that sent it to a high of 7.0174. The break of our ‘strong resistance’ level at 6.9920 indicates that USD is no more under pressure. The current USD strength is viewed as part of a corrective rebound but at this stage, any advance is expected to face solid resistance at 7.0400. On the downside, the ‘strong support’ level is at 6.9750.”

09:39
USD/CHF in a clear downfall towards long-term support at 0.9222 – Credit Suisse

FXStreet reports that USD/CHF remains in a clear downtrend with the market honing in on long-term supports at 0.9222 and then at the even more important 0.9188/83, which might remain a solid floor, according to analysts at Credit Suisse who see scope for further downside. 

“As USD/CHF is now approaching the pivotal 38.2% retracement of the entire 2015/2017 surge at 0.9222 and as the daily RSI momentum is now in heavily oversold territory, we continue to stay alert for a potential near term consolidation.” 

“Should the market see an immediate break below 0.9222, next pivotal support is seen at the 2018 and 2020 lows at 0.9188/83, where we expect the market to stall, as we expect this zone to remain a solid floor to keep the market in its broad, multi-year range.” 

“Resistance is seen initially at 0.9252/65, which ideally caps to keep the immediate downside bias intact. Above here though can see a move back to 0.9288, with scope for 0.9302, where we would expect another attempt to cap.”

09:21
UK PM Johnson: We will be past coronavirus by mid-2021

Reuters reports that British Prime Minister Boris Johnson said on Friday he thought the country would be through the novel coronavirus crisis by mid-2021 but his fear was that there would be second spike.

“Whether it came from... a bat, a pangolin or however it emerged, it was a very, very nasty thing for the human race. And I think by the middle of next year we will be well on the way past it,” he told reporters.

Speaking a year since he became prime minister, Johnson said his experience was that government needed “to move faster and be more responsive to the needs of the people.”

He mentioned that people were unable to get their passports in time and a backlog of court cases.

“Sometimes government can be slow,” Johnson told reporters.


08:59
USD/JPY: Building downward pressure to break out below 106-110 range – MUFG

FXStreet reports that the US dollar has remained at weaker levels overnight with further losses mainly concentrated against the yen. It has resulted in USD/JPY moving closer towards the bottom of its current trading range between 106.00 and 110.00 that has held for the majority of time since last May. The yen stands to benefit if optimism over the global recovery begins to fade after the initial sharp bounce back, per MUFG Bank. 

“The yen has benefitted more broadly overnight by more evidence of rising geopolitical tensions between China and the West. It has been reported that China has ordered the US to close its consulate in the southwestern city of Chengdu in retaliation for the US decision to close the Chinese consulate in Houston. It follows comments overnight as well from US President Trump who stated that the trade accord with China means “much less to me” because of China’s role in the spread of COVID-19.” 

“If the US dollar continues to weaken more broadly, we would expect USD/JPY to start to come under more downward pressure as well going forward.”

“The dollar index broke below the March low yesterday taking it to its lowest level since the autumn of 2018. It increases the risk that USD/JPY could soon break out below the 106.00 to 110.00 range.”

08:46
UK private sector output growth hits five-year high in July

According to the report from IHS Markit / CIPS, July data indicated a marked improvement in business conditions across the UK private sector economy following the easing of lockdown measures to contain the spread of the coronavirus disease 2019 (COVID-19). The latest survey indicated a return to growth for the service sector and a much faster rise in manufacturing production than seen in June.

At 57.1 in July, up from 47.7 in June, the headline seasonally adjusted Flash UK Composite Output Index – which is based on approximately 85% of usual monthly replies – registered above the 50.0 no-change value for the first time since February. Moreover, the index has now risen for three months running after hitting a survey-record low of 13.8 in April. The July expansion was the fastest recorded since June 2015.

Survey respondents commented on a gradual increase in business activity following the lockdown period during the second quarter of 2020, helped by returns to work and a phased reopening of the wider UK economy. There were also some reports that clients had started to take a more long-term view when considering their spending plans.

However, service providers often noted that business capacity remained limited and operating costs had risen due to COVID-19 mitigation efforts, while those in the manufacturing sector also commented on the likelihood of a slow return to output levels seen prior to the pandemic. UK private sector firms indicated a solid rebound in new order volumes during July, especially from domestic customers. That said, employment numbers continued to fall sharply, with the rate of job shedding accelerating since the previous month. Lower staffing levels were typically linked to redundancies in response to subdued workloads and higher operating costs. Business sentiment towards the year ahead outlook remained well above the low point seen during March. However, the speed of recovery moderated in July, as signalled by this index rising only slightly since the previous month. 

08:31
United Kingdom: Purchasing Manager Index Services, July 56.6 (forecast 51.5)
08:31
United Kingdom: Purchasing Manager Index Manufacturing , July 53.6 (forecast 52)
08:15
Eurozone businesses report strongest growth for two years in July - IHS Markit

According to the report from IHS Markit, business activity across the eurozone rose for the first time since February, growing at the sharpest rate for just over two years as economies continued to reopen after lockdowns implemented to prevent the spread of the coronavirus disease 2019 (COVID19). Output expectations improved, while new order inflows also picked up and job losses eased, albeit with job cutting remaining widespread as many firms continued to scale back capacity.

The flash Eurozone Composite PMI rose further in July from the all time low of 13.6 seen back in April, climbing from 48.5 in June to 54.8. This was the first reading above the 50.0 nochange level since February and indicated the largest monthly gain in output since June 2018. Both manufacturing and services returned to growth (the latter recording the slightly stronger performance), with growth hitting 23- and 25-month highs respectively. While the rise in service sector output was the first since February, the increase in factory production was the first reported since January 2019. The improvement in part reflected a technical rebound from recent lockdowns, as businesses and their customers increasingly returned to work following the further relaxation of COVID-19 containment measures across the region during the month.

Demand was also reported to have revived alongside the lifting of lockdowns, with new order inflows likewise rising for the first time since February and increasing to an extent not seen since October 2018. However, the upturn in new orders was less marked than that recorded for output, thanks in part to a further loss of export sales, leading to an ongoing depletion of backlogs of work during the month.

Looking ahead, expectations of future output continued to improve from the low plumbed in March, rising to five-month highs in both manufacturing and services, the latter reporting relatively greater prospects. Hopes of improved performance over the coming year often reflected expectations of a further opening up of economies, though companies also often warned that any gains were from historically low bases, due to business volumes having been hit hard by the pandemic.

08:01
Eurozone: Manufacturing PMI, July 51.1 (forecast 50)
08:01
Eurozone: Services PMI, July 55.1 (forecast 51)
07:46
Germany business activity up strongly in July, but employment continues to fall

According to the report from IHS Markit, the recovery in the German economy remained on track in July. Firms reported strong increases in both output and new orders, with business confidence also continuing to build. Nevertheless, data showed another manufacturing-led decrease in employment. 

The headline Germany Composite Output Index rose sharply again in July, recovering further from a record low in April at the height of the lockdown measures related to the coronavirus disease 2019 (COVID 19) outbreak. At 55.5, up from June’s 47.0, the index was above the 50.0 no-change threshold for the first time since February and was at its highest level overall in almost two years.

Many firms reported operating at higher capacity during the month, with activity supported by improved confidence among clients, increased travel and a general rise in new orders. A breakdown of the data by sector showed increases in activity across both manufacturing and services, with the latter recording the stronger rate of growth. Like output, overall inflows of new business across the German private sector rose solidly in July, following a downturn that began in March. On this front, however, the upturn was led by manufacturing, where data showed new orders rising for the first time since September 2018 and at the fastest rate in almost two-and-a-half years. Manufacturers also recorded a solid rise in export sales, albeit with the rate of growth being slower than that of total factory orders. 

Employment was down for the fifth month in a row in July. Though easing to the weakest in this sequence (thanks to a slight pick-up in hiring across the service sector), the overall rate of decline remained marked by historical standards amid further deep cuts to factory workforce numbers. The decline in manufacturing employment was in fact slightly quicker than in June, as 30% of goods producers reported a drop in staff numbers. 

Turning to business expectations for activity over the next 12 months, latest data showed a furtherimprovement in optimism, linked to hopes of a market recovery as COVID-19-related restrictions are potentially eased. Confidence was the jointhighest since September 2018, matching that seen at the very start of the year. By sector, expectations increased across both services and manufacturing, and remained stronger in the former.

07:31
Germany: Manufacturing PMI, July 50 (forecast 48)
07:31
Germany: Services PMI, July 56.7 (forecast 50.5)
07:16
France: Manufacturing PMI, July 52.6 (forecast 53.2)
07:16
France: Services PMI, July 57.8 (forecast 52.3)
07:01
Asian session review: the dollar fell against the yen, the euro is trading near a 2-year high against the dollar

TimeCountryEventPeriodPrevious valueForecastActual
06:00United KingdomRetail Sales (MoM)June12.3%8%13.9%
06:00United KingdomRetail Sales (YoY) June-12.9%-6.4%-1.6%


During today's Asian trading, the US dollar fell against the yen and euro. The euro is trading near its highest since September 2018. The euro continues to be supported by the results of the EU summit, where the anti-crisis plan and the EU's seven-year budget were agreed.

At the same time, the European Parliament (EP) criticized the decisions of the EU summit. The EP resolution adopted on Thursday notes that the budget cuts run counter to the EU's goals. In addition, уuropean deputy considered that European leaders "failed to resolve the issue of repayment of the costs of the recovery tool"

The yen rose to its highest in 4 weeks on the back of growing demand for safe haven assets due to the deterioration of relations between the US and China. The Chinese foreign Ministry announced today the closure of the US Consulate General in Chengdu, the administrative center of Sichuan province. Earlier, US authorities ordered the closure of the Chinese Consulate General in Houston.

The ICE Dollar index, which shows the value of the dollar against six major world currencies, fell by 0.05% relative to the previous day.

On Thursday, the US labor Department reported that the number of Americans who first applied for unemployment benefits in the week ending July 18, increased by 109 thousand to 1.416 million people. At the same time, analysts expected that the number of applications will be 1.3 million.

06:45
Australia needs a ‘comprehensive plan’ to create more jobs, shadow treasurer says

CNBC reports that Australia’s government needs to come forward with a comprehensive plan for future job creation as the country tackles the economic fallout from the coronavirus pandemic, Shadow Treasurer Jim Chalmers said Friday. 

The government has announced fiscal stimulus worth 289 billion Australian dollars ($206.54 billion) ⁠— around 14.6% of Australia’s GDP ⁠— to support workers, households and businesses affected by the virus outbreak. Australia expects its budget deficit to widen significantly and the economy is predicted to shrink by 3.75% this year. 

Job losses are a major concern as the pandemic ended the Australian economy’s nearly three-decade growth streak — one of the longest seen in any country around the world.

Treasurer Josh Frydenberg in his July Economic and Fiscal Update said the unemployment rate is predicted to peak at around 9.25% in the three months that will end in December. Though the labor market is expected to strengthen beyond 2020 due to a pickup in demand, the unemployment rate will take time to decline, according to the update. 

“What that shows is something like an extra 240,000 Australians are expected to lose their job between now and Christmas, to add to the million already without work,” Chalmers said on CNBC’s “Squawk Box Asia.” He added that this week’s budget update “should have had a plan” on how the government would create jobs once the temporary support measures trail away from the economy. 

Data from the Australian Bureau of Statistics showed that the unemployment rate in June was at 7.4%, with as many as 992,300 people out of work. 

06:30
EUR/USD: a contrarian call; where to target? - BofA

eFXdata reports that Bank of America Global Research discusses EUR/USD outlook and now targets the pair at 1.12 in Q3 and 1.08 by year-end.

"EURUSD is close to its high for the year. We remain sceptical. The market is long EURUSD and this position could be at risk, particularly for real money. We expect a weak recovery of the global economy during re-opening and don't see full normalization as long as the virus is a threat. The EU Recovery Fund is a positive step, but far from a game changer in our view, an 1-off increase in the EU budget that allows the EU to catch up to the fiscal stimulus other G10 economies have been doing-with the US doing more. Although the US recovery may slow in the months ahead, we do not expect another shutdown," BofA notes. 

"As the market has moved in a different direction from our forecasts, we update our forecasts, marking to market. We now expect EURUSD at 1.12 in Q3 from 1.08 before and 1.08 in Q4 from 1.05 before. We keep our 2021 EURUSD forecast at 1.15. We therefore retain a bearish EURUSD bias, to a large extent because of our positive USD view, which in turn is based on a bearish outlook for the global economy," BofA adds. 

06:15
UK retail sales rose sharply in June - ONS

According to the report from Office for National Statistics, in June 2020, the volume of retail sales increased by 13.9% when compared with May 2020 as non-food and fuel stores continue their recovery from the sharp falls experienced since the start of the coronavirus (COVID-19) pandemic. Economists had expected a 8.0% increase.

The two monthly increases in the volume of retail sales in May and June 2020 have brought total sales to a similar level as before the coronavirus pandemic; however, there is a mixed picture in different store types.

In June, while non-food stores and fuel sales show strong monthly growths in the volume of sales at 45.5% and 21.5% respectively, levels have still not recovered from the sharp falls experienced in March and April.

Food stores and non-store retailing both reached new high levels since the start of the pandemic, with volume food sales 5.3% higher, and non-store retailing 53.6% higher, than February.

In the three months to June, the volume of sales decreased by 9.5% when compared with the previous three months, with declines across all store types except food stores and non-store retailing.

The proportion of online spending reduced to 31.8% in June when compared with the record 33.3% reported in May, but is a considerable increase from the 20.0% reported in February.

06:01
Options levels on friday, July 24, 2020 EURUSD GBPUSD

EUR/USD

Resistance levels (open interest**, contracts)

$1.1707 (545)

$1.1681 (1390)

$1.1660 (1261)

Price at time of writing this review: $1.1599

Support levels (open interest**, contracts):

$1.1541 (128)

$1.1512 (45)

$1.1476 (146)


Comments:

- Overall open interest on the CALL options and PUT options with the expiration date August, 7 is 51000 contracts (according to data from July, 23) with the maximum number of contracts with strike price $1,1400 (4034);


GBP/USD

Resistance levels (open interest**, contracts)

$1.2858 (1951)

$1.2830 (1812)

$1.2791 (1154)

Price at time of writing this review: $1.2735

Support levels (open interest**, contracts):

$1.2638 (116)

$1.2605 (196)

$1.2528 (273)


Comments:

- Overall open interest on the CALL options with the expiration date August, 7 is 20280 contracts, with the maximum number of contracts with strike price $1,3000 (2736);

- Overall open interest on the PUT options with the expiration date August, 7 is 19921 contracts, with the maximum number of contracts with strike price $1,2400 (1534);

- The ratio of PUT/CALL was 0.98 versus 0.99 from the previous trading day according to data from July, 23

 

* - 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.

06:01
United Kingdom: Retail Sales, June -1.6% (YoY) (forecast -6.4%)
06:01
United Kingdom: Retail Sales, June 13.9% (MoM) (forecast 8%)
02:30
Commodities. Daily history for Thursday, July 23, 2020
Raw materials Closed Change, %
Brent 43.17 -2.26
Silver 22.51 -2.26
Gold 1885.846 0.76
Palladium 2146.64 -0.06
00:30
Stocks. Daily history for Thursday, July 23, 2020
Index Change, points Closed Change, %
Hang Seng 205.06 25263 0.82
KOSPI -12.47 2216.19 -0.56
ASX 200 19.4 6094.5 0.32
FTSE 100 4.34 6211.44 0.07
DAX -0.86 13103.39 -0.01
CAC 40 -3.36 5033.76 -0.07
Dow Jones -353.51 26652.33 -1.31
S&P 500 -40.36 3235.66 -1.23
NASDAQ Composite -244.71 10461.42 -2.29
00:30
Schedule for today, Friday, July 24, 2020
Time Country Event Period Previous value Forecast
06:00 United Kingdom Retail Sales (MoM) June 12% 8%
06:00 United Kingdom Retail Sales (YoY) June -13.1% -6.4%
07:15 France Services PMI July 50.7 52.3
07:15 France Manufacturing PMI July 52.3 53.2
07:30 Germany Services PMI July 47.3 50.5
07:30 Germany Manufacturing PMI July 45.2 48
08:00 Eurozone Manufacturing PMI July 47.4 50
08:00 Eurozone Services PMI July 48.3 51
08:30 United Kingdom Purchasing Manager Index Manufacturing July 50.1 52
08:30 United Kingdom Purchasing Manager Index Services July 47.1 51.5
13:00 Belgium Business Climate July -22.9 -14
13:45 U.S. Manufacturing PMI July 49.8 51.5
13:45 U.S. Services PMI July 47.9 51
14:00 U.S. New Home Sales June 0.676 0.7
17:00 U.S. Baker Hughes Oil Rig Count July 180  
00:15
Currencies. Daily history for Thursday, July 23, 2020
Pare Closed Change, %
AUDUSD 0.70946 -0.58
EURJPY 123.866 -0.08
EURUSD 1.15935 0.2
GBPJPY 136.004 -0.24
GBPUSD 1.27317 0.04
NZDUSD 0.66299 -0.37
USDCAD 1.34047 -0.06
USDCHF 0.92517 -0.41
USDJPY 106.821 -0.28

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