CFD Markets News and Forecasts — 27-07-2020

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27.07.2020
19:50
Schedule for tomorrow, Tuesday, July 28, 2020
Time Country Event Period Previous value Forecast
10:00 United Kingdom CBI retail sales volume balance July -37 -25
13:00 U.S. S&P/Case-Shiller Home Price Indices, y/y May 4% 4%
14:00 U.S. Richmond Fed Manufacturing Index July    
14:00 U.S. Consumer confidence July 98.1 94.5
19:01
DJIA +0.09% 26,493.68 +23.79 Nasdaq +1.30% 10,497.96 +134.78 S&P +0.46% 3,230.52 +14.89
16:01
European stocks closed: FTSE 100 6,111.50 -12.32 -0.20% DAX 12,838.66 +0.60 +0.00% CAC 40 4,939.62 -16.81 -0.34%
15:10
Dallas Fed Manufacturing Index improves to -3.0 in July

The Federal Reserve Bank of Dallas reported its general business activity index for manufacturing in Texas rose to -3.0 in July from an unrevised -6.1 in June, pointing to continuing improvement in Texas factory activity in July following a record contraction in the spring.

Economists had forecast the indicator to increase to -4.9.

According to the report, the production index, a key measure of state manufacturing conditions, rose to 16.1 from 13.6 in June, suggesting a slight pickup in the pace of output growth. The new orders index climbed four points to 6.9, also pointing to slightly accelerating growth this month. The capacity utilization and shipments indexes rose to 14.0 and 17.3, respectively, their highest readings in nearly a year. The employment index grew to 3.1 from -1.5, marking its first positive reading since January and indicating modest growth in employment. Meanwhile, perceptions of broader business conditions were mixed in July: the general business activity index edged up to -3.0 from -6.1, but remained slightly negative, while the company outlook index increased three points to 5.9, recording its second consecutive positive reading, and the index measuring uncertainty regarding companies’ outlooks climbed to 20.9 from 9.1, with more than a third of manufacturing executives indicating increased uncertainty from June. 

14:37
Germany: More signs of levelling off - ING

Carsten Brzeski, ING's Chief Economist, Eurozone and Global Head of Macro, notes that the latest Ifo reading provides more evidence of the German rebound: a strong V-shaped move followed by a more subdued recovery.

"Germany’s most prominent leading indicator just provided more evidence for what we would call a two-sided rebound. The V-shaped recovery continues but the bounce back is losing steam. The Ifo index increased for the third time in a row to 90.5 in July, from 86.3 in June, but still remains clearly below levels seen in January and February. The increase was driven by both an improvement in the current assessment and expectations component. While the expectations component is at its highest level since December 2018, the current assessment component is still significantly weaker than in March of this year."

"Before drifting away in too much enthusiasm, it would be a huge surprise if the German economy could maintain the growth momentum of the first months after the lockdowns. We are currently in a mechanical rebound and the real face of the recovery will only become clear in the coming months. Here, two opposing drivers will determine the path of the German recovery: while the fiscal stimulus, both in Germany and now also at the European level, bodes well for domestic demand and eurozone exports, the structural damage to the economy as well as continued weaknesses in major trading partners outside of the eurozone will hamper the recovery."

"Almost all indicators have staged a V-shaped rebound in the first few months of easing lockdown measures. The return to pre-crisis levels, however, will take time, patience and lots of stimulus."

13:42
EU's chief Brexit negotiator Barnier believes UK's PM Johnson wants deal - Reuters reports, citing EU diplomatic sources

  • Barnier believes Johnson wants deal despite publicly talking up readiness for no-deal exit
  • Barnier told EU envoys after latest talks that he remains confident that balanced agreement is possible but might be less ambitious
  • Low-quality, low-profile deal would need to include provisions on level playing field and fisheries
  • Ireland, the Netherlands confident new EU-UK deal will come together eventually
  • Lithuania, Hungary concerned EU27 may be weakening chances for overall UK deal with tough demands on fisheries

13:35
U.S. Stocks open: Dow -0.02%, Nasdaq +0.58%, S&P +0.03%
13:28
Before the bell: S&P futures +0.37%, NASDAQ futures +0.83%

U.S. stock-index futures rose on Monday, as investors awaited the coronavirus rescue package from Congress, fresh support signals from the Federal Reserve, as well as earnings reports from several tech giants, including Apple  (AAPL), Google  (GOOG) and Facebook  (FB) later this week.


Global Stocks:

Index/commodity

Last

Today's Change, points

Today's Change, %

Nikkei

22,715.85

-35.76

-0.16%

Hang Seng

24,603.26

-102.07

-0.41%

Shanghai

3,205.23

+8.46

+0.26%

S&P/ASX

6,044.20

+20.20

+0.34%

FTSE

6,105.12

-18.70

-0.31%

CAC

4,938.57

-17.86

-0.36%

DAX

12,835.36

-2.70

-0.02%

Crude oil

$41.58


+0.70%

Gold

$1,928.30


+1.62%

12:52
Wall Street. Stocks before the bell

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


3M Co

MMM

160.5

0.66(0.41%)

4294

ALCOA INC.

AA

12.9

0.15(1.18%)

4398

ALTRIA GROUP INC.

MO

42.03

0.18(0.43%)

7325

Amazon.com Inc., NASDAQ

AMZN

3,061.10

52.19(1.73%)

79185

AMERICAN INTERNATIONAL GROUP

AIG

31.18

-0.13(-0.42%)

5327

Apple Inc.

AAPL

374.76

4.30(1.16%)

340233

AT&T Inc

T

29.68

0.11(0.37%)

136150

Boeing Co

BA

174

0.24(0.14%)

155710

Caterpillar Inc

CAT

137.5

-0.08(-0.06%)

2047

Chevron Corp

CVX

90.4

0.27(0.30%)

7468

Cisco Systems Inc

CSCO

46.5

0.10(0.22%)

31000

Citigroup Inc., NYSE

C

51.56

-0.11(-0.21%)

21385

E. I. du Pont de Nemours and Co

DD

54.8

0.25(0.46%)

1480

Exxon Mobil Corp

XOM

43.45

0.02(0.05%)

25587

Facebook, Inc.

FB

232.45

1.74(0.75%)

69892

Ford Motor Co.

F

6.91

0.03(0.44%)

135003

Freeport-McMoRan Copper & Gold Inc., NYSE

FCX

13.32

0.20(1.52%)

69177

General Electric Co

GE

6.89

0.03(0.44%)

344630

General Motors Company, NYSE

GM

26.4

0.15(0.57%)

1838

Goldman Sachs

GS

201

-0.47(-0.23%)

7915

Google Inc.

GOOG

1,524.00

12.13(0.80%)

4773

Home Depot Inc

HD

266

0.69(0.26%)

3292

HONEYWELL INTERNATIONAL INC.

HON

150

0.57(0.38%)

2865

Intel Corp

INTC

50.96

0.37(0.73%)

851948

International Business Machines Co...

IBM

126.35

0.56(0.45%)

12306

International Paper Company

IP

36.5

0.18(0.50%)

421

Johnson & Johnson

JNJ

148.26

0.14(0.09%)

46600

JPMorgan Chase and Co

JPM

98.11

-0.17(-0.17%)

23552

McDonald's Corp

MCD

199.23

0.51(0.26%)

5875

Merck & Co Inc

MRK

77

-0.10(-0.13%)

37150

Microsoft Corp

MSFT

202.92

1.62(0.80%)

225151

Nike

NKE

98.01

-0.42(-0.43%)

9646

Pfizer Inc

PFE

37.68

0.02(0.05%)

167850

Procter & Gamble Co

PG

126.33

0.37(0.29%)

5949

Starbucks Corporation, NASDAQ

SBUX

76

0.22(0.29%)

11919

Tesla Motors, Inc., NASDAQ

TSLA

1,404.89

-12.11(-0.85%)

284818

The Coca-Cola Co

KO

48.61

0.12(0.25%)

20983

Travelers Companies Inc

TRV

118.43

0.15(0.13%)

731

Twitter, Inc., NYSE

TWTR

37.68

0.14(0.37%)

54747

UnitedHealth Group Inc

UNH

300.5

-0.29(-0.10%)

4120

Verizon Communications Inc

VZ

56.86

0.01(0.02%)

12370

Visa

V

195.25

0.10(0.05%)

11172

Wal-Mart Stores Inc

WMT

131.1

-0.14(-0.11%)

9242

Walt Disney Co

DIS

118

0.39(0.33%)

12024

Yandex N.V., NASDAQ

YNDX

56.83

0.61(1.09%)

2513

12:47
Target price changes before the market open

Amazon (AMZN) target raised to $3600 from $2800 at Telsey Advisory Group 

Apple (AAPL) target raised to $425 from $365 at JP Morgan

12:44
U.S. durable goods orders climb slightly more than forecast in June

The U.S. Commerce Department reported on Monday that the durable goods orders climbed 7.3 percent m-o-m in June, following a revised 15.1 percent m-o-m jump in May (originally a 15.8 percent m-o-m surge).

Economists had forecast a 7.2 percent m-o-m advance.

According to the report, orders for durable goods excluding transportation rose 3.3 percent m-o-m in June, following a revised 3.6 percent m-o-m increase in May (originally a gain of 4.0 percent m-o-m), missing economists’ forecast of 3.5 percent m-o-m rise.

Meanwhile, orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, increased 3.3 percent m-o-m in June after an unrevised 1.6 percent gain m-o-m in May. Economists had called for a 2.3 percent m-o-m advance in core capital goods orders in June.

Shipments of these core capital goods rose 3.4 percent m-o-m in June after a 1.5 percent m-o-m advance in the prior month (originally a 1.6 percent m-o-m increase).

12:31
U.S.: Durable Goods Orders ex Transportation , June 3.3% (forecast 3.5%)
12:31
U.S.: Durable Goods Orders , June 7.3% (forecast 7.2%)
12:31
U.S.: Durable goods orders ex defense, June 9.2%
12:16
European session review: EUR appreciates, benefiting from EU's recovery deal and broad USD weakness

TimeCountryEventPeriodPrevious valueForecastActual
08:00EurozonePrivate Loans, Y/YJune3% 3%
08:00EurozoneM3 money supply, adjusted y/yJune8.9%9.3%9.2%
08:00GermanyIFO - Current Assessment July81.3 84.5
08:00GermanyIFO - Expectations July91.4 97
08:00GermanyIFO - Business ClimateJuly86.2 90.5
10:00GermanyBundesbank Monthly Report    


EUR traded mostly higher against its major counterparts in the European session on Monday. The European single currency was little changed against JPY and GBP, but rose against the rest of major rivals, as it continued to benefit from the adoption by the European Union (EU) leaders of a EUR750 billion fiscal stimulus plan last week as well as broad USD weakness.

The U.S. currency saw pressure in anticipation of the possible coronavirus rescue package from Congress and fresh support signals from the Federal Reserve, following its regular policy meeting on Tuesday and Wednesday. Escalating U.S.-China tensions, following the tit-for-tat closures of consulates in Houston and Chengdu last week, also weighed on USD. In addition, COVID-19 infections continue to rise in the U.S., and investors are doubtful of a fast economic recovery there.

Market participants also assessed the latest Germany's Ifo business confidence survey, which confirmed the improvement in sentiment. According to the report, the business confidence index rose to 90.5 in July from a revised 86.3 in June. This was the third consecutive increase in the index. Economists had forecast the indicator to rise to 89.3. Both assessments of the current situation (84.5 in July, up from 81.3 in June) and expectations (97.0, up from 91.6 in June) of companies improved in July.

11:45
S&P 500: Move below 3200 to confirm a near-term top - Credit Suisse

FXStreet notes that S&P 500 posted a relatively neutral session on Friday following last week’s earlier reversal from near-term resistance at 3279/81, which moved the market back below the lower end of its large February price gap at 3260. The risk for a swing lower within the broader range remains in place, with a move below the 3200 level needed to complete a near-term top, according to the Credit Suisse analyst team. 

“With Nasdaq 100 still holding its bearish ‘reversal day’ from two weeks ago and with growing signs of ‘risk-off’ elsewhere (bond yields remain seen at risk of a meaningful move lower again), the risk is seen building again for a retracement lower.”

“Key near-term support is seen at its 13-day average at 3211, 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 3116.”

“Resistance is seen at 3227, then 3236, with a move above 3248 needed to 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.”

11:23
USD: No respite in sight - ING

USD: No respite in sight - ING

ING strategists note that the bar for any reversal in the dollar decline seems to be set rather high. 

"After the EU summit led to rises in the euro and cyclical currencies vs the US dollar last week, the dollar now faces a mix of geopolitical tensions and uncertainty about the US economic recovery."

"On the former, the US and China are now reciprocally closing their consulates in various cities, sparking concerns about the durability of the US-China trade deal."

"On the latter, the focus of the week will be on talks around the next US fiscal stimulus bill. Republicans have delayed the announcement of their stimulus package, with $600 a week payouts set to expire at the end of this week. Whether these payouts are extended (even partially) will be crucial for the near-term US growth outlook."

"At the FOMC Meeting on Wednesday, we expect the Fed to keep an accommodative stance in place, particularly given the recent rise in the US Covid-19 cases and the accompanying downside risk to the US economic outlook. The cautious Fed should keep the outlook for risk assets supported. See G10 FX Week Ahead for details."


10:56
Earnings Season in U.S.: Major Reports of the Week

July 28

Before the Open:

3M (MMM). Consensus EPS $1.79, Consensus Revenues $7285.87 mln

Altria (MO). Consensus EPS $1.06, Consensus Revenues $5084.89 mln

McDonald's (MCD). Consensus EPS $0.76, Consensus Revenues $3734.82 mln

Pfizer (PFE). Consensus EPS $0.66, Consensus Revenues $11553.30 mln

Raytheon Technologies (RTX). Consensus EPS $0.12, Consensus Revenues $13385.39 mln

Yandex N.V. (YNDX). Consensus EPS RUB4.31, Consensus Revenues RUB40960.02 mln

After the Close:

Advanced Micro (AMD). Consensus EPS $0.17, Consensus Revenues $1855.97 mln

eBay (EBAY). Consensus EPS -$1.06, Consensus Revenues $2797.84 mln

Starbucks (SBUX). Consensus EPS -$0.57, Consensus Revenues $4138.18 mln

Visa (V). Consensus EPS $1.04, Consensus Revenues $4847.30 mln

July 29

Before the Open:

Boeing (BA). Consensus EPS -$2.63, Consensus Revenues $12945.90 mln

General Electric (GE). Consensus EPS -$0.09, Consensus Revenues $17268.74 mln

General Motors (GM). Consensus EPS -$1.76, Consensus Revenues $16927.10 mln

United Micro (UMC). Consensus EPS $0.36, Consensus Revenues $43627.79 mln

After the Close:

Facebook (FB). Consensus EPS $1.37, Consensus Revenues $17354.39 mln

PayPal (PYPL). Consensus EPS $0.88, Consensus Revenues $4994.26 mln

Qualcomm (QCOM). Consensus EPS $0.71, Consensus Revenues $4798.16 mln

July 30

Before the Open:

DuPont (DD). Consensus EPS $0.58, Consensus Revenues $4710.99 mln

Int'l Paper (IP). Consensus EPS $0.39, Consensus Revenues $4971.84 mln

MasterCard (MA). Consensus EPS $1.18, Consensus Revenues $3259.18 mln

Procter & Gamble (PG). Consensus EPS $1.02, Consensus Revenues $16991.17 mln

After the Close:

Alphabet (GOOG). Consensus EPS $8.27, Consensus Revenues $37333.58 mln

Amazon (AMZN). Consensus EPS $1.68, Consensus Revenues $81052.93 mln

Apple (AAPL). Consensus EPS $2.06, Consensus Revenues $52238.91 mln

Ford Motor (F). Consensus EPS -$1.17, Consensus Revenues $15373.47 mln

July 31

Before the Open:

Caterpillar (CAT). Consensus EPS $0.72, Consensus Revenues $9397.11 mln

Chevron (CVX). Consensus EPS -$0.89, Consensus Revenues $21706.56 mln

Exxon Mobil (XOM). Consensus EPS -$0.59, Consensus Revenues $38156.65 mln

Fiat Chrysler (FCAU). Consensus EPS -$0.87, Consensus Revenues $13949.19 mln

Merck (MRK). Consensus EPS $1.05, Consensus Revenues $10523.78 mln

10:45
AUD/USD: A test of 0.72 loses momentum - UOB

FXStreet reports that FX Strategists at UOB Group now believe a move to the 0.7200 region could be losing traction in the short-term.

24-hour view: “We highlighted last Friday that ‘momentum indicators are still mostly neutral and AUD is likely to continue to consolidate from here albeit at a lower range of 0.7070/0.7150’. AUD subsequently traded within a narrower range than expected (between 0.7064 and 0.7125) before closing little changed at 0.7106 (+0.08%). The underlying tone has firmed somewhat and from here, AUD could edge above 0.7150 but for now, a sustained rise above this level is unlikely (next resistance is at 0.7200). Support is at 0.7090 followed by 0.7060.”

Next 1-3 weeks: “Our latest narrative was from last Wednesday (22 Jul, spot at 0.7135) wherein ‘upward momentum in AUD received a strong boost and the next level to focus on is at 0.7200’. AUD subsequently popped to a high of 0.7164 but the lack of a follow-through thereafter came as a surprise. For now, we continue to see chance, albeit a diminished one for AUD to move to 0.7200. Only a breach of 0.7030 (no change in ‘strong support’ level) would indicate the current upward pressure has dissipated.”

10:20
GBP/USD: Risk stays seen higher with resistance next at 1.2894 - Credit Suisse

FXStreet notes that GBP/USD continues its steady push higher after breaking key resistance from its 200-day average and with the June high at 1.2808/17 now cleared, analysts at Credit Suisse stay biased higher with next resistance next at 1.2894, then at 1.2977 and eventually at the more important long-term downtrend from the 2007 peak at 1.3128.

“We stay biased higher with resistance seen at 1.2894 next – the 50% retracement of the entire fall from the 2018 peak. Whilst a pullback from here should be allowed for, we look for a break in due course with resistance then seen next at 1.2936 ahead of 1.2977 and then eventually the long-term downtrend from the 2007 peak, currently seen at 1.3128. With the February and March highs not far above at 1.3200/15, we expect this to then prove a tougher barrier.”

“Support moves to 1.2804 initially, then 1.2785, with 1.2773/68 ideally holding to keep the immediate risk higher. A break can see a deeper pullback, but with key price and 200-day average support at 1.2717/01 ideally holding further weakness.”

09:58
USD/JPY marks material turn lower with support seen at 105.20 – Credit Suisse

USD/JPY has completed an important top below 105.98 to mark a more material turn lower with support seen initially at 105.20/14 and with the resistance at 106.65/70 ideally capping, the Credit Suisse analyst team reports.

“USD/JPY has seen an aggressive collapse as the USD itself continues to weaken on a broad basis, removing key support from the lows from May and June and ‘neckline’ support at 106.15/105.98 to mark the completion of an important top and more material turn lower.” 

“We see support next and initially at 105.20/14 – the 61.8% retracement of the March rally – and although we may see an initial rebound from here we look for a break in due course with support seen next at 103.98/94, then 103.43 – the 78.6% retracement of the rally from March – with the ‘measured top objective’ seen set lower at 102.34.” 

“Resistance is seen at 105.88/98 initially, with the immediate risk seen lower whilst below 106.21. Above can see a deeper rebound to 106.65/70, but with strength now not ideally extending back above here.”

09:43
U.S. Treasury prices move higher amid concerns over coronavirus infections, geopolital tension

CNBC reports that U.S. government debt prices were higher Monday morning as investors searched for so-called safe havens amid concerns over the global economy, the spread of Covid-19 and geopolitical tensions.

The yield on the benchmark 10-year Treasury note fell to 0.574% and the yield on the 30-year Treasury bond dropped to 1.21%. Yields move inversely to prices. This comes on the back of gold prices hitting new records on Monday. 

Recent growing Covid-19 infections in certain parts of the world have raised concerns over the prospects for the global economy. India, Hong Kong, as well as certain regions of Europe, have seen spikes in recent days. 

09:23
S&P 500 Index: Second quarter of 2020 to mark a low point for earnings – JP Morgan

FXStreet reports that equity markets have rebounded quickly from their March lows on the back of the unprecedented fiscal and monetary policy response. The second quarter of 2020 should mark a low point for earnings while corporate guidance should gradually return, which could help investors set realistic expectations for the second half of 2020 and 2021. In the meantime, economists at JP Morgan are inclined to embrace more cyclicality in portfolios.

“In the long-run earnings will need to catch-up or prices will need to move lower, but in the interim, an aggressive and coordinated policy response has supported risk assets.”

“The second quarter should mark a low point for earnings, as margins collapsed and revenues came under significant pressure. With that in mind, and 122 companies reporting earnings (28.5% of market cap), our current estimate for 2Q20 S&P 500 operating earnings per share is $22.29, a -44.5% decline from a year prior. However, we have seen a 5-year high 80% of companies beat earnings estimates and 66% of companies beating revenue estimates, suggesting that the bar for 2Q profits may have been set too low by analysts.”

“In the event of a Democratic sweep, the corporate tax rate could increase to a top rate of 28% as proposed in campaign documents. We estimate this would bring the effective tax rate for S&P 500 companies from 17.6% up to 23.5% and, if implemented in 2021, would change our current forecast of $155 for 2021 earnings per share to about $140 per share.”

“With international economies handling the virus far better than the US and the potential for further US dollar weakness going forward, we are inclined to take on a bit more value exposure in portfolios. A global reflation trade would support some of the sectors that have been hit the hardest over the past few months, and valuations are attractive; the industrial and financial sectors look particularly interesting.”

“At the end of the day, we recognize the structural tailwinds for sectors like technology and healthcare and want to be measured in how we embrace cyclicality. Demographic tailwinds will support spending on healthcare, and the role of technology in our lives will continue to increase. The key will be to focus on those companies that will be able to generate sustainable earnings growth going forward, as those that cannot will be left in the lurch when policy support eventually begins to fade.”


09:02
EUR/USD breaks above 1.17 to target September 2018 high at 1.1833 – Commerzbank

FXStreet reports that EUR/USD maintained upside pressure last week and has eroded the 1.1570 2019 high and the 1.1596 50% retracement of the move down from 2018. Today, the pair has lifted to fresh tops above 1.17 the figure and Commerzbank’s Karen Jones targets the September 2018 high at 1.1833.

“We have a number of warning signals now and caution is warranted, but acknowledge that the market remains bid.” 

“We target 1.1815/33, this a 61.8% Fibonacci retracement, a 12-year resistance line and the September 2018 high. This is highly likely to hold the initial test.”

“Initial support lies at the March high at 1.1495. Ideally dips lower will be contained by the two-month uptrend at 1.1383.”

“Above 1.1833 would target 1.2635/66, the 200-month ma”.

08:43
Gold prices surge to record high amid coronavirus worries, U.S.-China tensions

CNBC reports that gold touched record prices as worries over issues such as the coronavirus pandemic as well as U.S.-China tensions weighed on investor sentiment.

In the morning of Asian trading hours on Monday, spot gold traded at about $1,931.11 per ounce after earlier trading as high as $1,943.9275 per ounce. Those levels eclipsed the previous record high price set in September 2011.

In a note circulated before the new highs, Commonwealth Bank of Australia’s Vivek Dhar said the fall in U.S. 10-year real yields has been the “most important driver” among other factors, such as a weakened U.S. dollar and safe-haven demand being lifted. 

“The negative relationship between long term US real yields and gold futures has held up fairly well over the longer term. That is because when long term US real yields increase, gold is less attractive relative to US interest bearing securities since gold has no income earning ability,” said Dhar, who is a mining and energy commodities analyst at the firm. “The fall in US 10 year real yields is primarily being driven by an increase in US 10 year inflation expectations.”

Johan Jooste of The Global CIO Office told CNBC on Monday that the “opportunity cost of holding gold is virtually zero” with Treasury yields at their current low levels. Still, he added that there’s a “horrible feeling of chasing it a bit after the fact” if investors enter the gold market now.

The moves in prices of the precious metal came as tensions have been heating up between Washington and Beijing. China announced on Friday that it ordered the United States to shut its consulate in Chengdu, following the U.S. demanding the closure of the Chinese consulate in Houston.

Preceding that, Secretary of State Mike Pompeo also slammed China in a speech on Thursday. He said Washington will no longer tolerate Beijing’s attempts to usurp global order.


08:25
German business morale brightens further in July - Ifo

Reuters reports that German business morale improved further in July after posting a record increase in June, a survey showed on Monday, suggesting that firms expect Europe's largest economy to recover from the coronavirus shock if a second wave of infections is avoided.

The Ifo institute said its business climate index rose to 90.5 from an upwardly revised 86.3 in June. This was the third increase in a row and came in better than economists' expectations for 89.3.

"The German economy is recovering step by step," Ifo President Clemens Fuest said in a statement, adding that firms were notably more satisfied with the current business situation.

08:21
Eurozone: monetary aggregate M3 growth accelerated in June

According to the report from European Central Bank, annual growth rate of broad monetary aggregate M3 increased to 9.2% in June 2020 from 8.9% in May. Economists had expected a 9.3% increase

The components of M3 showed the following developments. The annual growth rate of the narrower aggregate M1, which comprises currency in circulation and overnight deposits, stood at 12.6% in June, compared with 12.5% in May. The annual growth rate of short-term deposits other than overnight deposits (M2-M1) stood at 0.7% in June, unchanged from the previous month. The annual growth rate of marketable instruments (M3-M2) increased to 10.1% in June from 5.7% in May.

Annual growth rate of adjusted loans to households stood at 3.0% in June, unchanged from previous month

Annual growth rate of adjusted loans to non-financial corporations decreased to 7.1% in June from 7.3% in May

08:01
Eurozone: M3 money supply, adjusted, June 9.2% y/y (forecast 9.3%)
08:01
Eurozone: Private Loans, June 3% Y/Y
07:40
One small step towards fiscal integration, one giant leap for the euro – JP Morgan

FXStreet reports that last week, the EU region took a giant step for a more fiscally integrated Europe with all 27 leaders of the EU member states approving the European Commission’s proposal for a joint COVID-19 crisis recovery fund. Gabriela Santos from JP Morgan notes that this recovery plan is a small step for fiscal integration but a giant leap for Europe and European assets, whose equities have underperformed the US by 174% pts in USD terms over the past ten years. 

“The details include a €750 billion recovery package (worth 5.4% of GDP), of which 52% will be grants and the remainder loans. There are a few transformational aspects: 1) it will be financed by the large issuance of common EU bonds, 2) the debt will be serviced by the EU budget, and 3) the funds will be allocated to countries based on need, not on contribution to the budget.”

“High-debt countries like Italy, Spain, Portugal and Greece will receive more in funds than they contribute, while high-income countries will be net contributors. Crucially, high debt countries will receive these funds financed by the European Commission’s AAA rating, instead of by their own much lower ratings. While this is exactly what the US does for its states on a regular basis, EU countries had never agreed to this level of fiscal federalism before.”

“There is now a lower risk that populations will become frustrated by the lack of benefits of the union and will vote to leave the project altogether. This lower break-up risk means that European assets need to embed less of a risk premium, allowing for higher equity valuations, lower bond spreads and a stronger currency.”

“While there has been some more optimism around European equities over the past two months, it is far from an overbought asset class. There is still a lot of ground to make up the 240 billion USD in outflows out of European equity funds over the last 30 months.”

07:19
Asian session review: US dollar declines ahead of Fed's meeting

TimeCountryEventPeriodPrevious valueForecastActual
00:00AustraliaRBA Assist Gov Kent Speaks    
04:30JapanAll Industry Activity Index, m/mMay-7.6% -3.5%
05:00JapanCoincident IndexMay80.174.673.4
05:00JapanLeading Economic Index May77.779.378.4


During today's Asian trading, the US dollar fell to a four-month low against the yen and updated a minimum of 22 months against the euro due to expectations that the Federal reserve (Fed) may signal an increase in economic stimulus.

The Fed's July meeting will be held on Tuesday and Wednesday. Analysts do not expect any high-profile statements from the Central Bank, but believe that the Fed's leadership may begin to prepare the ground for new measures that may follow in September or in the fourth quarter.

Also, the Central Bank can send a clearer signal about the advantages of the average inflation target, and this will keep rates low for a long time.

Some analysts note that if inflation accelerates, Fed officials may allow the economy to remain in a state of overheating for a long period of time.

Speculators increased the total value of net short positions in dollars for the week ending July 21 to $18.81 billion from $16.65 billion a week earlier.

The ICE Dollar index, which shows the value of the dollar against six major world currencies, fell by 0.56% relative to the previous day.

07:04
USD/JPY could slip back to 105.00 – UOB

FXStreet reports that further decline in USD/JPY could see the 105.00 area revisited in the next weeks, in opinion of FX Strategists at UOB Group.

24-hour view: “Last Friday, we expected USD to weaken and indicated that ‘barring a move back above 107.00, USD is expected to weaken further even though the support at 106.25 could be just out of reach’. While our view was not wrong, we did not quite anticipate the rapid improvement in downward momentum as USD plunged to a low of 105.66 before closing lower by -0.68% (106.12). From here, USD is expected to stay under pressure unless it moves back above 106.45 (minor resistance is at 106.25). On the downside, a break of 105.66 could lead to further loss towards 105.30 (next support is at 105.00).”

Next 1-3 weeks: “While we noted last Friday (24 Jul, spot at 106.65) that ‘downward momentum has improved quite a fair bit’ and that ‘the risk of a break of 106.25 has increased’, the manner by which USD plunged through 106.25 and the subsequent rapid drop to a low of 105.66 was not exactly expected. USD closed lower by -0.68% (106.12), its largest 1-day decline in 7 weeks. Downward momentum has increased further and from here and USD is expected to weaken further. The next level to focus on is at 105.00. On the upside, the ‘strong resistance’ level has moved lower to 106.80 from Friday’s level of 107.50. Only a break of this level would indicate that the current strong downward momentum has eased.”

06:40
China's industrial profits increase at faster pace

RTTNews reports that China's industrial profits increased at a faster pace of June as easing of the coronavirus containment measures boosted manufacturing activity, data from the National Bureau of Statistics showed Monday.

Industrial profits grew 11.5 percent on a yearly basis in June, following a 6 percent rise in May.

Profits of steel 35.3 percent and that of non-ferrous metals grew 24.1 percent in June.

Nonetheless, the statistical office said the sustainability of industrial profits is uncertain, the statistical office.

In the first half of 2020, industrial profits declined 12.8 percent from the same period last year.

Iris Pang, an economist at ING said the decline in Covid-19 cases and relaxation of restrictions are positive for domestic demand and for related manufacturing activity.

Some recovery from Covid-19 in parts of the rest of the world will also have helped China's manufacturing output and profitability in June, the economist said.

06:20
USD/CNH faces a tough hurdle around 7.0400 – UOB

FXStreet reports that according to FX Strategists at UOB Group, further upside momentum in USD/CNH is expected to meet resistance in the 7.04 region.

24-hour view: “Our expectation for USD to consolidate was incorrect as it soared to a high of 7.0301 before dropping back down to close little changed at 7.0144 (+0.02%). USD opened on a weak note this morning and while downward momentum is not exactly strong, USD could drift lower to 6.9920 (minor support is at 7.0000). Resistance is at 7.0150 followed by 7.0220.”

Next 1-3 weeks: “We have expected USD to weaken since early this month 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.”

06:01
Euro zone economy not yet out of danger from coronavirus - ECB's Panetta

Reuters reports that the danger for the euro zone from the coronavirus pandemic is not yet over, European Central Bank board member Fabio Panetta told La Repubblica, adding that he saw no need to make any tweaks to the bank's bond-buying programme.

"It's too soon to declare victory," Panetta said in the interview circulated by the ECB, adding that the euro zone economy was likely to contract further in the second quarter than the first.

He pointed to recent data that has shown an improvement in industrial production and retail sales but added: "They don't give us sufficient grounds for satisfaction."

On the ECB's Pandemic Emergency Purchase Programme (PEPP), he said: "The programme is working well, and I don't see any economic reasons to change our decisions or actions."

05:02
Japan: Leading Economic Index , May 78.4 (forecast 79.3)
05:01
Japan: Coincident Index, May 73.4 (forecast 74.6)
04:56
Options levels on monday, July 27, 2020 EURUSD GBPUSD

EUR/USD

Resistance levels (open interest**, contracts)

$1.1822 (2764)

$1.1783 (1100)

$1.1748 (941)

Price at time of writing this review: $1.1708

Support levels (open interest**, contracts):

$1.1555 (188)

$1.1522 (128)

$1.1483 (422)


Comments:

- Overall open interest on the CALL options and PUT options with the expiration date August, 7 is 52037 contracts (according to data from July, 23) with the maximum number of contracts with strike price $1,1400 (4031);


GBP/USD

Resistance levels (open interest**, contracts)

$1.2937 (682)

$1.2904 (1152)

$1.2875 (1930)

Price at time of writing this review: $1.2838

Support levels (open interest**, contracts):

$1.2719 (67)

$1.2660 (118)

$1.2538 (272)


Comments:

- Overall open interest on the CALL options with the expiration date August, 7 is 20225 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 19477 contracts, with the maximum number of contracts with strike price $1,2400 (1526);

- The ratio of PUT/CALL was 0.96 versus 0.98 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.

04:31
Japan: All Industry Activity Index, May -3.5%, m/m
02:30
Commodities. Daily history for Friday, July 24, 2020
Raw materials Closed Change, %
Brent 43.18 -0.02
Silver 22.71 0.75
Gold 1901.204 0.77
Palladium 2209.07 2.88
00:30
Stocks. Daily history for Friday, July 24, 2020
Index Change, points Closed Change, %
Hang Seng -557.67 24705.33 -2.21
KOSPI -15.75 2200.44 -0.71
ASX 200 -70.5 6024 -1.16
FTSE 100 -87.62 6123.82 -1.41
DAX -265.33 12838.06 -2.02
CAC 40 -77.33 4956.43 -1.54
Dow Jones -182.44 26469.89 -0.68
S&P 500 -20.03 3215.63 -0.62
NASDAQ Composite -98.24 10363.18 -0.94
00:30
Schedule for today, Monday, July 27, 2020
Time Country Event Period Previous value Forecast
00:00 Australia RBA Assist Gov Kent Speaks    
04:30 Japan All Industry Activity Index, m/m May -6.4%  
05:00 Japan Coincident Index May 80.1 74.6
05:00 Japan Leading Economic Index May 77.7 79.3
08:00 Eurozone Private Loans, Y/Y June 3%  
08:00 Eurozone M3 money supply, adjusted y/y June 8.9% 9.3%
08:00 Germany IFO - Current Assessment July 81.3  
08:00 Germany IFO - Expectations July 91.4  
08:00 Germany IFO - Business Climate July 86.2  
10:00 Germany Bundesbank Monthly Report    
12:30 U.S. Durable goods orders ex defense June 15.5%  
12:30 U.S. Durable Goods Orders ex Transportation June 4% 3.5%
12:30 U.S. Durable Goods Orders June 15.8% 7.2%
00:15
Currencies. Daily history for Friday, July 24, 2020
Pare Closed Change, %
AUDUSD 0.71047 0.14
EURJPY 123.664 -0.16
EURUSD 1.16538 0.52
GBPJPY 135.777 -0.17
GBPUSD 1.27946 0.49
NZDUSD 0.66407 0.16
USDCAD 1.34131 0.06
USDCHF 0.9207 -0.48
USDJPY 106.116 -0.66

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