Adding To Woes

22 Sep

Posted by RVR Ventures In Analysis 0 comment

The major central banks have met, and not one felt it incumbent upon them to take fresh policy action. Despite some dramatic intraday swings and close scrutiny, the euro-dollar exchange rate continues to be mainly in a $1.17-$1.19 trading range that has dominated since the end of July.

All the commotion about the rapid rise of the euro misses that it has been moving sideways for nearly two months. With all the attention commentary on the euro, it was the yen, whose 1.6% gain last week, led the majors. It arguably was a cleaner way to express a bearish dollar view.

The dollar broke below JPY105 in the middle of last week for the first time since July and remained below there ahead of the weekend. It approached the July 31 low set near JPY104.20.

Below are thumbnail sketches of the events and data that shape the macro picture.

Country

The US dollar remained on the defensive starting out a fresh week this Monday, extending last week’s softness, courtesy of the gridlock on the US fiscal stimulus.
The US lawmakers are still nowhere near agreeing on new relief aid, which could likely thwart the nascent economic recovery
The greenback failed to benefit from the risk-off market mood amid renewed US-China tensions. Trump administration ordered to ban WeChat and TikTok application from the states, although the curbs were put on hold by a judge.
Meanwhile, President Donald Trump approved Oracle Corp.’s bid for the US operations of TikTok “in concept.”

EUROZONE

Fresh restrictions were imposed in Greece and Denmark last Friday. Spain and France mulled local lockdowns amid a spike in infections.
Among other news, the European Central Bank (ECB) launched a review of its pandemic bond-buying program (PEPP), as cited by the Financial Times (FT).

Health Minister Hancock said that the country is at a “tipping point.” Chancellor Sunak may extend business support loans.
Optimism over a Brexit deal, courtesy of European Commission President Ursula von der Leyen’s upbeat comments, continued to bode well for the pound.

CHINA

China’s Moving on, markets in China stayed depressed as the People’s Bank of China (PBOC) refrained from further stimulus while Xinhua cited the injection of 210 billion Yuan into the dragon nation’s markets.

AUSTRALIA

The Reserve Bank of Australia (RBA) Minutes may influence AUD/USD ahead of the Federal Reserve interest rate decision on September 16 as Governor Philip Lowe and Co. “consider how further monetary measures could support the recovery.”
Australia’s ASX drops 0.70% as China’s Global Times flashed indirect signs of a war with the Pacific major if it chooses to follow the US. In doing so, the Aussie barometer ignores weekend comments from Chinese Prime Minister Xi Jinping conveying economic optimism.

NEW ZEALAND

Further, New Zealand’s NZX 50 drops around 1.0% by the press time even as lockdown conditions in ex-Auckland have been reduced to alert level 01.
The reason could be traced to the anticipated bearish tone from Wednesday’s Reserve Bank of New Zealand (RBNZ) statement.

JAPAN

Asian equities could print only mild losses as markets in Japan are off on Monday and Tuesday.
As a result, the MSCI index of Asia-Pacific shares, ex-Japan, drops 0.30% while heading into Monday’s European session.
A new Japanese Prime Minister and a BOJ who dismissed the kind of inflation report that sent the chins wagging in Europe saw the yen break below JPY105 and fall to almost JPY104.25 before the weekend. It closed on the lows for the week.

Market

OIL

Oil prices returned to the red despite the US storm-led production halt. WTI posted small losses to test the $41 mark.

GOLD

Gold traded on the front foot above $1950 amid the dollar weakness, ahead of the Fed Chairman Jerome Powell’s speech.
Gold rose for the second week, eking out a nearly 0.5% gain. It was the first back-to-back weekly gain since the end of July.

Here’s a look at all the important market-moving factors for the week:

Week Ahead

All times listed are EDT

Monday

08:45 EUR ECB President Lagarde Speaks

10:00 USD Fed Chair Powell Speaks

22:00 NZD RBNZ Rate Statement

Tuesday

03:30 GBP BoE Gov Bailey Speaks

07:00 BRL BCB Copom Meeting Minutes

10:00 USD Existing Home Sales (Aug), Forecast: 6.00M, Previous: 5.86M

10:30 USD Fed Chair Powell Testifies

22:00 NZD RBNZ Interest Rate Decision, Forecast: 0.25%, Previous: 0.25%

Wednesday

03:30 EUR German Manufacturing PMI (Sep), Forecast: 52.5, Previous: 52.2

04:30 GBP Composite PMI, Previous: 59.1

04:30 GBP Manufacturing PMI, Previous: 55.2

04:30 GBP Services PMI, Previous: 58.8

07:50 JPY BoJ Monetary Policy Statement

10:00 USD Fed Chair Powell Testifies

10:30 USD Crude Oil Inventories, Previous: -4.389M

Thursday

03:30 CHF SNB Interest Rate Decision, Previous: -0.75%

03:30 CHF SNB Monetary Policy Assessment

04:00 EUR German IFO Business Climate Index (Sep), forecast: 93.8, Previous: 92.6

08:30 USD Initial Jobless Claims, Forecast: 845K, Previous: 860K

10:00 GBP BoE Gov Bailey Speaks

10:00 USD Fed Chair Powell Testifies

10:00 USD New Home Sales (Aug), Forecast: 900K, Previous: 901K

Friday

08:30 USD Core Durable Goods Orders (MoM) (Aug), Forecast: 1.3%, Previous: 2.6%

Based on the above factors and the events lined up for the week, the analyst at RvR Ventures suggests you to Trade responsibly; invest only as much as you can lose. All the profits and losses due to the above data are your own personal responsibility. Kindly practice money management & risk mitigation while trading.

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