Big Stimulus Moves

Brexit talks and rising coronavirus cases in Europe are also a consideration for general market mood. The EU and UK resume negotiations this week and the risk of a no-deal Brexit is another shroud of uncertainty for the global economy. The focus will shift to the latest US non-farm payrolls report on Friday. Rosy data could weaken the Greenback. But, a lack of fiscal progress risks ebbing its impact. Markets are after all forward looking.

Here are the key market moving factors for the week:

 US

• The US dollar extended Friday’s pull back from two-month highs, undermined by the improved risk sentiment amid optimism over the US fiscal stimulus and China’s economic recovery.
• China’s industrial profits rose for the fourth straight month, suggesting the economic rebound is regaining momentum. Meanwhile, late Friday, US Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi agreed to restart formal talks on a new coronavirus fiscal aid.
• Further, investors refrained from placing fresh long bets on the greenback, as the focus shifts to the first US Presidential election debate this Wednesday.
• The Asian markets traded mostly higher while the US stock futures extended its winning streak into the third day on Monday.
• Among other developments, the US District Court halts the Trump administration’s ban on TikTok downloads while US President Donald Trump dismissed the NY Times report as fake news. The US daily reported that Trump’s taxes show chronic losses and years of income tax avoidance.

 EUROPE

• European stocks rose on Monday, as foreign investors went shopping for bargains in a flurry of activity.
• Down 3.6% last week in its worst performance since early June, the Stoxx Europe 600 SXXP, 1.76% climbed 1.5%.
• The German DAX DAX, 2.49%, French CAC 40 PX1, 1.89% and U.K. FTSE 100 UKX, 1.42% all advanced.
• Futures on the Dow Jones Industrial Average YM00, 0.92% rose 229 points. Politics were in the limelight after a report Donald Trump paid $750 in federal income taxes in each of his first two years as president, a day after he nominated Amy Coney Barrett to the U.S. Supreme Court. In Europe, the ninth round of talks between the U.K. and the European Union are due to kick off Tuesday.
• The German EU presidency has urged (Members of the European Parliament) MEPs to quit stalling, while MEPs accused the council of blackmailing them.
• EU capitals want to seal an agreement with the parliament by the middle of October to allow member states plenty of time to ratify the recovery fund mechanics in their legislatures.

 UK

• Junior Health Minister, Helen Whately said on Monday, they do not want to tighten the restrictions announced last week.
• However, they would keep a close eye on the coronavirus infection rate in the Kingdom, she added.
• “We will not rule out more COVID-19 restrictions,” Whately said.
• This comes after the Times reported early Monday, the UK Ministers are preparing to enforce total social lockdown across much of Northern Britain and potentially London.

JAPAN

• The government will not hesitate to deploy additional economic measures if needed, said the new Japanese Chief Cabinet Secretary Kato in a daily briefing on Monday.
• Nothing further is reported on the same.
• Meanwhile, the yen remains in demand across the board despite the upbeat tone in the Japanese stocks, as coronavirus concerns and US election risks play out stepping into the US NFP week.

AUSTRALIA

• In its latest assessment of commodity exports and prices, the Australian government offered an upbeat outlook on iron-ore prices.
• Also expects Australia to become the world’s largest gold producer. Exports of commodities expected to be upwards of 250bn AUD in the year ahead.
• Significant growth in Brazilian short-term supply remains unlikely due to the wider problems of COVID-19 across the Brazilian economy. The main risk to prices is thus on the demand side.

CHINA

• The People’s Bank of China (PBOC) is likely to maintain its monetary policy except for any external emergency, the Economic Information Daily reported on Monday, citing Wang Qing, the Chief Analyst at Golden Credit Rating.
• China’s monetary policy will remain stable and the PBOC is unlikely to cut banks’ reserve requirement ratios or interest rates barring a major external shock.
• The PBOC may choose to inject medium and long-term liquidity by rolling over the matured MLFs in excess of the required amount.
• China’s economic rebound from the coronavirus crash showed signs of losing steam in early September due to worsening business confidence, a weaker stock market, according to Bloomberg.

Market Overview:

 Gold

• Gold (XAU/USD) has started out a critical week on a cautious note, ranging within a striking distance of the two-month lows of $1849.
• Although the downside appears cushioned, at the moment, as the safe-haven US dollar loses further ground across its higher-yielding rivals.
• The Asian market mood remains buoyed by the renewed optimism on the Chinese economic recovery after industrial profits in the world’s second-largest economy rose for the fourth straight month.
• Further, uncertainty over the US political scenario, with the election debate in focus this week, and the pre-Non-Farm Payrolls release anxiety keep the dollar bulls unnerved.

 Oil

• The Organization of Petroleum Exporting Countries (OPEC) Secretary-General Mohammad Barkindo said, in remarks at the G20 Energy Ministers virtual meeting, the OECD commercial oil stocks could stay well above the five-year average in the third quarter of this year, courtesy of a potential market balance.
• Vitol, the world’s biggest independent oil trader, sees little scope for oil rally in the fourth quarter as global demand is slowing due to new coronavirus-related restrictions, according to Bloomberg.
• “The conventional wisdom going into the fourth quarter was that things were going to improve,” Vitol Group executive committee member Chris Bake said during a conference call hosted by Dubai consultant Gulf Intelligence, and added that, “it doesn’t feel like we have a huge catalyst and demand is more uncertain.”

Below are the major market moving events for the week:

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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