Exacerbated downturn amid the Pandemic

AstraZeneca’s renewal of its coronavirus vaccine test is contributing to a better market mood, favorable for stocks and weighing on the dollar. Japan will have a new prime minister and the UK parliament will debate the controversial internal market bill today, aggravating relations with the EU.

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

Country

US

• US Dollar extended gains against ASIAN currencies on rising volatility
• All eyes turn to the Federal Reserve, US sentiment and retail sales data
• While former Vice President and Democratic nominee Joe Biden continues to lead in the polls vs President Donald Trump, the spread in recent days has somewhat narrowed.
• For the general election, according to polls conducted by Fox News, Biden’s spread over Trump is 5 points, a little under his roughly 7 to 8 point lead that he’s typically held for the past few weeks.

EUROZONE

• As for Monday, the focus will be on the Eurozone Industrial Production for July, scheduled for release at 09:00 GMT. The data is expected to show the factory output rebounded by 10% month-on-month in July, following June’s 9.1% rise. An above-forecast reading could lift EUR/USD to 1.1875 (Friday’s high).
• The positive news on the coronavirus vaccine front and the uptick in the S&P 500 futures also favor the upside in EUR/USD.

UK

• There is no guarantee that the European Union (EU) will add Britain to its list of approved third countries for food imports, the UK’s Chief Brexit Negotiator David Frost tweeted out on Sunday.
• Numerous by-products of this nature resulting from a no-deal Brexit would likely prolong the economic recovery both in the European Union and United Kingdom.
• Tension between the two escalated after UK officials put forward a bill to revise parts of the Withdrawal Agreement they signed in January.
• The latest amendment has to do with the Northern Ireland Protocol which prevents a hard border between Northern Ireland, a part of the UK, and the Republic of Ireland, an EU member state.

CHINA

• China’s Commerce Ministry said in a statement on Monday, it launched an anti-subsidy investigation on certain glycol ethers imports from the US, starting September 14.
• Last month, the Ministry launched an anti-dumping investigation on certain glycol ethers imports from the US, effective from August 31, after Jiangsu Yida Chemical Co and its units called for an investigation on July 17 on behalf of the domestic industry.

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.”

NEW ZEALAND

• The NZIER’s report released early Monday said New Zealand’s relative success in containing COVID-19 and the Reserve Bank of New Zealand’s relatively less dovish stance makes the New Zealand dollar attractive.
• The central bank revised the current fiscal year’s growth outlook higher, as the massive fiscal and monetary stimulus is supporting demand. “Household spending is also expected to have a V-shaped growth profile, with a sharp rebound in spending expected from 2021,” the report said.

JAPAN

• Cabinet Secretary Yoshihide Suga will likely be elected by the ruling LDP Party to succeed outgoing Prime Minister Shinzo Abe. He is seen as a continuation candidate. The yen is marginally higher amid broad dollar weakness.
• Japan’s recovery from the pandemic is hindered by several factors. Global consumption a crucial item in Japan’s export economy has yet to return to pre-virus levels.

Market

OIL

• Oil prices have stabilized after the fall. OPEC and non-OPEC members will convene later in the week to discuss extending production cuts.
• Compliance has been relatively high yet fears of falling demand persist.  Hurricanes are brewing in the Gulf of Mexico and could boost crude prices.

GOLD

• Open interest in Gold futures markets shrunk by nearly 1.5K contracts on Friday, reversing at the same time four consecutive daily builds in light of preliminary data from CME Group.
• In the same line, volume extended the choppy activity and went down by around 70.2K contracts.

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

Week Ahead 

All times listed are EDT

Monday

21:30: Australia – RBA Meeting Minutes

22:00: China – Industrial Production: expected to edge up to 5.1% from 4.8%.

Tuesday

2:00: UK – Average Earnings Index + Bonus: seen to fall slightly, to -1.3% from -1.2%

2:00: UK – Claimant Count Change: previously printed at 94.4K.

5:00: Germany – ZEW Economic Sentiment: probably stepped back to 69.8 from 71.5.

Wednesday

2:00: UK – CPI: consensus expects a drop to 0.1% from 1.0%.

8:30: US – Core Retail Sales: predicted to decline to 0.9% from 1.9%.

8:30: US – Retail Sales: forecast to retreat to 1.0% from 1.2%.

8:30: Canada – Core CPI: likely to have fallen to -0.2% from -0.1% previously.

10:30: US – Crude Oil Inventories: previous reading was 2.032M.

14:00: US – Fed Interest Rate Decision: expected to remain at 0.25%.

14:30: US – FOMC Statement

21:30: Australia – Employment Change: anticipated to plummet to -50.0K from 114.7K 

Thursday

3:00: Japan – BoJ Press Conference

5:00: Eurozone – CPI: seen to hold at -0.2% YoY.

7:00: UK – BoE Interest Rate Decision: likely to have stayed at 0.10%.

7:00: UK – BoE MPC Meeting Minutes

8:30: US – Building Permits: expected to have risen to 1.510M from 1.483M previously.

8:30: US – Initial Jobless Claims: disappointed last week by falling to 884K.

8:30: US – Philadelphia Fed Manufacturing Index: seen to have receded to 15.5 from 17.2.

Friday

2:00: UK – Retail Sales: probably plunged to 0.7% from 3.6%.

6:30: Russia – Interest Rate Decision: forecast to be cut to 4.00% from 4.25%.

8:30: Canada – Core Retail Sales: expected to drop to 0.5% from 15.7%

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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