The Plunge of 2020

Amid thin trading and signs the economic recovery is losing momentum, most stocks closed lower on Friday. Adding to the gloom: Congressional negotiations over additional pandemic relief have gone nowhere and likely won’t start again for weeks, now that US legislators have gone on holiday through the end of August. We expect this conviction to endure into the upcoming trading week.

Treasuries rose on Friday, for the first time last week; the dollar fell for a third day. Gold ended its rally and oil dropped for a second day.

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

Country

US

• The US dollar extended last week’s decline into a fresh week this Monday, in the face of the US fiscal impasse, likely improvement in the US-China relations, mixed US macro news and retreat in the US Treasury yields.
• The stalemate on the additional US fiscal stimulus lingers, as Congress was adjourned for month-long vacation without action on the US unemployment crisis.
• The dollar bulls were unimpressed by the upbeat US inflation, jobless claims and consumer sentiment data, as the key retail sales data lagged, re-enforcing worries over the economic recovery. The retreat in the US Treasury yields following large bond auction last week also weighed on the greenback.

Gold remained on the defensive below $1950 after recording the biggest weekly loss since March.

EUROZONE

• City of London may have to wait beyond the end of this year to know whether it will secure access rights to the whole of the bloc’s market.
• Brussels would not be ready in the coming months to assess whether Britain qualifies for some pan-EU access rights, known as equivalence provisions, because the bloc’s own regulations are in flux.

CHINA

• Meanwhile, China boosting the US crude oil imports combined with US President Donald Trump having offered Chinese firm ByteDance 90 days to offload its TikTok app from the previous 45 days set out in the executive order alleviated concerns over the US-China diplomatic ties. Markets showed little reaction to the indefinite postponement of the US-China trade deal review.
• The People’s Bank of China (PBOC) injected CNY700 billion via one-year medium-term lending (MLF) facility on Monday.
• The Chinese central bank issued the one-year MLF at 2.95%, unchanged from the previous operation. The PBOC kept the rates unchanged for the fourth straight month.

AUSTRALIA

• 300 students from China, Japan, Hong Kong and Singapore will fly into Australia in early September.
• Flying into the city of Adelaide, which is relatively free of the virus and it will be a trial program.
• The students will be quarantined upon arrival at first.

JAPAN

• The Bank of Japan (BOJ) officials are concerned about the economic prospects in the July-September quarter (Q3) after the sharp Q2 GDP contraction.

Market

OIL UP OVER IRAQ PRODUCTION LOWERS

• Traders increased their open interest positions for the second straight session on Friday, this time by nearly 1.5K contracts in light of preliminary readings from CME Group. On the other hand, volume shrunk for the second consecutive day, noy by around 41.2K contracts.

GOLD

• Open interest in Gold futures markets shrunk for the third consecutive session on Friday, this time by around 6.3K contracts according to flash data from CME Group. Volume, in the same time, went down for the third session in a row, now by around 114K contracts.
• Prices of the ounce troy of gold closed the week with losses amidst shrinking open interest and volume on Friday, opening the door to a potential re-visit to the critical $2,000 mark in the short-term horizon.

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

Week Ahead

All times listed are EDT

Monday

00:30: Japan – Industrial Production: anticipated to have risen to 2.7%.

08:30: US – Empire State Manufacturing: seen to have fallen to 15.00 from 17.20.

Tuesday

08:30: US – Building Permits: predicted to climb to 1.313 million from 1.258 million.

Wednesday

02:00: UK – CPI: expected to remain flat at 0.6%.

05:00: Eurozone – CPI: seen to remain at 0.4%.

08:40: Canada – CPI: anticipated to have dropped to 0.4% from 0.8% previously.

10:30: US – Crude Oil Inventories: last week’s release showed a drawdown of -4.512M bbls.

14:00: US – FOMC Meeting Minutes 

Thursday

07:30: Eurozone – ECB Publishes Account of Monetary Policy Meeting

08:30: US – Initial Jobless Claims: last week’s release came in at 963K.

08:30: US – Philadelphia Fed Manufacturing Index: seen to edge higher to 20.5 from 24.1.

Friday

02:00: UK – Retail Sales: probably plunged to 2.3% from 13.9%.

03:30: Germany – Manufacturing PMI: seen to have edged up to 52.5 from 51.0.

04:30: UK – Manufacturing PMI: anticipated to have gained slightly, to 53.6 from 53.3.

04:30: UK – Services PMI: likely to have ticked higher, to 57.0 from 56.5.

08:30: Canada – Core Retail Sales: expected to have jumped to 15.0% from 10.6%.

10:00: US – Existing Home Sales: to rise to 5.39 million from 4.72 million.

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.

Chat with us to know more: https://wa.me/971581958582
Register to open your account: http://bit.ly/OpenFxAccount
Join Our Telegram Channel: https://t.me/ForexFundManagers
Subscribe to Our YouTube Channel: https://youtu.be/AnTlQd-FQxc