For instant updates, follow FCIMarkets onTwitter
Intermarket:
- SP Futures 3302 (+0.06%)
- EUSTXX 3249 (+0.09%)
- Crude Oil 41.58 (+0.30%)
- US 10YR 0.52 (-0.48%)
- EurUsd 1.1816 (+0.12%)
- UsdJpy 105.58 (-0.13%)
- DAX 12603 (+0.15%)
The main story for today comes from the intermarket: Gold is now above $2000 and Silver is also back at recent highs around 26.15. The move has pulled up risk FX and has been aided by a weaker USD.
NZ experienced a huge employment data surprise with the unemployment rate falling (!) to 4% The reality is that the unemployment rate suffered from people not being able to actively seek work during lockdown. The underutilisation rate jumped, and total hours worked plunged, by record rates over the quarter. Obviously the the RBNZ knows all this and for this reason, additional stimulus is coming, it’s just a matter of time.
The USD seems to have resumed it’s downtrend as 10-YR yields resumed their slide as Fedspeak remains cautious and traders are already discounting some form of YCC. US equity markets ended the day slightly higher as markets are still betting on an agreement in Washington regarding a new round of fiscal stimuli. In the meantime, extra unemployment benefits are gone and the moratorium on evictions and foreclosures is over. Time is of the essence.
Today the markets should pay attention to the US non-manufacturing ISM and ADP. The ISM will give us some sense of how much impact the recent surge in Covid-19 had on the economy. Furthermore, the employment component is an important leading indicator for non-farm payrolls.
In other news, Chinese state-run media said that the demand for a sale of the US operation of TikTok is a theft and called the Trump demand for a payment to the US government an ‘open robbery’. US and China will hold high-level talks on 15 August to discuss trade and perhaps the market is waiting to see the tone of that meeting, and has not been reacting to the recent tit-for-tat.
Matters that Matter:
• White House seeks deal this week with congressional Democrats on coronavirus bill
• SF Fed Daly - Length of support needed by economy will have to be longer – Bloomberg
• China, U.S. to review trade deal, air other grievances on August 15 - sources
• CN Jul Caxin Services PMI, 54.1, 58.4 prev
• Japan considering extending special employment subsidy - Labour min official
• Australia fears contagion as Victoria state reports record coronavirus deaths
• NZ Q2 Unemployment 4.0%, 5.8% f’cast, 4.2% prev;
• Gold extends record rally on softer dollar, stimulus bets
MAJORS 1-DAY VIEW:
USDJPY
• Further losses in Asia this morning have ended a small sequence of higher daily lows, and with signals pointing cautiously lower.
• US yields weigh on UsdJpy.
• Bids touted at 105.60; stops and more bids below with hot money accounts exiting shorts.
• Opex today less relevant, large for tomorrow at 105 and 106.
EURUSD
• Signals are weak, but although there is the potential for gains, on balance there remains a bias to sell into rallies towards 1.1900.
• USD weakness back in play.
• Support at 1.1750s, resistance around 1.1900.
AUDUSD
• Gains into the US close and in Asia this morning have improved sentiment and with signals pointing cautiously higher the outlook for Wednesday is bullish.
• Propelled higher on rally in metals, buoyant risk appetite and weak USD.
• Offers touted at .7200, resistance at .7220/30.
GBPUSD
• With 2 failed dips in a row, prices posted the 3rd unchanged daily close in row. The rally has the potential to extend, but it should be temporary and the outlook is to sell on rallies towards 1.3120.
• USD weakness the main theme.
• Resistance 1.3100 and 1.3170. Support at 1.3000.
FX Relative Strength Grid
Key: Week Bias up (down) if there has been a daily close above (below) prior weeks’ high (low).
%-Location is whereprice is, relative to the prior week range. Above 100% means we passed prior week high. Below 0% means we passed prior week low.
%-Change: change in %-location since yesterday at 07.00 CET.
Comment: Little movement overall, with USD weakness the main theme.
FX Relative ATR
Key: 1 Day vs 13 Day ATR. Values > 100% mean Day ATR expansion. Values < 70% mean Day ATR contraction.
Comment: Ranges have declined in an evident manner. Intraday trading conditions are less favourable and perhaps only GBP remains viable. Being selective is required as ranges decline.