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Intermarket:
- SP Futures 3432 (+0.43%)
- EUSTXX 3313 (+0.12%)
- Crude Oil 38.95 (-2.12%)
- US 10YR 0.72 (-0.00%)
- EurUsd 1.1806 (-0.05%)
- UsdJpy 106.27 (+0.03%)
- DAX 13111 (+0.20%)
There was little movement in equity markets into today after key market closures yesterday kept prices within Friday’s range. Today’s North American session will be key to further direction.
News flow isn’t exactly supportive of a recovery in risk however. US President Trump on Monday again raised the idea of “decoupling” from China, suggesting the United States would not lose money if the world’s two biggest economies no longer did business. The US is considering banning cotton products from the Xinjian province on human rights abuse concerns. Along the same lines, China expedited the departure of the last two AU journalists from the country and imposed new visa restrictions on US journalists.
But perhaps the main theme this morning will be Brexit negotiations: today PM Johnson will be speaking on Brexit, suggesting “a deal with the EU never made sense”. This comes after EC president Von Leyen said yesterday that “the withdrawal agreement is an obligation under international law”. The continued debate will likely weigh on the Pound.
Matters that Matter:
- President Xi sends gratitude to foreign assistance in China’s fight against COVID-19; China’s coronavirus data has been transparent and true
- China: Announces initiative over global data security; vows that companies will not provide overseas data against other laws
- Japan Suga: It is important to protect employment and continue business; will take economic measures appropriately for situation; working with related parties to prepare for Olympics
- UK Aug BRC Like-For-Like Sales Y/Y rose 4.7% from +4.3%
- UK ramps up no deal preparations as EU trade talks stall
- BoE Haldane – UK recovery from lockdown deserves more credit
- Australian banks to buy more govt debt under liquidity rule changes – AFR
MAJORS 1-DAY VIEW:
USDJPY
- Consecutive daily little changed closes have flattened intraday trend signals. The outlook is neutral between 106.00 and 107.00
- Crosses heavy, may weigh on prices.
- Opex for today: 105.00-50 1.6bln, 106.00 800mln, 106.70-107.00 1.9bln
EURUSD
• With key market closures, trading was muted on Monday and prices remained within Friday’s range. However, intraday signals are bearish on balance but the preference is to sell rallies today.
• Trading heavy on USD strength.
• Bids touted between 1.1750/80, offers still around 1.2000
AUDUSD
• With key market closures on Monday, prices posted the 2nd little changed close in a row. Intraday trend signals are thus weak but on balance a slight negative bias remains for Tuesday. Our preference is to sell rallies.
•Moves in equity markets key, as prices receiving no support from metals.
GBPUSD
• With Monday posting the 4th lower daily high & low in a row, with losses of over 1 Big Fig, signals remain bearish into Tuesday.
• No-deal Brexit in the cards, making headlines and pressuring Cable.
• 1.3000 seen as next stop.
FX Relative Strength Grid
Comment: USD strength, and GBP weakness are the main signals into Tuesday.
FX Relative ATR Grid
Comment: Evidently, with key market closures yesterday, prices remained largely dormant with the exception of GBP which is where the focus will likely be, and where trading conditions remain more favourable.