Economic Data, the FED Chair, COVID-19, and Brexit in Focus

Earlier in the Day:

It’s was a busier start to the day on the economic calendar this morning. The Japanese Yen and the RBNZ were in action in the early part of the day.

For the Japanese Yen

Prelim private sector PMIs for September were in focus this morning.

The Manufacturing PMI rose from 47.2 to 47.3, with the Services PMI increasing from 45.0 to 45.6.

According to the September prelim survey,

  • Across the manufacturing sector, production and new orders saw a marked decline once more.
  • By contrast, the rate of job shedding eased to a 4-month low, with business confidence hitting the highest level in over 2-years.
  • Weak external demand weighed heavily on new business across the service sector, which continued to slide at a marked pace.
  • Service sector employment contracted for a 7th consecutive month in September, with incomplete work continuing to decline.

The Japanese Yen moved from ¥105.074 to ¥105.142 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.21% ¥105.15 against the U.S Dollar.

For the Kiwi Dollar

The RBNZ held interest rates steady at 0.25% and the LSAP at NZ$100bn, which was in line with market expectations.

Salient points from the RBNZ Statement included:

  • Economic information available since the August statement confirmed that economic activity remained well below pre-COVID-19 levels.
  • Ongoing restrictions, particularly in Auckland, have continued to dampen economic activity and business and consumer confidence.
  • Any significant change in the domestic and global economic outlook remains hinged on the containment of the virus, which is highly uncertain.
  • International border restrictions continue to materially curtail migration and tourism.
  • Commodity prices for NZ exports remain robust. This has been partially offset, however, by the Kiwi Dollar exchange rate moderating the return to local export producers.
  • The Committee expects a rise in unemployment and an increase in firm closures.
  • Members agreed that monetary policy will need to provide significant support for a long time to come. They also agreed that they are prepared to provide additional stimulus.
  • Additional support could come in the form of Funding for Lending Programme (FLP), a negative OCR, and purchases of foreign assets.

The Kiwi Dollar moved from $0.66022 to $0.6643 upon release of the statement. At the time of writing, the Kiwi Dollar was down by 0.12% to $0.6624.

Elsewhere

At the time of writing, the Aussie Dollar was down by 0.53% to $0.7133.

The Day Ahead:

For the EUR

It’s a busy day ahead on the economic calendar. Ahead of the European open, Germany’s GfK Consumer Climate figures are due out for October.

While we can expect plenty of EUR sensitivity to consumer confidence figures, the focus will be on the PMI numbers.

Later in the morning, prelim September private sector PMIs for France, Germany, and the Eurozone will be the key drivers.

While manufacturing PMIs remain important, expect the Service PMIs and the Eurozone’s composite to have the greatest impact.

Another spike in COVID-19 numbers could mute the effects of any positive numbers, however. A reintroduction of lockdown measures would materially hit both services and manufacturing…

At the time of writing, the EUR was down by 0.22% to $1.1682.

For the Pound

It’s also a relatively busy day ahead on the economic calendar. Prelim private sector PMIs for September are due out later today.

Expect the focus to be on the services PMI.

Away from the economic calendar, there’s also Brexit and COVID-19 to consider. Last Monday, the government reintroduced containment measures to curb the spike in new cases. This week, further measures have been introduced that could materially impact consumption and service sector activity.

With the BoE having already floated the idea of negative rates, expect any further containment measures to fuel expectations of a rate cut.

At the time of writing, the Pound was down by 0.08% to $1.2723.

Across the Pond

It’s a busier day ahead for the U.S Dollar. Key stats include prelim private sector PMI figures for September.

The markets will be looking for a pickup in service sector activity to support riskier assets.

Later in the day, FED Chair Powell is due to deliver testimony that will also draw plenty of attention.

The Dollar Spot Index was up by 0.10% to 94.084 at the time of writing.

For the Loonie

It’s a particularly quiet day ahead, with no material stats due out today.

The lack of stats will leave the Loonie in the hands of the prelim PMI numbers from the Eurozone and the U.S.

Expect any further spikes in new COVID-19 cases to also influence ahead of the weekly EIA crude oil inventory numbers.

At the time of writing, the Loonie was down by 0.05% to C$1.3311 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

The Crypto Daily – Movers and Shakers – September 23rd, 2020

Bitcoin, BTC to USD, rose by 1.09% on Tuesday. Partially reversing a 4.57% slide from Monday, Bitcoin ended the day at $10,549.0.

It was a mixed start to the day. Bitcoin fell to an early morning intraday low $10,377.0 before making a move.

Steering clear of the first major support level at $10,171, Bitcoin rose to a late intraday high $10,597.0.

Falling well short of the first major resistance level at $10,850, Bitcoin eased back to wrap up the day at sub-$10,550 levels.

The near-term bullish trend remained intact, supported by the latest pullback. For the bears, Bitcoin would need to slide through the 62% FIB of $6,400 to form a near-term bearish trend.

The Rest of the Pack

Across the rest of the majors, it was a bullish day on Tuesday.

Binance Coin and Bitcoin Cash SV rallied by 4.02% and by 5.84% respectively to lead the way.

Bitcoin Cash ABC (+2.05%), Cardano’s ADA (+1.90%), Ethereum (+1.15%), and Litecoin (+3.15%) also made solid gains.

Chainlink (+0.26%), Crypto.com Coin (+0.26%), and Ripple’s XRP (+0.86%) trailed the front runners, however.

At the start of the week, the crypto total market rose to a Monday high $334.04bn before sliding to a Monday low $306.69bn. At the time of writing, the total market cap stood at $316.17bn.

Bitcoin’s dominance fell to a Monday low 60.89% before rising to a high 62.04%. At the time of writing, Bitcoin’s dominance stood at 61.55%.

This Morning

At the time of writing, Bitcoin was down by 0.02% to $10,549.6. A mixed start to the day saw Bitcoin fall to an early morning low $10,540.0 before rising to a high $10,555.0.

Bitcoin left the major support and resistance levels untested early on.

Elsewhere, it was a mixed start to the day.

Ethereum (-0.27%) and Ripple’s XRP (-0.03%) struggled early on.

It was a bullish start for the rest of the majors, however.

At the time of writing, Cardano’s ADA was up by 1.01% to lead the way.

BTC/USD 23/09/20 Hourly Chart

For the Bitcoin Day Ahead

Bitcoin would need to avoid a fall through the $10,508 pivot level to support a run at the first major resistance level at $10,638.

Support from the broader market would be needed, however, for Bitcoin to break out from Tuesday’s high $10,597.

Barring an extended crypto rally, the first major resistance level and Tuesday’s high would likely cap any upside.

In the event of a crypto breakout, Bitcoin could test resistance at $10,700 before any pullback. Bitcoin would likely come up short of the second major resistance level at $10,728, however.

Failure to avoid a fall through the $10,508 pivot would bring the first major support level at $10,418 into play.

Barring an extended crypto sell-off, however, Bitcoin should steer clear of sub-$10,300 levels and the second major support level at $10,288.

European Equities: Private Sector PMIs , Powell, and COVID-19 in Focus

Economic Calendar:

Wednesday, 23rd September

GfK German Consumer Climate (Oct)

Spanish GDP (QoQ) (Q2)

French Manufacturing PMI (Sep) Prelim

French Services PMI (Sep) Prelim

German Manufacturing PMI (Sep) Prelim

German Services PMI (Sep) Prelim

Eurozone Manufacturing PMI (Sep) Prelim

Eurozone Markit Composite PMI (Sep) Prelim

Eurozone Services PMI (Sep) Prelim

Thursday, 24th September

German IFO Business Climate Index (Sep)

The Majors

It was a mixed day for the European majors following Monday’s sell-off. The DAX30 and EuroStoxx600 rose by 0.41% and by 0.20% respectively, while the CAC40 fell by 0.40%.

There was little influence from a light economic calendar on the day. While bank stocks continued to struggle amidst the latest scandal, dip-buyers delivered support on the day.

A softer EUR added support to the DAX30 in particular as the Dollar bounce back continued.

The Stats

It was a quiet day on the Eurozone economic calendar. The Eurozone’s flash consumer confidence figure was in focus late in the European session.

According to the latest survey, the Eurozone’s Consumer Confidence Indicator rose from -14.7 to -13.9 in September. Economists had forecast a rise to -14.6.

While up on the month, the indicator continued to sit well below the long-run average -11.1.

From the U.S

It was a busier day. While existing home sales figures for August were in focus, FED Chair Powell’s testimony on Capitol Hill was the main event of the day.

FED Chair Powell provided few surprises in his first speech of the week, however. Powell cited the path forward would depend on keeping COVID-19 under control and government policy moves.

The Market Movers

For the DAX: It was a relatively bullish day for the auto sector on Tuesday. Continental and Daimler rose by 1.48% and by 0.86% respectively to lead the way. BMW and Volkswagen weren’t far behind, with gains of 0.41% and 0.75% respectively.

It was another day in the red for the banks, however. Deutsche Bank fell by 1.78% following Monday’s 7.64% tumble, with Commerzbank ending the day down by 0.07%.

From the CAC, it was also a bearish day for the banks. BNP Paribas and Credit Agricole ended the day down by 0.52% and by 0.57% respectively. Soc Gen saw a more modest 0.10% loss following Monday’s 7.66% slide.

For the banking sector, the latest scandal continued to pressure European bank stocks on the day.

It was a bullish day for the French auto sector, which bucked the trend on the day. Peugeot and Renault ended the day with gains of 3.63% and 2.66% respectively.

Air France-KLM slid by 4.35% following Monday’s 7.63% slump, with Airbus SE following Monday’s 6.57% slide with a 2.68% loss.

The spike in new COVID-19 cases and fears of a reintroduction of containment measures continued to weigh on travel stocks.

On the VIX Index

On Tuesday, the VIX fell by 3.31%. Partially reversing a 7.55% gain from Monday, the VIX ended the day at 26.86.

Support came from dip-buying, with little else to provide the majors with direction following Monday’s pullback.

FED Chair Powell’s delivery also provided nothing new for investors to fret about on the day.

The NASDAQ and S&P500 rose by 1.71% and by 1.05% respectively, with the Dow seeing a more modest 0.52% gain.

VIX 23/09/20 Daily Chart

The Day Ahead

It’s a busy day ahead on the Eurozone economic calendar. Key stats German consumer confidence figures that are due out ahead of the European open.

Later in the morning, September’s prelim private sector PMIs are due out of France, Germany, and the Eurozone.

Following some disappointing numbers from August, there will be plenty of interest in today’s stats.

Any general downward trend in the PMIs and expect the majors to come under pressure. With new COVID-19 cases on the rise and the threat of lockdown measures lingering, COVID-19 chatter will also influence.

On the geopolitical risk front, there’s also Brexit and tensions between the U.S and China to monitor.

From the U.S, prelim private sector PMIs and Powell’s 2nd day of testimony on Capitol Hill will also influence late in the day.

The Futures

In the futures markets, at the time of writing, the Dow was up by 36 points.

For a look at all of today’s economic events, check out our economic calendar.

US Stock Market Overview – Stocks Rebound Led by the Nasdaq; Housing Sales Rise

US stocks whipsawed between positive and negative territory for most of the trading session. The Nasdaq rebounded and was the best performer of the major averages on Tuesday. Most sectors in the S&P 500 index were higher, led up by real estate, financials were the worst-performing sector. Existing Home sales moved higher in August, as inventories continued to decline. The VIX volatility index moved lower but remains elevated near 27%. The US coronavirus case numbers exceeded 200K. Senator Romney said that he would want to consider who President Trump put forward as a Supreme Court Justice. Technology shares moved higher on Tuesday, as some of the major tech stocks rebounded from Monday’s tumble.

The Fed’s Powell Says it Does What it Will Take

Federal Chair Jerome Powell pledged continued support for the US economy that he said has shown substantial improvement. Powell said this in testimony to the House Financial Services Committee.  Powell reiterated the Fed’s commitment to helping the economy through the coronavirus pandemic and outlined what’s been done so far. He also said that he would do whatever it takes.

Existing-Home Sales Rise

US existing home sales increased by 2.4% to a rate of 6 million units, according to the National Association of Realtors. Sales were 10.5% year over year. This is the highest sales pace since December 2006. Sales were weighed on by the lack of inventory.  There were 1.49 million homes for sale at the end of August, down 18.6% year over year. This elevated the median price of an existing home sold in August to a record high of $310,600. That is up 11.4% annually.

U.S. Stocks Mixed As Traders Evaluate Their Next Moves After Yesterday’s Sell-Off

Tesla Shares Lose Ground In Premarket Trading Ahead Of ‘Battery Day’

Tesla shares are down by almost 5% in premarket trading as investors prepare to hear the latest news on the company’s battery technology.

Tesla is expected to show improved batteries that will deliver better driving range and come at a lower cost. However, Elon Musk stated that “serious high-volume production” of new batteries will not come until 2022.

Tesla’s ‘Battery Day’ may set the tone for the trading of other tech stocks as big tech names often trade as a group. While Tesla is not yet included into S&P 500, it has a significant impact on market mood.

It remains to be seen whether traders will be able to shrug off yesterday’s fears about the second wave of lockdowns in Europe. Currently, S&P 500 futures are swinging between gains and losses in premarket trading as traders are undecided about the near-term direction of the market.

UK Encourages Working From Home But Oil Still Tries To Get Back Above The $40 Level

WTI oil made an attempt to settle back above the psychologically important $40 level despite increasing risks of a second wave of lockdowns that may hurt oil demand.

Perhaps, traders are betting that new restrictions will be limited and will not have a major impact on oil demand recovery.

If oil manages to gain some ground today, the beaten oil-related stocks will have a chance to rebound. However, traders should note that virus fears may return at any moment as the situation in Europe remains challenging.

Miners In Spotlight As Strong Dollar Puts Serious Pressure On Gold And Silver

U.S. dollar managed to gain upside momentum against a broad basket of currencies as traders sold riskier assets amid fears about lockdowns and their negative impact on the world economy.

Strong dollar put significant pressure on silver which declined from $27.00 to $24.00 and tries to settle below the $24 level. Meanwhile, gold is attempting to settle below the $1900 level.

Gold and silver miners have already been hit hard during yesterday’s trading session and may find themselves under significant pressure today if gold and silver continue their downside moves.

For a look at all of today’s economic events, check out our economic calendar.

The FBS CopyTrade Team Presents New Updates in ‘Pro Trader’

The FBS CopyTrade team is constantly working hard to make investing for the users of the app more convenient and effortless. The platform is being named one of the most user-friendly and convenient social trading apps from year to year.

This time the FBS CopyTrade team developed a major update in the ‘PRO Trader’ feature’s workflow to continue living up the name. Now all the traders who share their accounts to the FBS CopyTrade App and have $5000 or more on it can become PRO.

PROs are the most trustworthy and experienced traders to copy in the FBS CopyTrade App. They can also set a commission they see fit and get more profit after the closing of their successful orders.

The FBS CopyTrade team made a thoughtful decision to give a PRO status to all the traders who have $5000 on their trading account because the traders who operate with such an amount of assets definitely know what they do on the Forex market.

The FBS CopyTrade App is a dynamically developing platform for social trading. It is usually named the most user-friendly and easy-to-use copy trading application.

The app was launched in 2018. It is used by more than 5 million investors. FBS CopyTrade allows people who are less experienced in trading to increase their capitals by copying the selected skilled traders. The traders get an income from each copier’s deposit after a successful transaction. The support team of the app operates 24/7 with more than 15 languages.


FBS is an international broker with over 190 countries of presence and 11 years of expertise, providing knowledge via free seminars, special events, educational materials, and daily analytics.

FBS is an official trading partner of FC Barcelona from January 2020.

Asia Pacific Shares Fall as Investors Shun Riskier Assets on Rising COVID-19 Concerns

The major Asia Pacific stock indexes were broadly weaker Tuesday as possible delays in expanded U.S. stimulus and concerns about fresh pandemic lockdowns in Europe dented the recent positive sentiment towards global equity markets. South Korea’s KOSPI led losses among the region’s major markets.

In the cash market, Hong Kong’s Hang Seng Index settled at 23716.85, down 233.84 or -0.98% and South Korea’s KOSPI Index finished at 2332.59, down 56.80 or -2.38%.

China’s Shanghai Index settled at 3274.30, down 42.63 or -1.29% and Australia’s S&P/ASX 200 closed at 5784.10, down 38.50 or -0.66%.

Japan’s Nikkei 225 Index remained closed for a bank holiday for a second session.

China Stocks End Lower as Surge in Global Virus Cases Weigh

China stocks closed lower on Tuesday as material and transport firms dropped following worries about a surge in global cases of the novel coronavirus.

Beijing is unlikely to approve an “unfair” deal Oracle Corp and Walmart Inc said they have struck with ByteDance over the future of video-streaming app TikTok, state-backed newspaper Global Times said in an editorial.

Among sectors, only securities firms gained as investors cheered latest consolidation in the industry. The Guolian-Sinolink merger could help consolidate financial resources and promote healthy development of the securities industry, analysts at Guosen Securities said in a report.

Consumer shares erased earlier gains through losses were narrower than other sectors.

China’s cabinet on Monday issued guidelines to boost new types of consumption, including online shopping and payments, in a bid to support the recovery of the economy.

South Korean Stocks Post Worst Fall in a Month on Europe Lockdown Concerns

South Korean shares dropped nearly 2.4% on Tuesday, logging the sharpest decline in a month, as investors shunned riskier assets on concerns about new coronavirus restrictions in Europe. Both the won and the benchmark bond yield weakened.

With COVID-19 infections on the rise in Europe, countries including Denmark, Greece and England have tightened restrictions, spurring fears about fresh lockdowns that could further pressure the economy.

Most of South Korea’s market heavyweights slumped, with the two largest – Samsung Electronics and SK Hynix – falling 1.7% and 3.8%, respectively.

LG Chem, a Tesla supplier, soared as much as 5.1% ahead of the electric-car maker’s “Battery Day” event on hopes for increased battery cell purchases from Tesla.

Finally, the Bank of Korea said it sees no need to downgrade its current economic growth projections, even after the government imposed tougher social distancing measures to curb a spike in coronavirus cases in late August.

For a look at all of today’s economic events, check out our economic calendar.

Brexit and COVID-19 – The Pound Sits in the Hands of Parliament…

The Internal Market Bill – What’s next?

At the start of the week, the Internal Market Bill had yet to progress to the House of Lords.

While the bill sat in limbo, however, the chatter continued as members of Parliament continued to air their views.

This time around, it was ex-Prime Minister Theresa May who spoke out from the political wilderness.

Having failed to move Brexit along, some appear to have been surprised by the willingness to air a view that was likely to be chastised by many.

Theresa May spoke out at the start of the week saying that she could not support the proposed bill.

The ex-Prime Minister certainly didn’t hold back, calling Johnson’s move both reckless and irresponsible.

Ironically, it reflected Theresa May’s stance on Brexit, a pro-European at heart.

Later this morning

The House of Commons is scheduled to debate Boris Johnson’s Internal Market Bill.

With Johnson’s commanding majority, there is unlikely to be too much concern over Theresa May’s outburst and lack of support.

Expectations are for the bill to be revised to ensure the inclusion of the parliamentary vote before any breach of the Withdrawal Agreement is permitted. The Parliamentary Lock looks to have appeased a number of pro-Brexiteers that had been against the original bill.

As for the House of Lords, the vote on the Internal Market Bill is not due to take place until November.

Between now and November, there will be last gasp attempts by both the EU and Britain to come to a Brexit agreement.

While the bill may not have passed through the House of Lords, Johnson will no doubt use it as part of the negotiations.

Last week, we talked of Johnson taking a leaf out of the U.S President’s book. Unfortunately, for Johnson, however, some MPs are devaluing the bargaining chip by stating their lack of support for the bill.

How the EU responds remains to be seen but we can expect plenty of chatter once Parliament makes its amendments.

The Pound, COVID-19, and Brexit

At the time of writing, the Pound was up by just 0.04% to $1.2807 for the day.

While Brexit has been a key driver for the Pound of late, sinking it back to sub-$1.30 levels, there’s also COVID-19 to consider.

The markets will be looking ahead to a government statement ahead of the Internal Market Bill debate.

News of a spike in new COVID-19 cases doesn’t bode well for the UK economy or the Pound.

Boris Johnson’s statement later this morning will likely deliver new measures to curb the accelerating spread of the virus.

Stricter than anticipated measures will hurt the Pound that has struggled this morning. The markets are expecting stricter enforcement of social gatherings and the early closure of social venues in the UK.

While the service sector activity has recovered from the COVID-19 meltdown, a reintroduction of containment measures will hurt the sector.

Last week, we heard the BoE talk of negative rates. Another lockdown would certainly force the BoE’s hand and the Pound deeper into the red.

GBP/USD 22/09/20 Hourly Chart

Fed News: Bullard’s Hawkish View on Strength of Recovery Contrasts With Powell’s Dovish Outlook

The week began with a slew of Federal Reserve speakers, who investors were hoping would shed light on the U.S. central bank’s new approach to inflation. Federal Chairman Jerome Powell is due to appear before Congressional committees all week, while Fed committee members Lael Brainard, Charles Evans, Raphael Bostic, James Bullard, Mary Daly and John Williams are also scheduled to make public speeches.

The general consensus among traders suggested that if Jerome Powell and the other Fed speakers failed to add more details to the Fed plans for how it is going to reach an average 2% inflation, the U.S. Dollar could move higher like it did after last week’s Fed monetary policy announcements.

Fed’s Powell Says Central Bank Committed to Using All Tools to Help Recovery

The Federal Reserve remains committed to using all the tools at its disposal to help the U.S. economy recovery from the blow delivered by the coronavirus pandemic, Chair Jerome Powell said on Monday.

“We remain committed to using our tools to do what we can, for as long as it takes, to ensure that the recovery will be as strong as possible, and to limit lasting damage to the economy.”

Powell said in remarks released ahead of Tuesday’s appearance before the House of Representatives Financial Services Committee, the first of three days of testimony to Congress this week.

Powell’s summation of the “marked improvement” in the economic landscape largely repeated what he said last week after the Fed’s latest policy meeting, at which policymakers promised to keep interest rates pinned at zero until the economy reaches full employment and inflation is on track to modestly overshoot the central bank’s 2% target, Reuters reported.

Fed’s Bullard Says U.S. Has Already Delivered Enough Fiscal Aid

Federal Reserve Bank of St. Louis President James Bullard said the U.S. economy has enough momentum to continue its recovery from the coronavirus slump even if Congress fails to pass additional taxpayer support, Bloomberg reported.

“I don’t think there is as much an imperative about a new fiscal package as there might have been” in July or August, Bullard said Monday in a Bloomberg Television interview with Kathleen Hays. “It seems like, at least in some broad macroeconomic type of calculation, we have enough resources to cover this.”

“We might be able to sustain a recovery through this,” he said. “I’m hopeful we still have enough in the pipeline to push us through, get the growth going in the second half of the year. That certainly seems to be what’s happening in the third quarter. I think that will continue in the fourth quarter and the first part of next year.”

Bullard’s Views Differ from Powell’s Outlook

Bullard’s view contrasts with Fed Chair Jerome Powell, who has urged additional fiscal aid and sometimes put the message in dire terms, as well as other Fed officials. In congressional testimony to be delivered Tuesday, Powell said the U.S. faces a long recovery with a high degree of uncertainty surrounding the pandemic, Bloomberg reported.

The U.S. economy may shrink 3%-4% this year, which is less than half of what was expected early during the crisis, so the $3 trillion in pandemic aid passed by Congress as well as he Fed’s easy monetary policy stance should help support growth during the recovery, Bullard said.

For a look at all of today’s economic events, check out our economic calendar.

US Stock Market: Declines Were Led by Value-Oriented Sectors as Opposed to Technology Stocks

The major U.S. stock indexes finished lower on Monday as concerns about new coronavirus restrictions and lockdowns in Europe and possible delays in fresh fiscal stimulus from Congress raised fears the U.S. economy faces a rockier road to recovery than previously hoped for.

Bad news for broad-based investors, in contrast to last week’s downturn, declines were led by value-oriented sectors such as industrials, energy and financials as opposed to technology stocks.

In the cash market on Monday, the benchmark S&P 500 Index settled at 3281.06, down 38.41 or -1.13%. The blue chip Dow Jones Industrial Average finished at 27147.70, down 509.72 or -1.82% and the technology-driven NASDAQ Composite closed at 10778.80, down 14.48 or -0.13%.

At its worst, the Dow was down as much as 900 points while the S&P 500 ended down less than 9% from its record high on September 2 after paring losses that had pushed the benchmark nearly into corrective territory. This year’s rally was led by a number of technology heavyweights, and the current correction is being fueled by the same shares with the NASDAQ Index down over 10% from its top and officially in a correction.

Negative Factors Affecting the Trade

Airline, hotel and cruise companies tracked declines in their European peers as Britain signaled the possibility of a second national lockdown. Europe’s travel and leisure index marked its worst two-day drop since April.

A new round of business restrictions would threaten a nascent recovery and further pressure equity markets. The first lockdowns in March led the S&P 500 to suffer its worst monthly decline since the global financial crisis.

The death of U.S. Supreme Court Justice Ruth Bader Ginsburg also appeared to make the passage of another stimulus package in Congress less likely before the November 3 presidential election, sparking large declines in the healthcare sector.

Ginsburg’s death could lead to a tie vote when the Supreme Court hears a challenge to the constitutionality of ACA in November.

Congress has for weeks remained deadlocked over the size and shape of another coronavirus-response bill, on top of the roughly $3 trillion already enacted into law.

Stocks on the Move

The largest gainer on the NASDAQ 100 was Zoom Video Communications Inc, which rose 6.8% on the prospect that fresh lockdowns would spur greater use of the product.

JPMorgan Chase & Co and Bank of New York Mellon Corp fell 3.1% and 4.0%, respectively, on reports that several global banks moved large sums of allegedly illicit funds over nearly two decades despite red flags about the origins of the money.

For a look at all of today’s economic events, check out our economic calendar.

FED Chair Powell Puts the Dollar in Focus as COVID-19 Continues to Rile the Markets

Earlier in the Day:

It’s was a particularly quiet start to the day on the economic calendar this morning. There were no material stats to provide direction in the early part of the day.

A lack of stats left the markets to consider the market moves through the European and U.S sessions on Monday.

Risk aversion plagued as investors considered the possibility of a reintroduction of lockdown measures across the EU.

Recent spikes in new COVID-19 cases stemming from governments looking to boost economic activity could ultimately derail any recovery.

The Majors

At the time of writing, the Japanese Yen was up by 0.11% ¥104.53 against the U.S Dollar. The Aussie Dollar was down by 0.21% to $0.7209, with the Kiwi Dollar down by 0.01% to $0.6667.

The Day Ahead:

For the EUR

It’s a quiet day ahead on the economic calendar. Eurozone consumer confidence figures are due out late into the European session.

The bigger question, however, is whether the latest survey captures the effects of the latest COVID-19 spike.

A continued rise in new cases from the weekend will likely continue to test EUR support levels.

At the time of writing, the EUR was down by 0.08% to $1.1762.

For the Pound

It’s also a quiet day ahead on the economic calendar. CBI Industrial Trend Order figures for September are due out.

It remains to be seen whether there will be any sensitivity to the numbers, however. The threat of further lockdown measures as a result of an upward trend in new COVID-19 cases will have a far greater impact.

To make matters worse, the Pound also has Brexit to face in the week as the Internal Market Bill continues t cause political friction.

At the time of writing, the Pound was down by 0.07% to $1.2808.

Across the Pond

It’s a quiet day ahead for the U.S Dollar. Key stats include August’s existing home sales figures.

The numbers are unlikely to have a muted impact on the Dollar and market risk sentiment, however.

FED Chair Powell is in the spotlight once more, giving testimony on Capitol Hill. With the latest spike in new COVID-19 cases, Powell could take an even more cautious stance on the economic outlook. In the summer, the FED Chair had continued to cite COVID-19 as the greatest threat to an economic recovery.

The Dollar Spot Index was down by 0.04% to 93.623 at the time of writing.

For the Loonie

It’s a particularly quiet day ahead, with no material stats due out today.

The lack of stats will leave the Loonie in the hands of market risk sentiment on the day. A real threat of a reintroduction of lockdown measures in key economies does not bode well…

At the time of writing, the Loonie was down by 0.06% to C$1.3316 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

European Equities: The Futures Point Northwards after Monday’s COVID-19 Sell-off

Economic Calendar:

Tuesday, 22nd September

Eurozone Flash Consumer Confidence

Wednesday, 23rd September

GfK German Consumer Climate (Oct)

Spanish GDP (QoQ) (Q2)

French Manufacturing PMI (Sep) Prelim

French Services PMI (Sep) Prelim

German Manufacturing PMI (Sep) Prelim

German Services PMI (Sep) Prelim

Eurozone Manufacturing PMI (Sep) Prelim

Eurozone Markit Composite PMI (Sep) Prelim

Eurozone Services PMI (Sep) Prelim

Thursday, 24th September

German IFO Business Climate Index (Sep)

The Majors

It was a particularly bearish start to the week for the European majors on Monday. The DAX30 slumped by 4.37% to lead the way down, with the CAC40 and EuroStoxx600 sliding by 3.74% and by 3.24% respectively.

A fresh spike in new COVID-19 cases across EU member states weighed on the European majors on the day.

The sell-off continued on from Friday, following the WHO’s warning of Europe being in a “very serious situation”.

There were no major stats to distract the markets, with the fear of a reintroduction of lockdown measures doing the damage.

Following recent central bank commentary and economic indicators, the economic recovery had already begun to wane. A reintroduction of lockdown measures could hit the European economy far harder than the 1st time around.

The Stats

It was a quiet day on the Eurozone economic calendar. There were no material stats to provide the European majors with direction at the start of the week.

From the U.S

It was also a quiet day, with no material stats from the U.S session to provide the majors with direction.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Monday. Continental and Volkswagen slid by 5.21% and by 5.13% respectively to lead the way down. BMW and Daimler weren’t far behind, with losses of 4.41% and 3.91% respectively.

It was also a particularly bearish day for the banks. Deutsche Bank tumbled by 7.64%, with Commerzbank sliding by 5.42%.

From the CAC, it was much better for the banks. BNP Paribas and Credit Agricole ended the day down by 6.37% and by 5.36% respectively. Soc Gen led the way down, however, tumbling by 7.66%.

It was also a particularly bearish day for the French auto sector. Peugeot and Renault ended the day with losses of 4.91% and 7.75% respectively.

Air France-KLM slumped by 7.63%, with Airbus SE sliding by 6.57%.

On the VIX Index

It was back into the green for the VIX on Monday. Reversing a 2.38% loss from Friday, the VIX rose by 7.55% to end the day at 27.78.

The U.S majors hit reverse as investors responded to the spike in new COVID-19 cases that could derail the sputtering economic recovery.

The Dow and S&P500 fell by 1.84% and by 1.16% respectively, while the NASDAQ saw a more modest loss of 0.13%.

VIX 22/09/20 Daily Chart

The Day Ahead

It’s a quiet day ahead on the Eurozone economic calendar. Key stats include the Eurozone’s flash consumer confidence figures due out late in the day.

With little else to focus on through the day, we can expect sensitivity to the numbers. Consumer confidence and spending remain key to any sustainable economic recovery. Expect any disappointing numbers to peg the majors back.

From the U.S, FED Chair Powell is back in the spotlight, however. We would expect Powell’s testimony to have the final say on the day.

Away from the economic calendar, geopolitics and COVID-19 news updates will also need tracking.

The Futures

In the futures markets, at the time of writing, the Dow was up by 34 points, the DAX up by 148.5 points.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Stocks Set To Open Lower On Worries About The Second Wave Of COVID-19

Virus Fears Put Pressure On Stocks

S&P 500 futures are losing more than 1.5% during the premarket trading session as traders are worried about the second wave of coronavirus.

European countries are struggling to contain the virus, and new measures are implemented on a daily basis. Today, UK was in spotlight as England’s Chief Medical Officer Chris Whitty shared his view on the upcoming restrictions that would be necessary to contain the virus.

While the UK has not made a decision on the exact set of additional anti-coronavirus measures, Whitty stated that COVID-19 would be a six-month problem and that it was very likely that the virus would benefit from autumn and winter. Obviously, this is not what traders wanted to hear about the virus.

Commodities Also Fall On Virus Worries

WTI oil is back to the $40 level despite the support from the hurricane season in the U.S. and OPEC’s determination to ensure full compliance with the production cut deal.

Oil is set to be the main victim of a potential second wave of lockdowns in case such measures are implemented in Europe.

Gold and silver are also losing ground as virus worries provide support to the U.S. dollar. The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, has managed to return above the 20 EMA at 93.10 and is trying to gain more upside momentum.

Stronger dollar is bearish for precious metals as it makes them more expensive for buyers who have other currencies. If the U.S. dollar manages to continue its upside move, gold and silver prices will fall.

Weakness of S&P 500 futures and strong U.S. dollar create a bearish setup for commodity-related stocks at the beginning of today’s trading session.

Oracle Makes A Deal With ByteDance

U.S. President Donald Trump stated that he gave Oracle‘s deal with ByteDance his blessing so TikTok will not be blocked in the U.S.

A successful ending of the TikTok story could have provided more support to the market but traders are too focused on the second wave of the virus.

However, Oracle investors will not miss the news since Oracle shares are up about 4% in premarket trading despite the global market sell-off.

For a look at all of today’s economic events, check out our economic calendar.

Asia-Pacific Markets Rocked by Plunge in Hong Kong Bank Stocks, Rising Global Virus Fears

The major Asia-Pacific stock indexes were lower on Monday, with Hong Kong’s Hang Seng Index leading losses. Markets in Japan were closed on Monday for a holiday. The catalysts behind the weakness were reports that some Hong Kong banks moved suspicious funds, rising COVID-19 cases and escalating tensions between the United States and China.

In the cash market on Monday, Hong Kong’s Hang Seng Index settled at 23950.69, down 504.72 or -2.06% and South Korea’s KOSPI Index finished at 2389.39, down 23.01 or -0.95%.

In China, the Shanghai Index settled at 3316.94, down 21.15 or -0.63% and Australia’s S&P/ASX 200 Index closed at 5822.60, down 41.90 or -0.71%.

Hong Kong Leads Losses as HSBC and StanChart Shares Tumble after Reports Show They Moved Suspicious Funds

Hong Kong-listed shares of Standard Chartered and HSBC tumbled on Monday following reports that they allegedly moved large sums of suspicious funds.

By Monday afternoon, shares of Standard Chartered tumbled 4.84%. HSBC also plunged 4.52%, trading at lows not seen in more than 25-years, according to FactSet. The moves came after the banks – among several global lenders – were identified in media reports as having allegedly moved suspicious funds over a period of nearly two decades, according to Reuters. The reports cited confidential documents submitted by banks to the U.S. government.

China Shares End Lower as Key Lending Rate Kept Steady for 5th Month

China stocks ended lower on Monday, dragged by consumer staples and financial stocks after the central bank left its benchmark lending rate unchanged, with investors taking profits after expectations of further stimulus lifted shares in the previous session.

China kept its benchmark lending rate for corporate and household loans, the loan prime rate (LPR), steady for a fifth straight month, as expected. The monthly fixing came after the People’s Bank of China kept medium-term borrowing costs unchanged, and after President Xi Jinping said China’s economy remains resilient.

South Korea Stocks Dip as Global Virus Concerns Offset Domestic Export Boost

South Korean shares ended lower on Monday as concerns over surging coronavirus cases in Europe and fading U.S. fiscal stimulus hopes offset optimism around domestic trade and virus situations.

European countries from Denmark to Greece announced new restrictions on Friday to curb surging infections in some of their largest cities, while Britain was reported to be considering a new national lockdown.

In other news, South Korea’s exports for the first 20 days of the month returned to growth for the first time since March, helped by higher microchip and car sales, data showed on Monday.

For a look at all of today’s economic events, check out our economic calendar.

Geopolitics Keeps the Pound and the Dollar in Focus, with Lagarde to Test the EUR Later

Earlier in the Day:

It’s was a relatively start to the day on the economic calendar this morning. There were no material stats to provide direction in the early part of the day.

While the PBoC was in action, there was little market reaction to Beijing’s threat of retaliatory measures from the weekend was the key driver.

Beijing’s threat came in response to the U.S administration’s targeting of TikTok and WeChat. It had started long before, however, with the targeting of Huawei and CFO Meng Wanzhou.

Out of China

The PBoC held the 1-year and 5-year loan prime rates steady at 3.85% and 4.65% respectively. This was in line with forecasts and recent forward guidance from the PBoC.

Economic data from China has continued to support an in-country driven economic recovery.

The Aussie Dollar moved from $0.73066 to $0.73058 upon release of the PBoC decision. At the time of writing, the Aussie Dollar was up by 0.25% to $0.7307.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.13% ¥104.43 against the U.S Dollar, with the Kiwi Dollar up by 0.21% to $0.6773.

The Day Ahead:

For the EUR

It’s a particularly quiet day ahead on the economic calendar. There are no material stats due out of the Eurozone to provide direction.

Through the early part of the day, the latest COVID-19 numbers and U.S – China tensions will be in focus.

Late in the European session, ECB President Lagarde is scheduled to speak. There are unlikely to be too many surprises, however.

At the time of writing, the EUR was up by 0.15% to $1.1858.

For the Pound

It’s also a particularly quiet day ahead on the economic calendar, with no material stats to provide the Pound with direction.

The lack of stats will leave the Pound firmly in the hands of Brexit and the passage of the Internal Market Bill.

At the time of writing, the Pound was up by 0.29% to $1.2954.

Across the Pond

It’s a quiet day ahead for the U.S Dollar. There are also no material stats from the U.S to provide the Greenback with direction.

The lack of stats will leave the Dollar in the hands of chatter from Beijing and Capitol Hill. Any news COVID-19 concerns will also influence ahead of FED Chair Powell’s testimony in the week.

The Dollar Spot Index was down by 0.09% to 92.838 at the time of writing.

For the Loonie

It’s a quiet day ahead, with August new house price figures due out later today.

Don’t expect too much influence from the numbers, however. Any renewed tensions between the U.S and China could question China’s willingness to crank up the import of U.S goods. Such an outcome would not bode well for global trade terms and crude oil prices.

At the time of writing, the Loonie was up by 0.18% to C$1.3180 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

European Equities: Futures Point Lower, with COVID-19 and Geopolitics in Focus

Economic Calendar:

Monday, 21st September

ECB President Lagarde Speaks

Tuesday, 22nd September

Eurozone Flash Consumer Confidence

Wednesday, 23rd September

GfK German Consumer Climate (Oct)

Spanish GDP (QoQ) (Q2)

French Manufacturing PMI (Sep) Prelim

French Services PMI (Sep) Prelim

German Manufacturing PMI (Sep) Prelim

German Services PMI (Sep) Prelim

Eurozone Manufacturing PMI (Sep) Prelim

Eurozone Markit Composite PMI (Sep) Prelim

Eurozone Services PMI (Sep) Prelim

Thursday, 24th September

German IFO Business Climate Index (Sep)

The Majors

It was a bearish end to the week for the European majors on Friday. The CAC40 slid by 1.22%, with the DAX30 and EuroStoxx600 ending the day with losses of 0.70% and 0.66% respectively.

A fresh spike in new COVID-19 cases across EU member states weighed on the European majors on the day.

Ahead of the European session, the WHO had warned of a “very serious situation” developing in Europe. In a bid to revive consumption and tourism, governments have been active in reopening the respective economies.

With a reliance on consumption to deliver an economic recovery, the latest spikes raise the chances of fresh lockdown measures.

Adding further pressures on the majors at the end of the week were Brexit and U.S – China tensions.

The Stats

It was yet another quiet day on the Eurozone economic calendar. Key stats included August wholesale inflation figures from Germany.

Germany’s producer price index stalled in August, after having risen by 0.20% in July. Whilst beating forecasts of a 0.1% decline, market jitters over deflationary pressures tested the majors going into the European open.

With stats on the lighter side, there was little to distract the markets from the latest U.S-China spat, Brexit, and COVID-19, however.

From the U.S

Key stats included prelim September consumer sentiment and expectations figures.

While both stats were skewed to the positive, both indicators remained well below pre-pandemic levels.

In September, the Michigan Consumer Sentiment Index rose from 74.1 to 78.9, according to prelim figures. While coming in ahead of a forecasted 75.0, the indicator had stood at 101.0 for January.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Friday. Continental and Volkswagen slid by 3.97% and by 3.52% respectively. BMW and Daimler saw more modest losses of 1.72% and 1.91% respectively.

It was also a bearish day for the banks. Deutsche Bank and Commerzbank fell by 1.38% and by 3.11% respectively.

From the CAC, it was a bearish day for the banks. Credit Agricole and Soc Gen fell by 3.16% and by 3.05% respectively. BNP Paribas ended the day down by 2.34%.

It was a particularly bearish day for the French auto sector, however. Peugeot and Renault ended the day with losses of 4.35% and 4.03% respectively.

Air France-KLM fell by 1.93%, with Airbus SE sliding by 3.54%.

On the VIX Index

It was back into the red for the VIX, bringing to an end a run of 2 consecutive days in the green.

On Friday, the VIX fell by 2.38%. Reversing a 1.61% gain from Thursday, the VIX ended the day at 25.83.

U.S – China tension over TikTok and WeChat, rising COVID-19 cases, and the FED’s dovish outlook weighed on the majors.

The NASDAQ and S&P500 fell by 1.07% and by 1.12% respectively, with the Dow seeing a more modest loss of 0.88%.

VIX 21/09/20 Daily Chart

The Day Ahead

It’s a quiet day ahead on the Eurozone economic calendar. There are no material stats due out to provide the majors with direction.

With no material stats from the U.S, talk of retaliation from Beijing over Trump’s targeting of Chinese companies will test the majors.

There is also Brexit to factor in and the recent spike in new COVID-19 cases to consider. A continued rise in new cases could see a reintroduction of containment measures that would throw cold water over any sustainable economic recovery.

On the monetary policy front, Lagarde is due to speak late in the day. There are unlikely to be too many surprises, however, following the latest ECB press conference. That’s assuming that Lagarde holds back from talk of exchange rate risk to the Eurozone economic recovery…

The Futures

In the futures markets, at the time of writing, the Dow was up by 15 points, while the DAX was down by 32 points.

For a look at all of today’s economic events, check out our economic calendar.

The Crypto Daily – Movers and Shakers – September 21st, 2020

Bitcoin, BTC to USD, fell by 1.47% on Sunday. Reversing a 1.29% gain from Saturday, Bitcoin ended week up by 5.84% to $10,934.5.

It was a bearish start to the day. Bitcoin slid from an early morning intraday high $11,098.0 to a late afternoon intraday low $10,779.0.

Bitcoin fell through the first major support level at $10,950 and the second major support level at $10,803.

Finding late support, however, Bitcoin broke back through the second major support level to wrap up the day at $10,930 levels.

The near-term bullish trend remained intact, supported by the latest visit to $11,000 levels. For the bears, Bitcoin would need to slide through the 62% FIB of $6,400 to form a near-term bearish trend.

The Rest of the Pack

Across the rest of the majors, it was a bearish end to the week.

Bitcoin Cash SV and Tezos led the way down, with losses of 4.78% and 4.11% respectively.

Binance Coin (-3.05%), Bitcoin Cash ABC (-3.60%), and Ethereum (-3.78%) weren’t far behind.

Cardano’s ADA (-2.17%), EOS (-1.05%), Litecoin (-2.89%), Monero’s XMR (-1.72%), Ripple’s XRP (-1.79%), Stellar’s Lumen (-2.16%), and Tron’s TRX (-2.14%) saw relatively modest losses.

It was a mixed week for the crypto majors, however.

Bitcoin Cash ABC (+1.58%), Ethereum (+1.12%), Monero’s XMR (+8.00%), and Ripple’s XRP (+1.83%) bucked the trend in the week.

It was a bearish week for the rest of the pack.

Binance Coin (-15.52%), Tezos (-15.40%), and Tron’s TRX (-11.84%) led the way down.

Bitcoin Cash SV (-6.01%), Cardano’s ADA (-6.07%), EOS (-2.07%), Litecoin (-2.28%), and Stellar’s Lumen (-3.85%) also saw red.

In the week, the crypto total market fell to a Monday low $314.21bn before rising to a Saturday high $341.59bn. At the time of writing, the total market cap stood at $330.57bn.

Bitcoin’s dominance rose from a Monday low 59.64% to a Wednesday high 61.56%. At the time of writing, Bitcoin’s dominance stood at 61.25%.

This Morning

At the time of writing, Bitcoin was up by 0.30% to $10,967.0. A mixed start to the day saw Bitcoin fall to an early morning low $10,917.0 before rising to a high $10,967.0.

Bitcoin left the major support and resistance levels untested early on.

Elsewhere, it was a mixed start to the day.

Binance Coin (-0.25%), Bitcoin Cash SV (-0.59%), EOS (-0.19%), Litecoin (-0.23%), Monero’s XMR (-0.36%), Ripple’s XRP (-0.22%), and Tezos (-0.19%) saw early losses.

It was a relatively bullish day for the rest of the pack, however.

At the time of writing, Tron’s TRX was up by 0.62% to lead the way.

BTC/USD 21/09/20 Hourly Chart

For the Bitcoin Day Ahead

Bitcoin would need to avoid a fall back through the $10,937 pivot level to support a run at the first major resistance level at $11,095.

Support from the broader market would be needed, however, for Bitcoin to break back through to $11,000 levels.

Barring an extended crypto rally, the first major resistance level and Sunday high $11,098 would likely cap any upside.

In the event of a crypto breakout, Bitcoin could test the second major resistance level at $11,256 before any pullback.

Failure to avoid a fall back through the $10,937 pivot would bring the first major support level at $10,776 into play.

Barring an extended crypto sell-off, however, Bitcoin should steer clear of sub-$10,500 levels. The second major support level at $10,618 should limit any downside.

The Week Ahead – Private Sector PMIs, Powell, Geopolitics, and COVID-19 in Focus

On the Macro

It’s a particularly quiet week ahead on the economic calendar, with just 32 stats in focus in the week ending 25th September. In the week prior, 69 stats had been in focus.

For the Dollar:

It’s a relatively quiet week ahead on the economic data front.

Key stats include prelim private sector PMI numbers for September on Wednesday.

Expect the services PMI to have the greatest impact ahead of the all-important weekly jobless claims on Thursday.

Wrapping up the week, durable and core durable goods orders for August will also influence.

For the markets, it is all about momentum. Any weak numbers will test the demand for riskier assets.

On the monetary policy front, FED Chair Powell is also back in action, giving testimony on Capitol Hill. Following last week’s FOMC press conference, however, will there be any more surprises?

The Dollar Spot Index ended the week down by 0.44% to 92.926.

For the EUR:

It’s a busy week ahead on the economic data front.

In a quiet start to the week, Eurozone flash consumer confidence figures are due out on Tuesday. The EUR will likely respond to the numbers ahead of a busy Wednesday.

Consumer confidence and spending remain key to any economic recovery across the Eurozone. Any weak numbers would test support for the EUR.

The focus will then shift to the busy Wednesday.

September’s prelim private sector PMIs for France, Germany, and the Eurozone are due out. Alongside the figures, Spanish GDP and German consumer confidence figures are also in focus on Wednesday.

The focus will then shift to September’s Ifo Business Climate and sub-index figures due out on Thursday.

While we can expect the private sector PMIs to be the key drivers, both business and consumer confidence will need to improve.

Concerns over economic speed bumps will raise EUR sensitivity to the stats in the week.

On the monetary policy front, ECB President Lagarde is due to speak on Monday. Expect any references to inflation or exchange rates and the economic outlook to influence.

The EUR/USD ended the week down by 0.05% to $1.1840.

For the Pound:

It’s a quieter week ahead on the economic calendar. September’s prelim private sector PMIs, due out on Wednesday, will be the key driver.

Following last week’s BoE forward guidance and chatter on Brexit, the Pound will be sensitive to the numbers.

CBI Industrial Trend Orders are also due out but will likely have a muted impact, barring dire numbers.

On the monetary policy front, BoE Governor Bailey is scheduled to speak on Thursday. Any further chatter on negative rates and a gloomy economic outlook would weigh on the Pound.

The GBP/USD ended the week down by 0.95% to $1.2917.

For the Loonie:

It’s a quiet week ahead on the economic calendar.

House price figures for August are due out that will likely have a muted impact on the Loonie.

Expect the private sector PMIs from the Eurozone and the U.S and market risk sentiment to be key drivers.

Geopolitics and COVID-19 will influence market risk sentiment in the week.

The Loonie ended the week down by 0.19% to C$1.3204 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a particularly quiet week ahead on the economic calendar.

There are no material stats due out of Australia to provide the Aussie with direction.

That leaves the Aussie in the hands of geopolitics and the global economic outlook influenced by the PMIs.

The Aussie Dollar ended the week up by 0.07% to $0.7289.

For the Kiwi Dollar:

It’s a relatively quiet week ahead on the economic calendar but an important one for the Kiwi Dollar.

Key stats include August trade figures due out on Thursday. We’ve seen plenty of sensitivity to China numbers of late, so expect the devil to be in the details.

Earlier in the week, however, is the RBNZ monetary policy decision on Wednesday. There had been the talk of negative rates. Will there be action or just some more chatter? Economic indicators have yet to impress despite all of the support.

The Kiwi Dollar ended the week up by 1.40% to $0.6759.

For the Japanese Yen:

It is a quiet week ahead on the economic calendar.

Prelim private sector PMI numbers for September will be in focus mid-week. Other than that, there are no stats to consider, leaving the Yen in the hands of geopolitics and COVID-19 news.

On the monetary policy front, BoJ monetary policy meeting minutes will likely have a muted impact. The minutes are dated following last week’s monetary policy decision.

The Japanese Yen ended the week up by 1.50% to ¥104.57 against the U.S Dollar.

Out of China

It’s a particularly quiet week ahead on the economic data front.

There are no material stats due out of China, leaving geopolitics in focus in the week.

On the monetary policy front, the PBoC is in action on Monday. We don’t expect any further cuts in Loan Prime Rates, however. PBoC forward guidance and recent economic data support a hold.

The Chinese Yuan ended the week up 0.95% to CNY6.7692 against the U.S Dollar.

Geo-Politics

UK Politics

The Pound found much-needed support last week. Brexit will remain a key driver in the week ahead, however. We have the House of Lords vote on the Internal Market Bill that could throw Brexit negotiations into chaos. Last week, the British PM attempted to soften the impact of the internal market bill. An amendment to the bill was made to prevent ministers from using the bill to override the Brexit Withdrawal Agreement without a parliamentary vote.

It will get interesting as, while this may have placated some of Johnson’s critics, it may not satisfy the EU…

All in all, it spells for a choppy week ahead for the Pound.

U.S – China

Last week, Trump hit TikTok and WeChat. From the weekend, news hit the wires of Beijing taking retaliatory steps in response.

China issued a warning stating that if the U.S insists on going its own way, China would take the necessary steps to protect the rights and interests of Chinese firms.

We can expect more in the week ahead, particularly with Trump trailing Biden in the polls…

U.S Politics

Presidential Election fever should start to pick up and begin to have a greater influence on the global financial markets.

Trump has yet to claw back the deficit that Biden has enjoyed since COVID-19 reached U.S shores.

Expect Trump’s distraction tactics to draw plenty of attention.

U.S Mortgage Rates Hold Steady thanks to the Dovish FED

Mortgage rates were mixed in the week ending 17th September. Following a tumble to a new record low, 30-year fixed rose by 1 basis point to 2.87%. In the week prior, the 30-year fixed had fallen by 7 basis points to 2.86%.

Compared to this time last year, 30-year fixed rates were down by 86 basis points.

30-year fixed rates were also down by 207 basis points since November 2018’s most recent peak of 4.94%.

Economic Data from the Week

Economic data was on the busier side in the 1st half of the week.

Key stats included August industrial production and retail sales figures and September NY Empire State Manufacturing Index numbers.

It was a mixed bag on the economic data front. While retail sales and industrial production saw further upside, both fell short of forecasts.

A pickup in NY State manufacturing sector activity was the only positive.

The stats had a limited impact on the yields, however. It was the FED’s monetary policy decision, projections, and Powell press conference that pinned back yields.

A particularly dovish outlook on interest rates weighed on U.S Treasury yields on Wednesday, pinning mortgage rates back.

Based on the FOMC projections, the FED sees interest rates holding at close to 0% until 2023. The markets had not anticipated such an accommodative stance by the FED. Ultimately, it was a reflection of the concerns over the economic outlook.

Freddie Mac Rates

The weekly average rates for new mortgages as of 10th September were quoted by Freddie Mac to be:

  • 30-year fixed rates increased by 1 basis points to 2.87% in the week. Rates were down from 3.73% from a year ago. The average fee remained unchanged at 0.8 points.
  • 15-year fixed rates fell by 2 basis points to 2.35% in the week. Rates were down from 3.21% compared with a year ago. The average fee increased from 0.7 points to 0.8 points.
  • 5-year fixed rates slid by 15 basis points to 2.96% in the week. Rates were down by 53 points from last year’s 3.49%. The average fee rose from 0.2 points to 0.3 points.

According to Freddie Mac,

  • In spite of the recession, low mortgage rates continued to draw first-time buyers into the real estate market.
  • In August, first-time buyer activity jumped by 19% from July to the highest monthly level ever for Freddie Mac.

Mortgage Bankers’ Association Rates

For the week ending 11th September, rates were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA, remained unchanged at 3.16%. Points decreased from 0.42 to 0.35 (incl. origination fee) for 80% LTV loans.
  • Average interest rates for 30-year fixed with conforming loan balances remained unchanged at 3.07%. Points declined from 0.36 to 0.32 (incl. origination fee) for 80% LTV loans.
  • Average 30-year rates for jumbo loan balances increased from 3.40% to 3.41%. Points decreased from 0.31 to 0.27 (incl. origination fee) for 80% LTV loans.

Weekly figures released by the Mortgage Bankers Association showed that the Market Composite Index, which is a measure of mortgage loan application volume, fell by 2.5% in the week ending 11th September. In the week prior, the Index had increased by 2.9%.

The Refinance Index declined by 4% from the previous week and was 30% higher than the same week a year ago. In the previous week, the index had increased by 3%.

The refinance share of mortgage activity slipped from 63.1% to 62.8%. In the week prior, the share had increased from 62.5% to 63.1%.

According to the MBA,

  • Mortgage rates held steady and have now hovered near the 3% mark for the past 2-months.
  • While conventional refinances saw a decline, overall activity was still 30% higher than a year ago.
  • Following the flurry of refinancing activity in recent months, demand may wane as borrowers look for another sizeable drop.
  • Last week, applications to buy a home fell, while the underlying trends remain strong.
  • Purchase activity has outpaced year-ago levels for 17-consecutive weeks.

For the week ahead

It’s a quieter 1st half of the week on the U.S economic calendar.

Key stats include September’s prelim private sector PMIs due out on Wednesday.

We would expect plenty of sensitivity to the numbers following the FED dovish outlook on monetary policy and the economic recovery.

Away from the economic calendar, geopolitics and COVID-19 will also be in focus. The markets will need to track chatter from Beijing and Washington and on Brexit.

Last week’s COVID-19 spikes will also be an issue should there be further spikes across the U.S, the EU, and other parts of the world.

The Crypto Daily – Movers and Shakers – September 20th, 2020

Bitcoin, BTC to USD, rose by 1.29% on Saturday. Following a 0.02% slip on Friday, Bitcoin ended the day at $11,098.

It was a range-bound start to the day. Bitcoin dipped to a late morning intraday low $10,920.0 before making a move.

Steering clear of the first major support level at $10,834, Bitcoin struck a mid-day intraday high $11,185.0.

Bitcoin broke through the first major resistance level at $11,073 before easing back.

Coming up against the second major resistance level at $11,188, Bitcoin fell back through the first major resistance level to sub-$11,040 levels.

Finding late support, however, Bitcoin broke back through the first major resistance level to wrap up the day at $11,090 levels.

The near-term bullish trend remained intact, supported by the latest visit to $11,000 levels. For the bears, Bitcoin would need to slide through the 62% FIB of $6,400 to form a near-term bearish trend.

The Rest of the Pack

Across the rest of the majors, it was another mixed day on Saturday.

Binance Coin (-1.74%), Bitcoin Cash SV (-0.70%), Litecoin (-0.14%), Tezos (-2.79%), and Tron’s TRX (-4.81%) saw red on the day.

It was a bullish day for the rest of the majors, however.

Bitcoin Cash ABC (0.10%), Cardano’s ADA (+0.56%), EOS (+0.47%), Ethereum (+0.16%), Monero’s XMR (+2.11%), Ripple’s XRP (+0.17%), and Stellar’s Lumen (+0.28%) joined Bitcoin in the green.

In the current week, the crypto total market fell to a Monday low $314.21bn before rising to a Saturday high $341.59bn. At the time of writing, the total market cap stood at $336.10bn.

Bitcoin’s dominance rose from a Monday low 59.64% to a Wednesday high 61.56%. At the time of writing, Bitcoin’s dominance stood at 60.89%.

This Morning

At the time of writing, Bitcoin was down by 0.13% to $11,084.0. A bearish start to the day saw Bitcoin fall from an early morning high $11,098.0 to a low $11,081.0

Bitcoin left the major support and resistance levels untested early on.

Elsewhere, it was another mixed start to the day

Bitcoin Cash SV (+0.31%) and Tezos (+0.28%) bucked the trend with modest gains early on.

It was a bearish start to the day for the rest of the majors, however.

At the time of writing, Tron’s TRX was down by 0.92% to lead the way down.

BTC/USD 20/09/20 Hourly Chart

For the Bitcoin Day Ahead

Bitcoin would need to avoid a fall through the $11,068 pivot level to support a run at the first major resistance level at $11,215.

Support from the broader market would be needed, however, for Bitcoin to breakout from Saturday’s high $11,185.0.

Barring an extended crypto rally, the first major resistance level and current week high $11,185.0 would likely cap any upside.

In the event of a crypto breakout, Bitcoin could test the second major resistance level at $11,333 and resistance at $11,500 before any pullback.

Failure to avoid a fall through the $11,068 pivot would bring the first major support level at $11,950 into play.

Barring an extended crypto sell-off, however, Bitcoin should steer clear of sub-$10,700 levels. The second major support level at $11,803 should limit any downside.