Market Update: Quiet Week Ahead, Doubts Over Global Economy Recovery
(17 Aug 2020)
With the US Congress heading to their month-long holiday, and little announcements scheduled for major regions’ central banks, it will be a quiet week for the forex scene. On Monday morning USD continues its downward slide for the 9th consecutive week; however, other major currencies did not react with strong bulls as each has their concerns.
USD
The bear continues this Monday morning for the Dollar, worries on stagnant US economic recovery and lack of stimulus package continues to weigh down on the support momentum caused by rising bond yields and safe-harbour demand.
US economy is in need of larger and constant stimulus package to recover from the damage caused by Coronavirus, but this wouldn’t be possible with the Congress members leaving for vacation. The latter also means postponement of the Sino-US trade deal discussion. Furthermore, the Trump government is more interested in campaigning for the next election instead of containing the pandemic properly.
This week’s event:
Mon – NY Empire State Manufacturing Index
Tue – Building Permits (Jul)
Wed – Crude Oil Inventories, FOMC Meeting Minutes
Thu – Philadelphia Fed Manufacturing Index (Aug), Initial Jobless Claims
Fri – Existing Home Sales
EUR
This morning sees EUR/USD extends its 2-day rally into the 3rd day, recording a near 300pips gain from 1.18327 open to 1.18606. Technical indicators seem to be overbought and vulnerable to pullback corrections. Despite technical data’s overbought reading, weak US economic recovery will pin strong support position.
In the Eurozone, France’s Coronavirus pandemic is resurging, while other EU members do not report any bullish-inducing news. The market is waiting for ECB meeting on Thursday, and Germany and France’s Manufacturing Data on Friday.
This week’s event:
Wed – CPI
Thu – German PPI, ECB Monetary Policy Meeting,
Fri – French Manufacturing PMI, German Manufacturing PMI
AUD
The AUD/USD pair hits a record high of 0.7242 last week, the highest since Feb 2019. China’s economic improvement proves to be supporting the AUD bull even though the Victoria State is still in lockdown to contain the pandemic.
As mentioned above, US Congress’s recess halted the discussion for Coronavirus stimulus package, this caused prevalent selling bias and boosted the pair’s bullish advance.
This week’s event:
Mon – RBA Meeting Minutes
GBP
The GBP/USD pair traded sideways this morning without any strong bias. this weeks attention are on UK’s retail sales data, local Coronavirus cases, and US’s Fed meeting minutes to lead the major trend for the pair.
UK and EU are set to start another round of Brexit trade deal discussion tomorrow, with Britain’s chief negotiator, David Frost optimistically stated that an agreement could be reached in September, which if successful then it will be a huge bullish support for the British Pound.
This week’s event:
Tue – Brexit negotiation
Wed – CPI
Fri – Retail Sales, Composite PMI, Manufacturing PMI, Services PMI
Asian Session Today Morning
USD Index (DXY) slumped to 93.09 from last week’s highest of 93.91
USD/CNY dropped to 6.942 from last week’s highest of 6.972
USD/JPY shot to 106.48 from last week’s lowest of 105.71
EUR/USD shot to 1.1835 from last week’s lowest of 1.1711
AUD/USD rose to 0.7172 from last week’s lowest of 0.7109
GBP/USD rose to 1.3082 from last week’s lowest of 1.3005
XAU/USD crashed to 1951.07 from last week’s highest of 2049.91
Data from Tradingview.com (UTC+8)
Sources:
https://www.fxstreet.com/news/sp-500-futures-mildly-bid-above-3-350-as-us-congress-will-return-to-session-202008170104
https://www.fxstreet.com/news/gbp-usd-robust-uk-retail-sales-and-dovish-fed-to-cheer-sterling-up-202008170659
https://www.fxstreet.com/news/aud-usd-eases-from-1-week-tops-fails-ahead-of-07200-mark-202008170713
https://www.investing.com/news/forex-news/dollar-in-the-doldrums-us-politics-fed-minutes-eyed-2267740
https://www.investing.com/news/forex-news/forex–dollar-weakens-2266054
