Midday Analysis – 11th August 2020

Today’s Market Outlook

In Asia, Asian markets overall rose broadly today after the strong close in US stocks, with the Nikkei up by 1.90%. Hong Kong HSI is up 2.30%. China Shanghai SSE is up 0.33%. Singapore Strait Times is up 0.22%. Japan 10-year JGB yield is up 0.0176 at 0.028. Overnight, DOW rose 1.30%. S&P 500 rose 0.27%. NASDAQ dropped -0.39%. 10-year yield rose 0.012 to 0.574. Technically, Hong Kong HSI seems to be withstanding the political turbulence rather well with strong 2.3% gain at the time of analysis. Shorter term channel support seems to be defended well and focus is back on key or significant resistance levels to confirm. That would temporarily ease the threat of risk aversion out of Asia. 

For the currencies market, the risk tone was a clear driver of markets, especially shown with NZD and AUD the strongest of the majors. This is, despite the latest NAB Business Confidence figures that fell back to -14, which also underlined the negative impact, of the coronavirus outbreak in Victoria is having on Australia’s economy. On the contrary, safe havens like the JPY and CHF are currently the weakest of the FX majors. As such, the session saw AUDJPY break firmly above yesterday’s high and the 76.00 handle while NZDJPY broke above the 70.00 handle. The JPY and USD are both back under selling pressure, together with the CHF. Overall, commodity currencies are generally stronger, with AUD leading the way higher.as mentioned above. 

As for Gold, rising Treasury yields together with a firmer U.S. Dollar as of yesterday, are weighing on gold prices, since investors seemed to be returning to the safety of the USD. This is so, right after Beijing smacked sanctions on U.S. officials in the latest flare-up in tensions between the United States and China, with investors also keeping a close watch on negotiations over a U.S. stimulus plan. The main trend is up according to the daily swing chart; however, momentum is trending lower. A trade through $2089.20 will signal a resumption of the uptrend. The main trend will change to down on a breakthrough the last main bottom at $1819.30. 

Today’s High Impact Events

The times below are GMT+3

09.00 (Post) – UK Claimant Count Change 

Claimant Count Change presents the change in the number of people claiming unemployment benefits during the given month. An increase in the claimant count is an indication of weakness in the labour market and can have a negative effect on the GDP quotes. GBP/USD as of time of analysis today, is trading near 1.3070 following the data that was released, while the UK’s labour market results showed mixed results for the month of June. The focus now shifted to GDP figures, Industrial Production due tomorrow. 

Potential instruments to Trade: GBP Crosses.

12.00 – ZEW Germany Economic Sentiment Indicator 

The ZEW Indicator of Economic Sentiment for Germany decreased slightly in July 2020.The assessment of the economic situation in Germany has improved slightly for the second time since January 2020. The corresponding indicator currently stands at minus 80.9 points, an increase of 2.2 points compared to June. Going forward, traders would keep a watch on Euro-zone’s ZEW survey economic sentiment for August along with Germany’s ZEW survey current situation and economic sentiment, both for August, slated to release to in less than an hour’s time. 

Potential instruments to Trade: EUR Crosses.

Coronavirus Status Update 

The number of confirmed coronavirus cases worldwide topped 20 million today, more than half of them from the U.S., India and Brazil. It took six months or so to get to 10 million cases after the virus first appeared in central China late last year. It took just over six weeks for that number to double. 

US COVID-19 cases +48,690 (prev. +54,590) and deaths +558 (prev. +1,064), while a major newswire tally stated that US cases increased by at least 48,405 to a total of 5.11mln on Monday and deaths rose by at least 541 to a total of 163.2k. 

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