Midday Analysis – 28th July 2020

Today’s Market Outlook

In Asia, the Nikkei closed down slightly by -0.26%. Hong Kong HSI is up 0.29%. China Shanghai SSE is up 0.31%. Singapore Strait Times is up 0.38%. Japan 10-year JGB yield is up 0.0035 at 0.023. Overnight, DOW rose 0.43%. S&P 500 rose 0.74%. NASDAQ rose 1.67%. 10-year yield rose 0.020 to 0.609. 

In the currencies market, the USD seemed to have recovered mildly today as markets start to digest recent broad-based losses. Gold and silver are also in retreats after their initial spiked-up moves. But the movements so far look restricted. While some consolidations might be seen, there is no sign for sustainable rebound in the USD yet. As of now, the CAD is trailing behind the USD, followed by the EUR. The NZD is the weakest for today, followed by JPY and CHF. 

If we were to focus on Gold’s rally but from a fundamental perspective, there is no question that recent weakness in the USD is offering its own support, but the primary drivers are now the prospect of longer-term inflation. In saying that following market open today, the gold price traded at $1943 and has reached as far as $1981 which has now brought gold price up to nearly 28% YTD. Gold prices have recorded the longest monthly winning streak since 2012. One thing to note by moving away from the Federal Reserve is that, gold prices have been supported due to the rising geopolitical tensions between the U.S. and China. Additionally, China bought only 23% of the total purchase target of goods from the U.S. during the first half of this year. 

As for oil, prices rose for a third straight day today, sustained by support for demand coming from efforts to stimulate the US economy’s recovery from the coronavirus crisis and a weakening of the dollar that makes crude cheaper for global buyers. Brent crude futures climbed 35 cents, or 0.8 percent, to $43.76. 

Today’s High Impact Events

The times below are GMT+3

17.00 – US CB Consumer Confidence Index 

Conference Board (CB) Consumer Confidence measures the level of consumer confidence in economic activity. It is a leading indicator as it can predict consumer spending, which plays a major role in overall economic activity. Higher readings point to higher consumer optimism. As for last month, figures rose sharply to 98.1 after coming in at 85.9 (revised from 86.6) in May. The reading did beat market expectations of 91.8. This time around , Consumer Confidence is expected to rise to 91.6 in June from 86.6 in May. 

Potential instruments to Trade: USD crosses & Gold.

Coronavirus Status Update 

US CDC reported COVID-19 cases +61,795 (prev. +64,582); deaths +564 (prev. +969). A newswires tally suggested that US COVID-19 cases rose by at least 61,277 (Prev. +53,667), whilst deaths rose by at least 491 (Prev. +427). California COVID-19 cases +1.5%/+6,891 (prev. +1.9%/+8,259, 7-day avg. 2.4%). A newswires tally suggested California coronavirus cases increased by at least 10,549 (Prev. +4,372), deaths rise by at least 91 (Prev. 21). New York COVID-19 cases +608 (prev. +536); hospitalisations 642 (prev. 637). 

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