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US Dollar raises, Oil falls and Eyes on the ECB rate Decision

US Dollar raises, Oil falls and Eyes on the ECB rate Decision

Capex.com financial markets rundown Forex, Commodities, and Indices.

The Chinese inflation number for August of 2.4% came in line with expectations, although was lower than the prior read of 2.7%, while the Chinese Producers Price Index (PPI) number of August came in line with expectations at -2.0% however, this read was better than the prior print of -2.4%. That said, these figures did not have any noticeable effect on the Yuan price against major currencies.

Equities

On Tuesday, AstraZeneca the company that partners with Oxford University in developing one of the leading Coronavirus vaccines put on hold the third stage trial due to the unexplained illness of a study participant. This reflected negatively on the market sentiment and triggered a selloff in equities (especially the tech stocks) and risky assets, and led investors to the safety of government bonds. As a result, the US 10Y treasury yield fell to 0.6722.

Stock Market

Change %

S&P 500

- 3.4%

Dow Jones

-3.2%

NASDQ

-4.4%

Japan 225

-1.2%

DAX 30

-1.8 %

FTSI 100

-1.0 %

CAC 40

-2.3%

Currencies

As a safe haven, the US Dollar benefited from Tuesday’s Coronavirus vaccine’s update and continued recovering from over two-year low and closed the daily candlestick with a near 0.5% gain. Yet, a positive move of the US Dollar index may require a close above 93.94.

The Euro investors will tune in the ECB president press conference on Thursday at 4:30 PM (UAE time) to find out more about the central bank’s monetary policy and whether there will be any verbal intervention to reduce the Euro exchange rate. EUR/USD neared on Tuesday critical support of 1.1750. A daily close below 1.1712 may encourage bears to take the initiative.

The British Pound returned to feel the heat of Brexit trade deal negotiations, especially after reports about the readiness of the UK PM to abandon current talks and the possibility of even not honoring the recent Brexit deal he stroke with the EU last year. On Tuesday GBP/USD closed below 1.3048 hintings that the pair may fall towards 1.2773.

Commodities

Concerns of lower global demand caused by the increasing Coronavirus cases worldwide combined with the US dollar recovery weighed on the crude oil price. Today, Brent oil steadied above $39.30 per barrel after falling on Tuesday by 5.0%, while the US oil steadied above $36.25 after falling by 6.0%.

Gold remained flat as failed again on Tuesday close below $1,921 indicating that XAU/USD may reverse higher towards $2,015.

Looking Ahead

Today, eyes will be on the US Mortgage applications due at 3:00 PM (UAE time) then the Bank of Canada rate decision with rate statement at 6:00 PM.

This information/research prepared by Mahmoud Alkudsi does not take into account the specific investment objectives, financial situation or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk. The research provided does not constitute the views of JME Financial Services (Pty)Ltd nor is it an invitation to invest with JME Financial Services (Pty)Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report. As of the date the report is published, the research analyst and his/her spouse and/or relatives who are financially dependent on the research analyst, do not hold interests in the securities recommended in this report (“interest” includes direct or indirect ownership of securities). The research analyst in not employed by JME Financial Services (Pty)Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation or particular financial needs before making a commitment to invest. The laws of the Republic of South Africa shall govern any claim relating to or arising from the contents of the information/ research provided.