The US is going uphills due to the General Election and crude oil

Market Recap

Global equity market

(Source: KVB PRIME)

Yesterday’s market fundamentalswere relatively flatand the importanceof the coming general election has begun to rise recently; US stocks seem ready to enter a regular warm market. The S&P 500 index continued to hit record highs at the opening before falling.

The Dow Jones closed down by 0.21% to 28248.44, the S&P 500 rose 0.36% to 3443.62and the NASDAQ continued to rise 0.82% to 11721.81. Chinese concept stocks continued to perform well, while gold and oil stocks generally fell.

European stock markets were mixed - the German DAX index fell 0.04% to 13061.62and the British Fuji closed down by 1.11% to 6037.01.

Regarding A-shares, on the second day of the GEM registration systemthe GEM index rose and fell and finally closed up by 0.63%. A total of 17 of the first batch of 18 registered new stocks closed up, and 11 triggered a temporary suspension during the session.

In other sectors, the Shanghai Composite Index fell 0.36% and the Shenzhen Component Index rose 0.02%.

Precious metal forward contracts

After the Asian market opened on Tuesday, gold went higher overall but only reached $1937. After the opening of the US market, the price of gold broke through the 1920 mark and hit $1914. It fell by more than $20 from the previous day but rebounded overnight and finally closed up by 0.02% at $1,929.15 per ounce.

Spot silver closed down by 0.29% at $26.52 per ounce. Meanwhile, the USD index closed down by 0.3% at 93.01.

Crude oil forward contracts

WTI crude oil fluctuated between 42.2-42.6 during the Asian trading hours and begun to rise in the European trading hours,breaking through the $43 mark and reaching a maximum of $43.53.

At the beginning of the US session, WTI crude oil quickly recovered its losses after a sharp drop in the short-term, and finally closed up by 2.28% at $43.35 per barrel.

Brent crude oil rose 2.2% to $46.01 per barrel.

Currency forward contracts

·        USDX down to 92.98 (-0.343%)

·        EUR/USD up to 1.18322 (0.368%)

·        GBP/USDup to1.31444 (0.628%)

·        AUD/USDup to0.71924 (0.430%)

·        NZD/USDup to0.65447 (0.251%)

·        USD/CAD down to 1.31707 (-0.195%)

·        USD/JPY up to 106.373 (0.384%)

Global Fundamentals

United States

The Federal Reserve meeting minutes show that the chairs of the 12 local Federal Reserve banks agreed to keep the discount rate unchanged. Some Fed presidents noted that, although economic activity hasimproved, it still remainsat a low level.

The Fed presidents believe that the economy is still facing considerable uncertainty, but the sharp increase in new crown cases has had a weak economic impact overall.

Federal Reserve CEO ThomasBarkin said that he has not seen any evidence to suggest that the Fed’s balance sheet has caused inflation, and re-affirmed that zero interest rates are appropriate in the current climate.

The market understands the Fed’s commitment to supporting the economyand the path of economic development ultimately depends on the direction of the epidemic.

Europe

Germany's annualisedGDP for the second quarter decreased by 11.3%, which was better than the expectation of 11.7%. German Finance Minister Olaf Scholz noted that it was cause for optimism that Germany's economic growth was better than expected.

The yield on German 10-year government bonds rose four basis points to -0.445%, which was the highest in a week.

Gold

As of June, the Central Bank of India has accumulated 43.25 tonnes of gold holdings, increasing the total in its possession to 661.41 tonnes.

In addition to India, Turkey is also becoming one of the world's largest gold buyers; over the past six months, the country has accumulated about 170 tonnes of gold.

Crude oil

According to the estimations from the US Bureau of Security and Environmental Enforcement (BSEE), the impact of the hurricane has led crude oil production in the Gulf of Mexico to decreaseby 1.56 million barrels per day (over 82%), and natural gas production decreased by approximately 1.6 billion cubic feet per day.

Valero Energy, the largest refiner in North America, is reported to have begun shutting down its Port Arthur refinery in Texas.

CME Group issued a notice on Tuesday to lower the minimum price fluctuation range for micro silver futures contracts. The minimum price fluctuation range for direct trading was lowered from $0.01 per ounce to $0.005 per ounce, and the minimum price fluctuation range for spread trading and settlement was reduced from $0.005 per ounce to $0.001 per ounce; the adjustment will take in place on20^th September 2020.

Today's currency forecast

EUR/USD

From a technical point of view, the current Euro price has left its previous triangle formation and both of the moving averages are still having a suppressing effect on the price.

At the same time, it is affected bythe fundamentals of the dollar: namely, the active capital market In the run up to the general election and the generally positive market patterns, so there is a high probability that the EUR/USD pair may continue to decline.

The first target is still 1.175 and the second target is 1.172. The main logic surrounding the recent trends of both EUR and GBP remains unchanged, and the two will be staggered afterwards.

[EUR/USD, four-hour chart] (Source: KVB PRIME)

USD/JPY

The price continued to rise after breaking the targeted position yesterday, as we expected. The USD index continued to rise intraday, despite the overall weakness of the USD index; this is mainly due to the current weakness of the Yen.

If you followedour layout yesterday, you should have grasped 30 pips of space, and the mid-term layout following on from that currently has about 70 pips of space.

After that, the mid-term strategy remains unchanged; if you want to continue to enter the market, you can choose to wait for the 106.3 to continue with the plan.

[USD/JPY, four-hour chart] (Source: KVB PRIME)

Gold

In terms of risk events, traders could look to the recent Iranian sanctions in the Middle East and conflicts between Turkey and Greece for fresh impetus. However, capital markets are typically not interested in these kinds of regional themes.

However, therecent announcement of an increase of gold holdings in India and Turkeycould wellinspire the participation of small and mediumsized capital.

Before the price returns to 1900, large-scale capital investors seem to have no interest in participating in the market – therefore,shorting gold is a suitable planfor the medium term.

[XAU/USD, four-hour chart] (Source: KVB PRIME)

US Dollar Index

Since the US dollar index is represented by an overall weighted a basket of currencies, it is a good reflection of the USD’s ​​position in the market. As far as the current technological analysis is concerned, the price belongs to the previously discussed triangular pattern and the price is suppressed by both of the moving averages.

Overall, the US dollar index looksbearish in the short term. As the US market warms up during the US general election, the secondary market is receiving greater attention.

As such, the probability that the US dollar index will remain strong in the mid-term is high. The recent intraday fluctuation of the US dollar index is about 0.495%and it is recommended to use four cents as a grasp point.

[USDX, four-hour chart] (Source: KVB PRIME)