Trump is out, market boomed, USD boosted

President Trump leaves hospital following COVID-19 scare, UK’s Rishi Sunak unveils new job scheme

(Source: KVB PRIME)

US President Donald Trump was released from hospital late yesterday; the US capital market opened high and went higher. The Dow Jones closed up 1.24% at 28024.81, the S&P 500 rose 1.29% to 3391.55 (reaching highs above 3400 intraday), while the NASDAQ recovered 1.47% to 11421.63.

The European market’s situation was similar - the DAX rose 1.1% to 12828.31 and the FTSE closed up 0.69% at 5942.94.

China’s stock market remained closed due to a public holiday.

Crude oil forward contracts

Oil prices dropped 7% last week, however Brent and WTI both recovered strongly at the beginning of this week, with WTI oil rising 7% and closing at $39.72 per barrel.

Brent oil closed up by $41.42 per barrel with a maximum 6.48% increase.

Precious metal forward contracts

Gold fluctuated upwards and during the European session. The price maximum rose 1.1% and hit daily highs of $1918, closing at $1913 per ounce.

Currency pairs

·        USDX down to 93.45 (-0.352%)

·        EUR/USD up to 1.17776 (0.527%)

·        GBP/USD up to 1.29722 (0.388%)

·        AUD/USD up to 0.71779(0.201%)

·        NZD/USD down to 0.66372 (-0.048%)

·        USD/CAD down to 1.32584 (-0.277%)

·        USD/JPY up to 105.714 (0.239%)

Global fundamentals

United States

Chicago Federal Reserve President Charles Evans said on Monday that he expects US inflation to reach 2% by 2023 and indicated that he would like to push it to 2.5% in order to offset years of below-target price rises.

During a virtual meeting of the National Association for Business Economics,Evans opined that the Fed ‘needs to have an ‘in it to win it’ attitude toward our inflation objective’, whilst also encouraging the implementation of additional fiscal stimuli.

Meanwhile, President Trump walked out from hospital without any help from medical staff following his treatment for coronavirus, and later announced he will resume normal duties soon.

His Democratic Party challenger, former Vice President Joe Biden, stated he would participate the upcoming debates with the President if medical expert scan confirm it is safe to do so.

Elsewhere, US-based energy giant Exxon Mobil revealed plans to cut up to 1,600 jobs across Europe as the oil major continues to struggle with collapsing demand caused by the coronavirus pandemic.

The company - the biggest US oil firm by market capitalisation – stated on Monday that the virus had ‘increased the urgency’ of reducing costs and said the job losses would be made by the end of next year.

UK

Bank of England (BoE) policy maker Jonathan Haskel noted he’s prepared to back more monetary support for the UK if necessary as he warned that the near-term risks to the economy lie to the downside.

Haskelalso said that a ‘material amount’ of spare capacity has emerged and that he anticipates a temporary period of subdued inflation pressure.

UK Chancellor Rishi Sunak said during a speech yesterday that the government’s unprecedented support initiative has protected millions of livelihoods and businesses since the start of the pandemic, but noted he had always been clear that he would be unable to save every job.

Sunak further added that he had spoken about the damaging effects of being out of work, but promised to provide fresh opportunities to those that have sadly lost their jobs to ensure that nobody is left without hope.

Thousands of work coaches will be hired under a new government employment programme to help those who have lost their jobs during the pandemic, amid fresh warnings of an unemployment crisis as the furlough scheme ends.

IMF

Back in June, the International Monetary Fund(IMF) predicted a contraction of 4.9% in global Gross Domestic Product) for 2020, but the organisation is now warning that the fall could be even higher as many countries are now dealing with a second wave of infections. 

The IMF meeting notes also stated that increasing public investment by 1% of GDP in these economies could create seven million jobs directly, and between 20 million and 33 million jobs overall when considering the indirect macroeconomic effects.

Today’s major asset analysis

EUR/USD and GBP/USD

Yesterday prices’ moves were different to our expectations;both the euro and pound went up without any strong fundamental support –Eurozone members’ credit rating was revealed to have declined, while the UK is still facing Brexit uncertainty.

In the short term, since the price didn’t reconsolidate and instead appreciated, both currencies will likely require reconsolidation.

The EUR’s support is around 1.1745 and its resistance is around 1.180. The GBP’s support, meanwhile, is located near 1.288 with a resistance at 1.30 .

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

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

AUD/USD

Even with a weak USD, the AUD and NZD remained weak due to less support from commodities.

The Australian dollar is still within our previously identified range. Today’s support is around the weekly EMA and its resistance is around 0.7194.

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

Gold

Gold prices rose slightly yesterday but, again, this was not due to fundamentals and the price did not break the key resistance.

Currently, the price is still moving between 1890 to 1920, which are also the key resistance and support levels. 

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

USD Index

The USD kept dropping yesterday due to the EUR and GBP prices rising; however, based on recent fundamentals, the current price movement could be classed as a price adjustment in the short term that will not affect our long-term analysis.

For an intraday layout, the support looks to be around 93.2 and the resistance is around 93.7.

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