The Week Ahead 27th – 31st July 2020

Market Recap

The markets on Friday closed in the red as rising tensions between the U.S. and China as well as the latest earnings reports continued to concern investors. U.S. stocks closed lower Friday as investors seemed to have been bothered about rising Chinese-American tensions and a lack of progress on another fiscal stimulus bill in Washington. The DJIA declined 182.44 points, or 0.7%, to close at 26,469.89; the S&P 500 index 20.03 points, or 0.6%, closing at 3,215.63; and the Nasdaq Composite Index fell 98.24 points or 0.9% to close at 10,363.18. 

Market Outlook for Today

In Asia, currently, Nikkei is down -0.24%. Hong Kong HSI is down -0.36%. China Shanghai SSE is up 0.26%. Singapore Strait Times is down -0.25%. Japan 10-year JGB yield is up 0.0046 at 0.021. 

In the currencies market, the USD is seen to have extended its’ recent selloff and is the worst performing one for today so far, followed by the CAD. The JPY is the most bullish, followed by NZD and then EUR. The USD looks rather defenceless and it’s unlikely to be saved by Fed later in the week. 

On commodities, Gold’s up trend accelerates further and finally makes new record high today. That comes in a time when there are increasing evidence of second wave of coronavirus infections globally. Spot gold rose 1.5% to $1,928.83 per ounce by 0306 GMT after hitting an all-time high of $1,943.30. U.S. gold futures climbed 1.4% to $1,924.20. Silver too joined the rally, jumping 4.5% to its highest since September 2013 at $23.86 per ounce 

As for Oil, its price seems to still be on track and as of last weeks close to have seen testing the March high after taking out the June high ($41.63), with crude on the verge of trading above the 200-Day SMA ($43.11) for the first time since January. 

Technically, a focus would be on whether the EUR could maintain last week’s strong upside momentum (resistance at 1.1750 -1.1800), or it would finally be overwhelmed by risk aversion. For now, further rise is still in favour of EUR/JPY and break of 124.43 will resume whole rebound from 114.42. But a break of 121.96 support will indicate rejection by 124.43 and bring deeper fall to extend a short-term consolidation pattern, towards 119.31/120.27 support zone. Further rise is also expected for the EUR/CHF with 1.0701 minor support intact. Break of 1.0797 should at least target a test on 1.0915 short term top. But break of 1.0701 would bring a test on 1.0602 support instead. 

Overview for the Week Ahead

For the week ahead, domestic markets will largely be guided by corporate earnings, developments on US-China relations front and COVID-19 trends. Quarterly earnings will provide impetus in the week ahead, as a number of big companies are scheduled to declare their numbers. Apple, Amazon, Facebook, Visa, Mastercard, Procter & Gamble, amongst others are schedule to release their results this week. Another major event that markets would track is the Fed interest rate decision on Wednesday. 

Today’s High Impact Events

The times below are GMT+3

Monday 27th July

  • 11.30 – IFO Business Climate (Germany) 

Potential instruments to Trade: EUR Crosses. 

  • 15.30 – US Durable Goods & Nondefense Goods Order 

Potential instruments to Trade: USD Crosses.

Tuesday 28th July

  • 17.00 – US CB Consumer Confidence Index  

Potential instruments to Trade: USD Crosses.

Wednesday 29th July

  • 17.00 – US Pending Home Sales 

Potential instruments to Trade: USD Crosses. 

  • 17.30 – EIA Crude Oil Stocks Exchange 

Potential instruments to Trade: USD Crosses. 

  • 21.30 – US FED Interest Rate Decision 

Potential instruments to Trade: USD Crosses. 

  • 21.30 – FOMC Press Conference  

Potential instruments to Trade: USD Crosses. 

Thursday 30th July

  • 11.00 – Germany GDP y/y  

Potential instruments to Trade: EUR Crosses. 

  • 11.00 – US GDP y/y  

Potential instruments to Trade: US Crosses. 

Friday 31st July

  • 08.30 – France GDP q/q  

Potential instruments to Trade: EUR Crosses. 

  • 12.00 – Europe GDP q/q  

Potential instruments to Trade: EUR Crosses.

Coronavirus Update

More than 15.87 million people have been reported to be infected by the novel coronavirus globally and 639,354​ have died, according to a Reuters tally. Over the past week, nearly 40 countries have witnessed a record single-day spike in fresh coronavirus infections which is double the number from the previous week. Apart from the countries like the US and Brazil that have larger caseloads, Australia, Hong Kong, Sudan, Uzbekistan, Israel among others saw their highest spike in cases. 

US CDC reported 64,582 new COVID-19 cases (Prev. +74,818) and deaths increased by 929 (Prev. +1,145) on July 26th. Texas reported 5,810 new COVID-19 cases (Prev. +8,112) and deaths rose by 153 (Prev. +168), current hospitalisation +248 (Prev. -209); according to the State Health Department. Florida reported 9,344 new COVID-19 cases (Prev. +12,199) and deaths increased by 78 (Prev. +126) while hospitalisation fell by 88 (Prev. -285) on Sunday.

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