Trading Analysis — 31st July 2020

Trading Analysis — 31st July 2020

Today’s Market Outlook

In Asia, at present Nikkei is down -2.8% while Hong Kong HSI is down 0.24%. China Shanghai SSE is up 0.7%. Singapore Strait Times is down -1.70%. Japan 10-year JGB yield is down -0.0088 at 0.011. Overnight, DOW dropped -0.85%. S&P 500 dropped -0.38%. NASDAQ rose 0.43%. 10-year yield dropped -0.038 to 0.541, broken April’s low at 0.543. 

As for the stocks market, the old adage «buy the rumor; sell the fact.» Has lost its’ appeal mainly because, for the last 24 hours have been more like «buy the rumor, buy the fact, sell the aftermath,» as today’s earlier trading session seen the market with looming weakness. 

Additionally, within the FAANG group like Apple Inc., Amazon.com Inc., and  Facebook Inc. jumped in after-hours trading, though advances for S&P 500 and Euro Stoxx 50 contracts ended. Stocks underperformed today in Japan and Australia, amid record daily infections in Tokyo and a warning that curbs in Melbourne could be tightened.  

As for the commodities market in particular the oil market, Rising OPEC and U.S. oil supply, coupled with stalled economic and crude demand recovery, have pushed the futures market structure back to indicating a surplus, last observed during oil’s collapse in April and May amid the coronavirus pandemic.  

As for the currencies market, the USD broad-based sell-off continues since the Asian session today, following increasing concerns that momentum of US economic recovery is starting to weaken. The pessimism is somewhat reflected in the persistent decline in treasury yields too. However, the CAD is seen to be even worse as pressured by a sharp decline in oil prices. The EUR and GBP continue to stay strong across the board. EUR will be facing some tests from GDP data today, but it will likely endure downside surprises. 

Today’s High Impact Events

The times below are GMT+3.

8.30 (Post event) – France Gross Domestic Product (GDP) 

France’s economy contracted by a record 13.8 percent in the second quarter under the impact of coronavirus lockdowns, the national statistics institute (INSEE) said today. INSEE also updated the figure for the first quarter — when lockdowns had just begun to be implemented — to a 5.9 percent contraction, from the 5.3 percent it had previously estimated. 

Potential instruments to Trade: EUR Crosses.

12.00 – Euro Gross Domestic Product (GDP)

The pan-European Stoxx 600 index was up 0.35% with tech and banking stocks leading the gains. BNP Paribas reported a net income drop of about 7% for the second quarter in comparison with the same period a year ago. However, the French bank experienced higher trading volumes and beat market expectations and its’ stock rose 4% in early deals.  

Potential instruments to Trade: EUR Crosses.

12.00 – Euro Consumer Price Index (CPI) 

Consumer Price Index CPI in Euro Area is expected to be 105.40 points by the end of this quarter, according to Trading Economics global macro models and analysts’ expectations. Looking forward, we estimate Consumer Price Index CPI in Euro Area to stand at 107.06 in 12 months-time. 

Potential instruments to Trade: EUR Crosses.

Coronavirus Status Update 

US COVID-19 cases rose 65,935 (Prev. +59,862) and deaths rose by 1,417 (Prev. +1,194), while a major newswire reported that US coronavirus cases rose by at least 67,783 to 4.51mln and deaths rose by at least 1,187 to 152,383. California COVID-19 cases rose by 10,197 (Prev. +8,755) and deaths increased by 194 (Prev. +197), while Texas coronavirus cases rose by 8,800 to 412,107 (Prev.+9,042) and deaths rose by 322 (Prev. +313) (Newswire).

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