Market Recap 8/17

Global equity market:

(Source: KVB PRIME)

Equity market:

US stocks remained the same as before: most high-tech stocks closed down. The S&P 500 index closed down by 0.02% at 3372.85; the Dow closed up by 0.12% at 27931.02. The Nasdaq index closed down by 0.12% at 11164.45. China's concept stocks were affected by the investigation of the US Securities Regulatory Commission, iQiyi fell more than 11%; GSX fell more than 10%.

European stock markets closed down, in which the German DAX index fell 0.71% to 12901.34, and the UK FTSE 100 index fell 1.55% to 6090.04.

The A-share market began to rise after midday last Friday. The net inflow of northbound funds exceeded 8 billion. The three major stock indexes rose by more than 1%. As of the close, the Shanghai Composite Index rose 1.19%, the Shenzhen Component Index rose 1.49%, and the ChiNext Index rose 1.76%. Today's early trading continued to rise rapidly.

Precious metal forward contracts:

Last Friday, gold continued to fall but the price remained around 1940 and eventually closed down by 0.46% at $1,943.64 per ounce. Gold fell 4.44% late last week.

Silver fell 3.92% to $26.41 per ounce and the weekly accumulated amount is 6.55%.

Crude oil forward contracts:

Both oil maintained a narrow range of volitation, the Boiler fell below US$45, WTI crude oil fell below US$42, and both oils rebounded in the late trading. In the end, WTI crude oil fell 0.31% to US$42.20/barrel; Brent crude oil fell 0.42% to $43.93 per barrel.

Currency forward contracts:

USDX: closed down by 93.03 -0.07%.

EUR/USD: closed up by 1.18378 -0.200%

GBP/USD: closed up by 1.3086 -0.151%

AUD/USD: closed up by 0.71726 -0.367%

NZD/USD: closed down by 0.65429 -0.047%

USD/CAD: closed up by 1.3257 -0.262%

USD/JPY: closed down by 106.579 -0.311%

Global fundamentals:

COVID-19: The Ministry of Health of Russia said on Friday that Russia has begun to produce the new coronavirus vaccine and mass vaccination may begin in December this year or January next year. White House trade adviser Navarro said that the US may also produce the new coronavirus vaccine on a large scale as early as January 2021.

Trump said that he will not reach an agreement with the Democratic Party on the COVID-19 rescue, because they are seeking funds for cities and states. Currently, California has become the first state in the US to have more than 600,000 cases of COVID-19 infection.

United States

The Federal Reserve, Kaplan, predicts that the US GDP will grow at an annualised rate of 20% in the third quarter, and the US GDP in the fourth quarter will grow at an annual rate of 6% to 7%, but overall it is expected that the US GDP will shrink by 4.5% in 2020.

The monthly rate of US retail sales in July was 1.2%, announced last Friday, which was the second consecutive month of decline and worse than the market’s expectation of 1.9%. The previous value was revised upwards. Data shows that retail sales growth slowed in July, and demand for automobiles and gasoline is expected to be weaker. The agency believes that data may slow further in the coming months.

According to Reuters, US Consumer News and Business Channel (CNBC), US President Trump signed an executive order on the 14^th, local time, requiring ByteDance to sell or divest the company’s TikTok business in the US within 90 days. CNBC also said that this new administrative order has bought time for ByteDance to finalise possible deals. CNBC believes that according to the latest administrative order, Bytedance is expected to destroy TikTok data of all US users

Over the weekend, Trump stated that he had instructed US Treasury Secretary Mnuchin to be ready to make direct payments to all Americans (providing $3,400 for a family of four). Also it is ready to allow the US Treasury Department and the US Small Business Administration (SBA) to provide small businesses with more compensation plan (PPP) payments. The market began to question whether the government has enough funds to cash out.

Europe

The quarterly rate of employment in the Eurozone in the second quarter was adjusted to 2.8%, which was the lowest record since 1995. Eurostat confirmed on Friday that economic output shrank in the second quarter. The Eurozone's GDP in the second quarter shrank by 15% at an annual rate, which was also unchanged from expectations and previous values.

German Finance Minister Scholz proposed a 10 billion euro plan to extend German employment subsidies.

International crude oil:

According to Baker Hughes, US drillers cut oil and natural gas rigs for the 15^th consecutive week, and the number of active oil rigs in the US dropped again by 4 to 172, which was the lowest level since 2005. LBBW, Germany's largest state bank, said that global corporate default rates are still rising and the oil and gas industry has the highest default rate of any industry.

Today's currency forecast analysis:

EUR/USD

The strategy was executed perfectly last Friday, and a profit margin of more than 50 pips can be obtained. The European region may have a second wave of liquidity to stimulate the economy. Therefore, it is not recommended to place more long orders in the mid-term. From a technical perspective, the possibility of current price has a short-term impact of 1.19 is higher, but price adjustment is needed. Shorting is still the main strategy in the short-term: profit margins are not recommended to be greedy, just 30-40 pips.

(Source: KVB PRIME)

GBP/USD

In terms of the mid-term layout, our mid-term short position is still valid. However, in the short-term, the current price is supported by both of the moving average, and the main target is still to place a long position at around 1.315 in the short-term. The trade relationship between Britain and Japan is bullish for GBP, while USD continues to be weak, so we need to adjust our strategy on the short-term layout. It should be noted that once the liquidity of EUR increases in the near future, the USD will strengthen as a whole. The short-term layout should not be greedy in the future.

(Source: KVB PRIME)

USD/JPY

The USD/JPY’s short position pullback last Friday has accumulated a profit of 40 pips. We can expect more, but even if the overall short-term thinking does not reach our optimal position of 106.1, we still need to take a stance gradually before the change on Wednesday, Also In the early speech, the price is still not optimistic about Japan's overall economy, but it will be stronger than the United States and Europe.

(Source: KVB PRIME)

XAU/USD

Without the participation of large capital, the price of gold has become more controllable, and the price dispersion has returned to a normal position. Our prediction from last week of the price will fluctuate $10 around 1950 is well verified. Before the US election, if there is no abrupt accidents, we expected that the market will be very calm and sort of decline. In terms of technology, the price is suppressed by both of the moving average and it is not considered to have counterattack ability. The price is between 38.2%-50% of this wave. Our overall strategy will be to grasp every $10 space.

(Source: KVB PRIME)