USDX turns weak again, UK PM Johnson remains optimistic about Brexit deal

Market Recap

Global equity market:

(Source: KVB PRIME)

The overall US stock market is still in the midst of a weakened stage: the Dow Jones closed down by 0.31% at 27844.91, the S&P 500 index pulled back after the opening before falling after the afternoon market and eventually closed without either rising or falling.

The NASDAQindex saw some capital repatriation, closing 1.11% higher at 11288.57. Among them, technology and chip stocks rose, while Chinese concept and gold stocks rebounded.

In terms of European stocks, the German DAX index closed up by 0.15% at 12920.66 and the UK FTSE 100 index closed up by 0.61% at 6127.44.

The three major A-share stock indices opened higher and the Shanghai Composite Index returned to above 3,400. As of closing, the Shanghai Composite Index rose 2.34%, the Shenzhen Component Index rose 1.88% and the ChiNext Index rose 1.04%.

More specifically, securities, insurance, banking and other major financial sectors led the gains and many stocks rose to their daily limit. In addition, sectors such as digital currency, beer, photo resist and gold were also highly active.

Precious metal forward contracts

The price of gold rose again; after a brief decline in early trading, gold counterattacked and hit the top of the $1990 mark before falling back. In the end, gold rose by 2.10% to $1984.47 per ounce.

Silver once rose to $27.54, peaking at an increase of more than 4%. In the end, silver rose 3.46% to $27.32 per ounce.

Crude oil forward contracts

Oil first fell and then rose on Monday - the Asian and European sessions saw a fluctuation followed by a fall, before rising sharply during the US market. WTI crude oil rose more than 2% before a drop in late trading.

As of closing, WTI crude oil rose 1.26% to $42.73 per barrel, while Brent crude oil rose 0.71% to $45.25 per barrel.

Currency forward contracts

·        USDX down to 92.79 (-0.07%)

·        EUR/USD up to 1.18708 (0.240%)

·        GBP/USD up to 1.31018 (0.029%)

·        AUD/USD up to 0.72124 (0.541%)

·        NZD/USD up to 0.65545 (0.142%)

·        USD/CAD down to 1.32187 (-0.285%)

·        USD/JPY down to 105.993 (-0.544%)

Global Fundamentals

United States

The issuance of investment-grade corporate bonds in the US reached a yearly high of $1.342 trillion on Monday, surpassing the total for the entire year of 2017 in the space of eight months.

US President Trump vowed on Monday to create 10 million jobs within 10 months, specifying that taxes on products from overseas companies will be increased to free up more US jobs.

The US Treasury Department stated that G7 finance ministers held an online meeting on Monday to continue to coordinate response measures for COVID-19.

Officials discussed the importance of supporting vaccine manufacturing, distribution and viral treatment programmes - as well as global debt issuances - and agreed to promote debt data transparency. The G7 ministers agreed to provide additional options for low-income countries, including extending the debt freeze period through to 2021.

United Kingdom

The British Prime Minister's Office stated that it still believes a post-Brexit trade agreement with the EU can be achieved next month. A spokesperson for the Prime Minister Boris Johnson noted that a new round of future UK-EU relations negotiations will be held in Brussels on Tuesday 18^th August and that British negotiators will strive to continue to narrow the gap of disagreement.

PM Johnson’s representatives also said he could potentially reach a trade agreement with the EU in September.

Russia

On 17^th August, the Moscow Stock Exchange announced that 19 US stocks, including Microsoft, Amazon, McDonald’s, Exxon Mobil, and Boeing, will be listed and traded in Russia from the 24th.

According to news sources, the Board of Directors of the Moscow Stock Exchange approved the listing and trading of 19 American companies, in accordance with the listing rules, commencing from the announced date.

International crude oil

The draft OPEC report shows that the cartel’s technical committee considered a scenario where in if COVID-19 worsens, demand will face major downside risks.

The OPEC Technical Committee predicts that the implementation rate of production cuts in July will reach 95% - including Mexico, which will reach 97%. OPEC experts called for vigilance and supervision of the implementation of compensation measures for overproduction. The OPEC technical team will hold its next discussion via a remote meeting on 16th September.

Today's currency forecast

EUR/USD

Yesterday’s short-term strategy grabbed 40 pips of profit space and traders will need to take a profit and leave the market–chasing further highs is not . The price will be seen around 1.19 and there will be a certain probability of callback.

The current trend has been moving in an‘N’ shape around from the 11^th to the present. If it hits 1.2, investors will need to prepare for the callback, where the target is around 1.18660.

If you are keen to participate, strict risk control is recommended here. In terms of the current fundamentals, the USD index is still bearish this week, which has the knock-on effect of pushing up the Euro.

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

GBP/USD

The current price is close to the 1.315 mark as we predicted yesterday; as above, it is recommended that you take your profit and exit the market. The overall strategy and ideas for the pound are similar to the EUR today.

If there is no additional information this week, long trading in the short-term will still be the prevailing plan. From the medium and long-term perspective, meanwhile, the GBP is approaching its highest value since the end of last year - we do not think this current upward movement can last long, so the short-term strategy is still valid.

Slightly different from the EUR, however, is that the space for profit is not abundant and it is not recommended that investors participate in the market today.

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

USD/JPY

The price reached the expectation of 106.1 and the trajectory we planned last week can now access a profit of 50-80 pips.

Pay attention to the change in the market tonight. The USD index is expected to continue to be weakened this week and you can wait for the price to pull back to 106. After testing the effectiveness of the resistance, traders could continue to lay out short positions with a target of 40-46 pips, but it should be noted that the strong JPY is not in line with the current overall Japanese fundamentals.

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

Gold

The market has begun to establish the perception that ‘Buffett holds Barrick Gold’ and ignores the fundamentals. The company's gold production has been reduced by 13% this year, while small and medium sized capital investments have been growing.

The overall epidemic situation has not deteriorated further, and after President Trump praised the job creation statistics, prices began to rise. Due to the lack of decisive movements among the participants, the possibility of a subsequent price fermentation is low.

Should traders feel compelled to trade gold today, then they may do so with strict risk control measures in place; the price is expected to return to the weekly moving average and there is around $20-worth of space.

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