The US stockmarkets staged a late-afternoon rally on Friday as traders squared up for the weekend and month-end, ignoring concerns over the pandemic, with the big tech stocks charging higher, led by huge rallies in Apple (+10%) and Facebook (+8.2%). The rally did surprise many, as lawmakers on Capitol Hill were still at an impasse on a fourth round of economic stimulus, including the fate of a $600 weekly pandemic unemployment program that expired on Friday. A continuing standoff, at least an inability to arrive at a stopgap measure, could well see stocks head into reverse. As it was, the S+P/DJI ended up by around 0.5%, while the Nasdaq soared again, by 1.5%, with the big players leading the way.
The US$ made quite a turnaround from its new multi-year lows seen in Asia, where the DXY traded down to 92.25, last seen in May 2018, to make a bullish outside reversal, in closing the month at 93.46. The Euro, having traded up to 1.1908, ended the day at 1.1775, and looks heavy heading into Monday trade. The Euro was not helped by the release of the Eurozone GDP, which contracted -12.1% qq in Q2, slightly worse than expectation of -12.0% qq. Over the year, GDP contracted -15.0% yy. EU GDP contracted -11.9% qq, -14.4% yy, making for the worst decline since records began in 1995. The bigger move though was seen in US$Jpy, which rallied from a low of 104.18 back to 106.05 and came after some comments from top Japanese officials about the need for market stability so it could well be that the authorities (BOJ) were carrying out some form of intervention. It led to a sizable bullish outside day and could herald further gains in early trade in the coming week. Elsewhere, the US$ made gains against all the other majors although the moves were generally seen as a steady move lower after earlier making new trend highs, which applied to Gbp, Aud and Nzd., all of which look a little heavy on Monday.
Gold stood firm in face of the stronger US$ and ended the week at $1976oz, up by 1% on the day, in holding on to its early Asian gains. Oil remains rangebound, with WTI up by 0.3% on Friday, although traders are looking towards OPEC’s looming supply increase of 2million barrels per day in August, which could cast a shadow over any potential upside move on the back of the long hoped for economic upturn.
The coming week will be busy, with the main focus likely to be on the Interest Rate Decisions to come from the RBA (Tue) and the BOE (Wed), along with the US Unemployment report due on Friday. No changes are expected from either central bank although they are likely to remain dovish in the extreme in their outlook. The US employment data is expected to show an increase of 1.36 million jobs created last month, coming on top of the 4.8 million that were created in the previous month, however the overall headline unemployment rate is expected to remain dire, at 10.7%.
The week starts today with the Australian TD Inflation and ANZ Job Ads (exp +37%mm) along with the Global Mfg PMIs, which will be released through the session, beginning with the Australian AIG /CBA figures.
Economic data highlights will include:
Mon: Australian TD Inflation, ANZ Job Ads, Global Mfg PMIs (Australia, Japan, China (Caixin), EU, UK, US), US ISM Mfg PMI/Prices Paid, Total Vehicle Sales, Construction Spending
Tue: Japan Tokyo CPI, Australian Retail Sales, RBA Interest Rate Decision/Statement, Consumer Inflation Expectation, German Trade Balance, EU PPI, US Factory Orders, ISM NY Business Conditions, Global Dairy Trade Index, API Weekly Crude Oil Stock Inventory
Wed: NZ Unemployment, Australian AIG Construction Index, Global Services/Composite PMIs (Australia, Japan, China (Caixin), EU, UK, US), Home Loans, Investment Lending for Homes, EU Retail Sales, US ADP Jobs data, ISM Non-Mfg Index/Prices Paid, EIA Weekly Crude Stocks Change
Thur: Japan Preliminary Q2 GDP, RBNZ Inflation Expectations, BOE Meeting/Statement/Minutes/Vote Count/APP Facility, BOE Governor Bailey Speech, UK Financial Stability Report, German Industrial Production, Factory Orders, US
Fri: Australian Services Index, RBA Monetary Policy Statement, RBA’s Ellis Speech, China Trade Balance, Japan Coincident Index, Leading Economic Index, US Headline rate /NFP /Average Hourly Earnings/Average Weekly Hours, Wholesale Inventories, Consumer Credit Change, Baker Hughes Oil Rig Count
Market moves, in brief:
FX: DXY 93.46 (+0.53%)
|INDICES / COMMODITIES|
|1 Hour||Down||Up – Overbought||Down||Turning Higher||Turning Lower||Down|
|4 Hour||Bearish Divergence||Turning Higher||Possible Topping Formation||Turning Higher||Neutral – Turning Lower?||Neutral – Turning Lower?|
|1 Day||Up||Possible Basing Formation||Turning Higher||Down||Turning Neutral||Turning Neutral|
|1 Week||Turning Higher||Neutral – Turning Lower?||Neutral – Turning Higher?||Turning Lower||Up||Turning Higher|
|1 Hour||Turning Higher||Turning Neutral||Oversold – Turning higher?||Turning Lower?||Neutral – Turning Higher?||Neutral – Turning Higher?|
|4 Hour||Bullish Divergence||Neutral||Turning Lower||Turning Lower?||Turning Neutral||Turning Neutral|
|1 Day||Possible Basing Formation||Turning Neutral||Turning Neutral||Up||Possible Topping Formation||Neutral – Turning Lower?|
|1 Week||Turning Lower||Turning Higher||Up||Up||Up||Up|
|1 Hour||Possible Topping Formation||Possible Basing Formation||Bearish Divergence||Turning Neutral||Turning Neutral||Turning Neutral|
|4 Hour||Neutral – Turning Higher?||Turning Lower||Up||Turning Neutral||Turning Neutral||Neutral – Turning Lower?|
|1 Day||Turning Higher?||Turning Neutral||Turning Higher?||Turning Neutral||Turning Neutral||Neutral – Turning Higher?|
|1 Week||Turning Higher?||Neutral – Turning Higher?||Possible Basing Formation||Turning Higher?||Turning Lower?||Turning Neutral|