News & Analysis

Overnight on Wall Street: Thursday 03 September 2020

September 3, 2020

By Deepta Bolaky
 @DeeptaGOMarkets

Equity Markets

Global stocks advanced higher on Wednesday. While the catalyst for yesterday’s gains is unclear, we note that investors are fuelled by the ongoing stimulus and vaccines updates. It was a day of gains for major equities indices. 

Wall Street recorded new highs as all the three US benchmarks finished the day higher by 1% or more:

  • The Dow Jones Industrial Average added 455 points or 1.6% to 29,101.
  • S&P 500 rose by 54 points or 1.5% to 3,581.
  • Nasdaq Composite added 117 points or 1% to 12,056.

Currency Markets

In the FX space, the US dollar gathered more strength against major currencies on the back of recent upbeat economic data and comments from the ECB’s chief economics, Philip Lane. The US dollar index which measures the performance of the greenback against a basket of currencies was trading firmer around the 92 level. 


Source: GO MT4

At this level, Adam Taylor CTEe takes a look at the DXY Monthly Chart:

Sometimes it is the simplest of charts that turn out to be the most rewarding in terms of key market analysis, and in today’s Chart of The Day, we’ve found the Dollar Index (DXY) on the monthly time-frame to be a perfect example of this idea.

All we are focussing on is this validated bullish trend line that originated back in May 2011 and how price action may respond to not only this potential area of support but the combined levels of supply and demand driving the appetite for the US Dollar.

At the current price of 92.80, the DXY is teetering on the edge of this trendline and appears to be holding as support for the time being. Note although price action dipped below the trendline under 92.00 during recent sessions, technically, we will need to see out the remainder of September to see if sellers can close beneath here or not.

Those traders bullish on the Dollar may see this as a reasonable risk-reward opportunity should the price action maintain this longer-term trend and resume an upward trajectory.

If we take a quick look at the same chart, but in point and figure form pictured below, there seem to be large disparities between the main areas of supply and demand. To the upside, the initial target would be 102.00. However, beyond this level is void of sizable resistance until we reach previous highs around the 120.00 regions.

Similarly we see the same issue to the downside with likely support at 92.00 but further down, nothing obvious until the 80.00 level. It’s clear the Dollar Index has approached a historic moment in time and could be in for a big move either way longer-term.

With US elections right around the corner and global commodity prices gathering pace, these fundamental drivers may provide the spark to ignite such a massive move and thoroughly test this trendline’s strength.

On the economic front, data releases were mixed:

Australia: 

The Australian economy is officially in a recession after the ABS reported that the GDP for the June quarter fell by 7%, the biggest drop since records began in 1959. 


Source: Australian Bureau of Statistics

The fall in GDP was mostly caused by the contraction in household consumption due to the related COVID-19 lockdown restrictions.


Source: Australian Bureau of Statistics

Germany

Retail Sales were generally higher in the same month of last year:

  • -0.9% on the previous month (in real terms, calendar and seasonally adjusted, provisional)
  • -0.3% on the previous month (in nominal terms, calendar and seasonally adjusted, provisional)
  • +4.2% on the same month a year earlier (in real terms, provisional)
  • +5.6% on the same month a year earlier (in nominal terms, provisional)

United States: 

New orders for manufactured goods in July, up three consecutive months, increased $27.8 billion or 6.4 percent to $466.1 billion, the U.S. Census Bureau reported today. This followed a 6.4 percent June increase. Shipments, also up three consecutive months, increased $21.3 billion or 4.6 percent to $479.5 billion. This followed a 10.0 percent June increase.

Commodities

Crude oil prices fell overnight as traders are pricing-in the Hurricane Laura disruptions as temporary. A larger-than-expected draw of -9.4 million barrels in the week of August 28 reported by the EIA was unable to provide much support to the oil market as it coincided with the decrease in output production related to Hurricane Laura. As of writing, WTI Crude oil (Nymex) and Brent Crude (ICE) were trading around $41.77 and $44.96 respectively. 

Gold

Gold struggled to advance amid a stronger US dollar and the broad optimism in the equity market. As of writing, the XAUUSD pair is currently trading around $1,944.


Source: GO MT4

By Deepta Bolaky
 @DeeptaGOMarkets

Key upcoming events

  • AiG Performance Construction Index and Commonwealth Bank Services, Imports, Exports and Trade Balance (Australia)
  • Caixin Services PMI (China)
  • Consumer Price Index (Switzerland)
  • Markit PMI Composite (Germany)
  • Markit PMI Composite, and Retail Sales (Eurozone)
  • BoE’s Governor Bailey Speech (UK)
  • Trade Balance, Jobless Claims, Markit Services & Composite PMI, ISM Services New Orders Index, Services PMI, Employment Index and Services Prices Paid (US)
Friday, 04 September 2020 
Indicative Index Dividends
Dividends are in Points
ASX200 WS30 US500 US2000 NDX100 CAC40 STOXX50
0.057 0 0 0.043 0 0 0
ESP35 ITA40 FTSE100 DAX30 HK50 JP225 INDIA50
0 0 0 0 1.363 0 0


Disclaimer:  The articles are from GO Markets analysts,  based on their independent analysis or personal experiences. Views or opinions or trading styles expressed are of their own;  should not be taken as either representative of or shared by GO Markets.  Advice (if any),  are of a ‘general’ nature and not based on your personal objectives, financial situation or needs.  You should therefore consider how appropriate the advice (if any) is to your objectives, financial situation and needs, before acting on the advice.  If the advice relates to acquiring a particular financial product, you should obtain and consider the Product Disclosure Statement (PDS) and Financial Services Guide (FSG) for that product before making any decisions.

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