Monday September 28th, 2020

Currency & Equity markets rebound from last week’s sell-off, finding support from upbeat industrial profits data from China. Global equity markets are starting the week stronger, all US equity futures also in positive territory heading into the North American open. In the latest round of Sino/US tensions, a US Judge temporarily blocks the US administration ban on new TikTok downloads. A flurry of Fed officials speaking this week and likely all pressing the call for US stimulus relief. The US$ index slips from its 2-month highs ahead US first presidential debate Tuesday and a barrage of economic data this week. GBP jumps as BoE dismisses negative rates talk. NZD, JPY, CNY & Asian currencies are up 0.2% on average. ZAR is up 0.3%, AUD & MXN are up 0.5%, NOK up 0.6% vs US$. The Turkish lira falls almost 2% amid concern about the Azeri-Armenian conflict. No key data out in the US, so focus remains on US Stimulus talk and the upcoming US presidential debate Tuesday.

Oil prices edge lower on demand concerns and rising exports from Iran and Libya. The Russian oil minister warns of resurgent of coronavirus and its impact on oil demand. C$ strengthens on a consolidating US$ but the bias remains to buy US$ into these dips. Oil prices remain vulnerable to further weakness due to increasing output and falling demand. With no key data out today so expect some consolidation. Support at 1.3300 with resistance at 1.3420, if breached look for 1.3537 (Jul21st)

Euro bounces off last week’s lows as the US$ eases and equities rebound on upbeat Chinese data. ECB president is speaking today, and her comments will likely focus on stimulus needs, rising coronavirus concerns and its likely impact on the EU economy. Investors will be watching closely to see if she expresses any concerns over the prospect of future Euro strength. Support holds 1.1580 with minor resistance at 1.1670, followed by 1.1785.

GBP is the market outlier today up over 1% after BoE Ramsen dismisses the imminent use of negative interest by the BoE. Also providing additional support were comments that both EU & UK negotiators that they made key concessions to avoid a no-deal Brexit. The next round of discussions begin again on Tuesday and expectations are that a finalized deal is possible by the end of this week ahead of Mid-October EU Summit. The UK continues to battle increased covid-restrictions which could overshow GBP’s prospects for further strengthening. Support rises to 1.2800 with resistance at the phycological 1.3000 level.