Market Recap 8/14

Global equity market:

(Source: KVB PRIME)

Equity market:

After yesterday's strong performance, the US stock market showed weakness again and the three major indexes all consolidated. Among them, the S&P 500 index closed down by 0.20% at 3373.43, and the Nasdaq closed up by 0.19% at 11178.37. The Dow closed down by 0.29% at 27896.72.

In terms of European stocks, major European stock indexes closed down. The German DAX index closed down by 0.50% at 12993.71, and the UK FTSE 100 index closed down by 1.5% at 6185.62.

Yesterday, the Shanghai and Shenzhen stock markets maintained a weak and volatile pattern. As of the close, the Shanghai Composite Index rose 0.04%, the Shenzhen Component Index fell 0.13%, and the ChiNext Index fell 0.49%. Among them: the seed industry sector rose by more than 8%; the ecological agriculture, pork, and land transfer sectors rose by more than 2%; the industrial hemp, military, tourism, and new retail sectors rose by more than 1%; biological vaccines, digital currencies, generic drugs, and light Engraving machine and other sectors had the highest decline.

Precious metal forward contracts:

Gold and silver rebounded after the ‘Great Escape’. Gold was at $1960 per ounce. As of the close, gold closed up by 1.94% at $1952.62 per ounce;

Silver has become a ‘playground’ for small and medium-sized capital: it grew 8.5%, which was the largest increase in a day since December 2014 and closed up by 7.91% at $27.49 per ounce.

Crude oil forward contracts:

The US WTI crude oil and Brent oil fluctuated within a narrow range during the day, and the US market fell rapidly, and then recovered by a little. WTI crude oil fell 0.47% to $42.34 per barrel; Brent crude oil fell 0.60% to $45.04 per barrel.

Currency forward contracts:

USDX: closed down by 93.77 -0.15%.

EUR/USD: closed up by 1.18117 -0.246%

GBP/USD: closed down by 1.30622 -0.260%

AUD/USD: closed down by 0.71448 -0.208%

NZD/USD: closed down by 0.65741 -0.455%

USD/CAD: closed down by 1.32212 -0.208%

USD/JPY: closed up by 106.906 -0.057%

Global fundamentals:

COVID-19:

On August 13, local time, WHO Director, Desai Tan, said that according to the estimates of the International Monetary Fund, COVID-19 has caused a monthly loss of $375 billion in the global economy, and the cumulative economic loss in the next two years will exceed $12 trillion. The G20 countries have used more than $10 trillion in fiscal stimulus, which is more than 3.5 times the total funds used in the global response to the financial crisis that year.

United States:

Last week, the number of initial unemployment claims in the US was 963,000, falling below 1 million for the first time in five months, which suggests that the hard-hit in the US job market is recovering steadily.

On Thursday, the White House economic adviser, Larry Kudlow, said that he expects the US unemployment rate to return to single-digit levels at the earliest this month, and as the economy recovers from the recession caused by COVID-19, the annualised growth rate of in the third quarter should reach 20% or higher.

Fed Governor Brainard said that the Fed is examining the opportunities and challenges brought by central bank digital currencies (CBDC). She said that in order to improve the Fed’s understanding of digital currencies, the Boston Federal Reserve Bank is cooperating with researchers from the Massachusetts Institute of Technology for many years to establish and test hypothetical digital currencies used by the central bank.

According to foreign media reports, on Tuesday, local time, a number of US companies said in a telephone conference that the White House directly stated that the ban on WeChat would weaken their competitiveness in the world’s second largest economy. Also, they wish the scope of the executive order will be narrowed and clarified within a week. There were dozens of companies participated in a conference call with White House officials on Tuesday, including Apple, Ford, Walmart and Disney.

International crude oil:

The IEA released its latest monthly report saying that due to the bleak outlook of the air travel industry, it lowered its global crude oil demand forecast. It stated that this impact reduced the 2020 global crude oil demand forecast from 92.1 million barrels per day to 91.9 million barrels per day.

The OPEC representative stated that OPEC+ postponed the Joint Ministerial Supervisory Committee (JMMC) meeting for one day to August 19 because of the postponement of the Russian minister’s schedule. Russian Energy Minister Novak: The OPEC+ committee will not discuss adjustments to the OPEC+ agreement this month.

Today's currency forecast analysis:

EUR/USD

Yesterday’s forecast of the resistance level of 1.1836 was accurate. The main delivery orders in the market were completed in the vicinity of long and short. After the announcement of the US unemployment benefits for the week, EUR had a certain downward trend, and the current price is still supported by both of the moving average. The daily fluctuations are very standard, so the subsequent layout can rely heavily on the technical side: after the price test 1.180, once the price is stable, you can set up short and long targets around 1.185.

(Source: KVB PRIME)

GBP/USD

At present, GBP price needs to be well organised from the daily level. With the help of the overall weak USD, the price climbed to 1.30, and the aggressive price can see the mid-term strategy layout of 1.128. The short-term goal is near 1.30. Although GBP has been highly correlated with EUR historically, the current correlation is significantly weakening.

(Source: KVB PRIME)

(Source: KVB PRIME)

USD/JPY

The US/JPY are still oversold. We have given a stress test to our strategy. Although the current major components of the USD index: EUR and GBP need to be adjusted in the mid-term. However, in the short term, the oversold of the USD/JPY still needs to be adjusted. The layout is consistent with yesterday: from the current price target to around 106.1, a callback shorting order can be placed.

(Source: KVB PRIME)

XAU/USD

In the absence of extreme capital’s action of taking advantages to react, the recent trend of gold will be in line with technical analysis, but unfortunately, compared with large-scale price fluctuations, we can predict and grasp the space is relatively small: yesterday's price was at around 1950 as we predicted and it was exactly 50% of the previous wave. Therefore, it is not believed that the price now has counterattack elements and the price will fluctuate around $10 in 1950.

(Source: KVB PRIME)