Trading Week Ahead: 7th – 11th September 2020
Key Events and Data Releases This Week
US and Canadian Bank Holidays
CAD BOC rates statement – Overnight rate
EUR Main Refinancing Rate, Monetary Policy Statement, ECB Press Conference
CAD BOC Gov Macklem Speaks
(Times adapted to AEST timezone)
Last Week’s Wrap
Traders, in another notable week on the markets, we saw new demand for the battered USD and a turn away from equities after the Nasdaq tumbled. Data wise, concentration was fixed on Friday’s U.S. and Canadian employment data. The U.S. data surprised some with NonFarm Payrolls coming in at 1,375K. This was stronger than some had expected, but despite the number, many still believe it’s going to be years until we see a proper recovery. U.S. unemployment also surprised coming in stronger at 8.4%, the first time since April that we saw U.S. unemployment inside 10%. Zero Hedge posted that the employment figures could be artificially high due to the hiring of temporary census takers. On the other hand, Canada did not fair well with employment change missing and unemployment ticking up to 10.2%.
Elsewhere, U.S. stimulus still remains in deadlock, with $1200 still the figure touted for the second round checks. Lawmakers in Washington are set to resume talks after a shutdown was avoided.
The Australian economy dropped into a confirmed recession last week after GDP came in lower than expected at 7%. To be honest, with some of the other numbers we have seen of late, is 7% really that bad? The AUD barely moved after the release suggesting the market saw it as inevitable and no real surprise considering some of the numbers coming out of Europe and US.
On a forex front, the return to the USD remained in play last week with the dollar gaining to the risk majors and closing higher to the JPY and CHF but slipping into the red to the CAD. AUDUSD finished close to 1% lower, EURUSD closed 0.49% lower, and GBPUSD lost 0.37%. We highlight the GBPUSD weekly chart later. All three risk majors cut losses to the USD in Friday’s NY session. This did not hurt the USD overall as it finished the week higher to both the JPY and CHF.
Gold remains firmly held in a triangle consolidation pattern and for now, continues to tread water. We continue to watch gold to see which side will hit momentum and form a breakout.
Oil broke out of its consolidation channel with a break lower last week. Sellers followed that up with two more days of selling, as price ended the week GBP lower. Now that we have the breakout, will we see a lower high confirm a new downtrend?
Bitcoin was another market hit mid-week by heavy selling. This was around the same day stocks dropped. There is some speculation around why this happened but they are hardly firm to provide a concrete answer. Well, from what I have read BTC lost 8.94% at week’s end but traded as much as 14% lower before the end of week fightback.
Stock indexes started the week lower but quickly bounced back, the Nasdaq and S&P500 hit new records. The US30 closed back above 29,000, only 300+ points away from its current record. At this stage, things looked just like they did last week, as thoughts of a US30 record push started to come to mind. This thinking changed fast on Thursday as tech stocks took a beating and led other indexes down with them. On Friday selling continued, as the tech stocks remained the principal target of sellers. Late Friday stock indexes joined risk with forex fighting back from session lows. The NDX100 snapped a 5-week winning streak closing 3.82% lower.
We have a light news week coming up this week, with Thursday’s ECB monetary policy statement and press conference the principal focus. The BOC also meets and is expected to hold rates. The ECB is also expected to hold rates, but traders will be looking at the statement for stimulus details and future policy hints. New momentum will be another factor this week worth paying attention to. Can the USD continue its fightback? Have risk majors hit highs and are they ready to pull back with a USD rally? With regards Oil, will we see confirmation of a new downtrend, while for tech stocks is the honeymoon over? Could this be the start of a reversal that will cascade global equity markets into longer-term pullbacks?
Below are this week’s charts in focus. First up, with the NDX100 daily, what do you think when you see last week’s pullback?
While looking at the GBPUSD weekly, we can see that we have hit and started to pull back at a key resistance point.