Archives of “August 18, 2020” day

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European shares close lower and give up earlier gains

  
  Analysis
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Major indices down across the board

The European shares are closing lower on the day after trading higher earlier. The provisional closes are showing:

  • German DAX, -0.5%. The high reached +1.0%
  • France’s CAC, -0.8%. The high reached 0.59%
  • UK’s FTSE 100, -1.0%. The high reached 0.57%
  • Spain’s Ibex, -0.8%. The high reached 1.06%
  • Italy’s FTSE MIB, -0.6%. The high reached 1.05%

Another day, another dollar (selloff)

  
  Analysis

US dollar on the defensive again

US dollar on the defensive again
The US dollar is sinking again.
The rundown of reasons to sell the dollar is this:
  • US election/political risk
  • Improving Republican polls increase risk of divided, deadlocked
  • The lack of further stimulus could tee-up US economic underperformance
  • Relative valuations are better outside the US (i.e. equity p/e ratios)
  • Money is flowing out of USD safe-haven trades
  • Debt monetization fears
At the moment, the euro and the pound are leading the way with the commodity currencies not far behind. It’s a genuine dollar rout though and at some story the momentum simply takes over.
EUR/USD still faces a big level at 1.20 but it certainly looks like it can run. The major risk I continue to see is that equity markets begin to kick-and-scream about the lack of stimulus.
EURUSD

China repeats that it firmly opposes US’ suppression of Huawei

  
  Analysis
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Comments by the Chinese foreign ministry

Huawei

This comes after the US moved to cut off Huawei’s supply chain via fresh sanctions that will restrict any foreign semiconductor company from selling chips – developed or produced using US software/technology – to the Chinese company.

The remarks from China today are rather reserved – no specific mention of retaliation but there is anxiety surrounding the situation – but fitting with the tone that both sides are still largely holding off from escalating tensions too much for the time being.

Nikkei 225 closes lower by 0.20% at 23,051.08

  
Analysis, Global Indices

A mixed and slow session for Asian equities for the most part

Nikkei 18-08

Asian equities are a bit more mixed in trading today, with Japanese exporter stocks also not really finding much comfort in a stronger yen. The Hang Seng is down 0.1% but the Shanghai Composite is up by 0.1% going into the closing stages.

The push higher in the Nasdaq and the S&P 500 is failing to really brighten the mood as we look to get things going in European morning trade.
US futures are near unchanged levels on the day so that isn’t really providing much clues.
In the currencies space though, the dollar is still a notable laggard – alongside the kiwi – as we see EUR/USD near 1.1900 and USD/JPY tracking near session lows of 105.60.
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