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EURUSD trades to highest level since May 2018 and tests 1.2000 in the process

Tests the May 13 week high and 1.2000 today.

The EURUSD traded to a high price today of 1.19967. That moved just ahead of the May 13, 2018 high price of 1.19957 (by a pip – highest level since May 3rd) and just short of the natural resistance at 1.2000.  A break of the 1.2000 level (and stay above) would have traders targeting 1.2054 and 1.2092 as the next upside targets.
Tests the May 13 week high and 1.2000 today.

Drilling down to the hourly chart, the price move higher today occurred in the Asian session and stalled at the similar high (at 1.19967) during the early European session. That move took the price above a topside trend line but the break failed.

Getting above the trend line, and the high for the day along with the 1.200 level are obvious upside targets to get to and through.
On the downside, the swing hi from August 18 at 1.1965 is near a upward sloping trendline. The low corrective move after reaching the high today moved just below that level to 1.19604, but could not sustain selling pressure. Risk for longs looking for more upside would be a break below that level today.
EURUSD on the hourly chart

Germany to revise higher 2020 GDP forecast, expect weaker rebound in 2021

Reuters reports, citing two sources familiar with the matter

Germany
  • 2020 GDP forecast to be revised to -5.8%; previously -6.3%
  • 2021 GDP forecast to be revised to +4.4%; previously +5.2%
These are the same figures as what Der Spiegel is reporting here. German economy minister, Peter Altmaier, is going to present the latest figures later today at ~0900 GMT.

Eurozone August final manufacturing PMI 51.7 vs 51.7 prelim

Latest data released by Markit – 1 September 2020

The preliminary release can be found here. This just confirms that factory activity held up somewhat in August across the euro area, keeping on the recovery path.
However, there are ongoing concerns surrounding domestic demand conditions and amid the hit to the services sector last month, it continues to allude to a considerable degree of uncertainty involving the virus situation in general.
We’ll have to see how things go in the coming months for a better idea on how the recovery is progressing within the region. Markit notes that:

“Eurozone factory output rose strongly again in August, providing further encouraging evidence that production will rebound sharply in the third quarter after the collapse seen at the height of the COVID19 pandemic in the second quarter. Business expectations for output in a year’s time also rose to the highest for over two years as prospects continued to brighten from the unprecedented gloom seen earlier in 2020.

“Caution is warranted in assessing the likely production trend, however, as so far it would have been surprising to have seen anything other than a rebound in output and sentiment. Worryingly, order book growth cooled slightly in August, and there are indications that firms are bracing for a near-term weakening of demand.

“Of note, a key theme of the latest survey is one of firms taking a cautious approach to costs and spending, notably in respect to investment and hiring, amid continued worries about the strength of future demand and uncertainty over the course of the pandemic. Producers of investment goods such as plant and machinery reported the weakest order book growth, and job losses remained amongst the most prevalent since the global financial crisis.

“Whilst the drop in payroll numbers was led by Germany, France, Spain and Austria reported a reacceleration of job losses and a return to job cutting was seen in Ireland, sending worrying signals that many firms have become more concerned about the near-term outlook.

“In short, manufacturing is currently being buoyed by a wave of pent up demand, but capacity is being scaled back. The next few months’ data will be allimportant in assessing the sustainability of the upturn.”

Nikkei 225 ends the day flat at 23,138.07

Japanese stocks close pretty much flat on the day

Nikkei 01-09

Asian equities are seeing rather muted tones in general, though they are off earlier lows at least but are failing to find much inspiration after the mixed tones in Wall St overnight.

The Hang Seng is also flat on the day currently, while the Shanghai Composite is down slightly by 0.1%. US futures are off earlier lows to sit around ~0.2% higher now.
Elsewhere, the mood among major currencies is still siding against the dollar with the greenback lagging across the board. EUR/USD is hovering just under 1.2000 as we look towards European trading while USD/CAD is nearing the 1.3000 handle.

China – Caixin/Markit Manufacturing PMI for August: 53.1 (expected 52.5)

Caixin/Markit Manufacturing PMI for August comes in stronger than expected and up from July at 53.1, 4th consecutive month in expansion

  • expected 52.5, prior 52.8
Highest since January of 2011
  • New export orders a notable improvement, first growth for this year
  • Sharpest increases in output and new orders since the start of 2011
  • Employment moves closer to stabilisation
Dr. Wang Zhe, Senior Economist at Caixin Insight Group (this in summary):
  • overseas demand started to pick up
  • new export orders entered expansionary territory for the first time this year, due mainly to the slowing spread of the pandemic overseas
  • Companies were willing to replenish their stocks as demand continued to expand
  • Employment remained subdued … employment subindex stayed in negative territory for the eighth consecutive month, but it was the closest to positive territory this year
  • backlogs of work expanded at a faster pace than the previous month, which could be seen as a positive signal that a turning point is approaching for employment.  Input costs and output prices both rose, albeit at a slower pace
“Overall, the post-epidemic economic recovery in the manufacturing sector continued. Supply and demand expanded with the pickup in overseas demand. Backlogs of work continued to increase. Both quantity of purchases and stocks of purchased items also grew. Companies’ future output expectations remained strong, reflecting a positive outlook for the manufacturing sector for the year ahead. Employment remained an important focus. An expansion of employment relies on long-term improvement in the economy. Macroeconomic policy supports are essential, especially when there are still many uncertainties in domestic and overseas economies. Relevant policies should not be significantly tightened.”