Archives of “September 2020” month

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Dollar index to hit 90 or 100 first?

  
Analysis, Forex

DXY at 94.35

I came across a piece on Bloomberg’s Market Live blog making a case for the Dollar Index to hit 90, before 100. Here is the rationale:
1. The recent Dollar strength has been fuelled by US election uncertainties.
2. The rising COVID-19 cases in Europe have been a key part of the EURUSD weakness. Technically the EURUSD is being pushed back down into a large downtrend from 2008.
3. Despite crowded eur longs and USD shorts being a bit cleaner there still remains election risks.
4. The sum conclusion is that once the election tensions fade then the EURUSD will be driven by the fact that the Fed’s stimulus is greater than the ECB’s. Therefore, DXY to move to 90 before 100.
Points 1 and 2  are really two sides of the same coin. EURUSD weakness = DXY strength and vice versa due to their tight negative correlation. US elections are close and tense. The ‘sell everything’ feel has definitely been here with heavy global stock selling.
DXY at 94.35

Nikkei 225 closes higher by 1.32% at 23,511.62

  
Analysis, Global Indices

Asian equities off to a good start to the new week

Nikkei 28-09

Stocks in Asia are following the more positive mood from Wall Street from the end of last week, with higher US futures also helping to keep the optimism flowing today.

The Nikkei is closing near the highs, with the Hang Seng seen up by 0.9% while the Shanghai Composite is up by 0.1%. HSBC stocks in particular are outperforming, after reports of Ping An Insurance adding to their stake in the financial firm.
Both Nasdaq and S&P 500 futures are up by ~0.6% so that is also helping with the mood.
In the currencies space, the dollar is mildly weaker to start the day but it is still early to draw any real conclusions from the relatively minor movement so far.

Here is the US election debate timetable (and the bad news)

  
Analysis, Politics

OK, lets get the bad news out of the way – the debates will be held during the US evening, which is the Asian time zone.

😀
The schedule (all dates US time … they’ll be a day later in Asai)
  • Trump vs. Biden on Tuesday September 29 (begins at 9pm NY time, so that is 0100 GMT on Wednesday Sep 30)
  • Pence vs Harris (the VP vs challenger) on October 7
  • Trump v Biden October 15
  • Trump v Biden October 22
OK, lets get the bad news out of the way - the debates will be held during the US evening, which is the Asian time zone.

Australian government forecasting the price of iron ore to remain elevated

  
  Analysis

Australia’s Department of Industry in its latest assessment of commodity exports, prices.

  • Expects the price of iron ore to remain high for the next two years
  • Also expects Australia to become the world’s largest gold producer
  • Exports of commodities expected to be upwards of 250bn AUD in the year ahead
  • department is effectively predicting a benchmark iron ore price of about $US93 per tonne in mid-2021.
Further:
  • expects continued disruption to Brazil’s ability to supply iron ore
  • ”Significant growth in Brazilian short term supply remains unlikely due to the wider problems of COVID-19 across the Brazilian economy”
  • ”The main risk to prices is thus on the demand side.”
  • The department predicted iron ore would hold around $US100 a tonne “over coming months” and would gradually decline to be closer to $US85 a tonne by June 2021.

Oil trader Vitol says prices have little room to rise in the next quarter because global demand growth is faltering

  
Analysis, Crude

Weekend comments from Vitol Group executive committee member Chris Bake.

Crude prices will have little room to rise in the next quarter
  • the recovery in global demand slowing due to new coronavirus-related restrictions on the economy
  • conventional wisdom going into the fourth quarter was that things were going to improve … It doesn’t feel like we have a huge catalyst,” and demand is more “uncertain,”
Vitol is a Dutch energy and commodity trading company.
Weekend comments from Vitol Group executive committee member Chris Bake.

War breaks out between Armenia and Azerbaijan

  
Analysis, Politics

Old conflict explodes

map of armenia-azerbaijan
Armenia Prime Minister Nikol Pashiyan declared martial law and a general mobilization after accusing Azerbaijan of “pre-planned aggression.”
The region of Nagorno-Karahakh along with some nearby districts are formally part of Azerbaijan but there have been frequent clashes since the fall of the Soviet Union in 1991, including one that killed hundreds in 2016.
At this moment, this is a non-event from markets but if Russia or Turkey were to get involved that could change quickly.
Putin expressed “serious concern” and called for a halt to hostilities. Turkey’s Erdogan said it “stand by its Azeri brothers with all its means.” Azeri is a term for Turkic Azerbaijani people.
There have been periodic attacks that recently escalated into what’s now close to full-scale warfare. The Azeri army is using tanks, artillery, missiles and aircraft against Armenian positions.
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