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19
Oct

US Housing Market Index, Fed’s Powell Speech

calendar 19/10/2020 - 08:19 UTC

Major currency markets were trading relatively stable on Friday and on Monday. Even the pound sterling (GBP) made no sizable moves after the drop on Thursday, despite increased rhetoric of a no-deal exit of the UK from the EU at the end of the year after the transition period comes to an end. While UK government officials confirm that they still see a chance of a deal, they are seemingly also preparing their country and their country’s businesses to manage a no-deal exit.

In emerging markets the Mexican peso (MXN) and South African rand (ZAR) continued to improve against the greenback, while the USD/TRY pair also was off the recent heights.

After gold prices settled around the $1,900 mark on Friday, by Monday morning again a push higher could be observed. Over the past trading days however the momentum was not enough to surpass the $1,915 threshold. Silver prices on the other hand, moved to a new six days high.

Bitcoin and Ethereum prices continued to consolidate marginally higher, trading almost unchanged on a weekly basis. This was not the case for some of the better-known altcoins like Litecoin or Ripple, which traded within the past 24 hours lower and lost more than five per cent of their value over the past week.

On Monday the Chairman of the US Federal Reserve Bank Jerome Powell will participate in a discussion on cross border payments and digital currencies at the annual meeting of the International Monetary Fund. Fed’s Vice Chairman Richard Clarida will hold a speech at the American Bankers Association.

EUR/USD

Despite the relatively stable to slightly weakened dollar, the EUR/USD pair was unable to advance over the past days and by Monday morning remained for the most part just above the 1.17-threshold.

The rising numbers of coronavirus infections especially in Europe might be affecting even the markets at this point.

German industrial orders were reported were up by one per cent in August, while the industrial orders from abroad were up by even 1.1 per cent.

Besides for the release of the US housing market index, relatively few fundamental data points can be expected during the trading session on Monday.

EUR/USD

Germany 30

The German stock market index strongly recovered on Friday, but overall still closed the week lower. By Monday morning the index remained somewhat below the 13,000-threshold.

One of the best performing shares on Friday was the industrial and steel company Thyssenkrupp, whose stock price was even at the end of the day up by more than 11 per cent after gaining at the peak 24 per cent in the trading session on Friday. This move came after the UK company Liberty Steel made an offer to purchase the struggling steel business from the German company. Unions however seem to prefer for the German government to step in instead and save the struggling company.

Car makers also performed strongly on Friday, while by Monday morning Daimler traded almost unchanged and VW and BMW continued to move into the green. Given this strong recovery, VW shares are trading almost unchanged from last week, recovering the steep losses from Thursday. Analysts from Bank of America are expecting positive results in the upcoming earnings for the major car makers in Germany, France and Italy.

Germany 30

WTI Oil

The US Baker Hughes Oil Rig Count continued showing an increased number of operating oil rigs, reaching for the first time since early June more than two hundred oil rigs.

On a weekly basis, oil prices ended the week for the second time in a row higher. However the price range in both directions is still rather restricted. While the actions of countries organised under OPEC+ managed to stabilized prices, the concerns about the demand outlook in the wake of a second wave of COVID-19 infections continues to affect the markets. Even the OPEC cartel revised its demand outlook for 2021 last week due to these issues.

Oil and its derivates’ stockpile data in the US will be published on Tuesday by the American Petroleum Institute (API) and on Wednesday the Energy Information Administration (EIA)

WTI Oil

US 500

While the US 500 index closed yet again lower on Friday, due to the extremely strong market performance on the previous Monday, the weekly performance was still overall positive.

Performance on a sector-by-sector basis was quite mixed with noticeable gains in the health care (US Health Care ETF +1.12%) and utilities sector (US Utilities ETF +1.13%), while overall energy companies’ stock prices (US Energy ETF -2.08%) were under pressure. Oil service company Schlumberger (-8.52%) was one of the worst performers during the trading session despite the released quarterly results showing better than expected adjusted losses. However, the dropping revenue to $5.28 billion, which represented a decline of 38 per cent might have spooked some long investors. Shares of its competitor Halliburton (-6.24%), which will publish its own quarterly results on Monday also took a hit.

Then on Tuesday companies including Lockheed Martin, Philip Morris, Netflix and Snap are publishing their quarterly results.

US 500

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