By Deepta Bolaky
 @DeeptaGOMarkets

Equity Markets

Global stocks were mixed as investors await updates from central bankers, policymakers and economists to determine whether the current stimulus will likely stay on hold for some time.

Source: Bloomberg

On Wall Street, S&P500 and Nasdaq Composite continue to record new highs fuelled by positive vaccine-related news:

• The Dow Jones Industrial Average lost 60 points or 0.2% to 28,248.
• S&P 500 rose by 12 points or 0.4% to 3,444.
• Nasdaq Composite added 87 points or 0.8% to 11,466.

The Dow finished in negative territory after the reshuffling of the index – Amgen ($AMGN), Salesforce.com ($CRM) and Honeywell International ($HON) will be added to the index while Pfizer ($PFE), Raytheon Technologies ($RTX) and Exxon Mobil ($XOM) will be removed. The moves were spurred by Apple’s decision to split its stock which will reduce the Information Technology index weight!

The share price of the new stocks to be added to the Dow rose on Tuesday and continue to increase in after-hours trading. 

Currency Markets

In the FX space, major currencies were stronger against the greenback. Major pairs remained in familiar levels ahead of the Fed Chair Jerome speech at the Economic Symposium at Jackson Hole. The symposium is gearing up to be a dollar-event. 

Source: GO MT4

The British Pound was the performer against the US dollar. Adam Taylor CTEe takes a look at the GBPUSD pair:

For the Chart of The Day, we are looking at Cable on the daily time frame. After several days of tight consolidation following an impulsive move higher, GBPUSD forms a bullish flag candle pattern and could be about to break higher.

The impulsive move mentioned occurred last month in July when the price rose from 1.28 to the 1.31 region, and within this movement, we have a few clues as to what may be driving this market from a technical perspective.

Firstly, it’s worth highlighting the significance of the 1.28 level in terms of key support for the pair. Before the price fell through the floor back in March, this level acted as a strong base for Cable and became a significant 61.8% retracement zone from the Nov 2019 high of 1.35 and the most recent low in March of 1.14. Initially, this area acted as resistance but can now be considered a line in the sand for GBPUSD. Should 1.28 be tested again and fail, then the price may tend to drift even lower.

Now with the critical support highlighted, we can look at the current bullish activity and discuss the bullish flag formation. It appears buyers in this market are still firmly in the driving seat and waiting for an opportunity to push higher. We see sizable resistance situated at 1.32, but I suspect a confident break above could see the fruits of this latest pattern test targets towards the 1.35 mark upwards.

Much will depend on just how much of a risk appetite Sterling buyers have in this current environment in the coming days. Still, given how much Dollar volatility we’ve seen of late, the opportunity that buyers are waiting for could be just around the corner.

On the economic front, attention was on the IFO surveys and US docket. 

Germany: 

• Budget Deficit: Germany dealt with its first budget deficit since 2013 and recorded its biggest deficit in a decade. 

Source: GO MT4

• IFO Surveys: Current Assessment and Business climate came above expectations:

1. Current Assessment above forecasts (86.9) in August: Actual (87.9)
2. Business Climate above forecasts (92.2) in August: Actual (92.6)
3. Expectations below forecasts (98) in August: Actual (97.5)

• GDP: The gross domestic product (GDP) fell sharply by 9.7% in the 2nd quarter of 2020 on the 1st quarter of 2020 after adjustment for price, seasonal and calendar variations. According to the Federal Statistical Office (Destatis), the GDP drop in the 2nd quarter of 2020 was not quite as steep as reported in the first release of 30 July 2020 (-10.1%). The slump in the German economy was thus much larger than during the financial and economic crisis of 2008/2009 (-4.7% in the 1st quarter of 2009) and the sharpest decline since quarterly GDP calculations for Germany started in 1970.

United States: 

• Housing Data:

1. Home prices grew by 5.4 percent in the second quarter of 2020 compared to a year ago, despite the impacts of COVID-19. The monthly index for June was up 0.9 percent from May. 
2. As per S&P Shiller Index, The 20-City Composite posted a 3.5% year-over-year gain, down from 3.6% in the previous month.
3. New Home Sales: Sales of new single-family houses in July 2020 were at a seasonally adjusted annual rate of 901,000. This is 13.9 percent (±20.0 percent)* above the revised June rate of 791,000.

Source: GO MT4

• Consumer Confidence dropped from 91.7 (revised from 92.6)in July to 84.8.

Commodities

Crude oil prices traded higher on Tuesday lifted by the overall COVID-19 vaccine progress and a bullish API report. The weekly crude oil stock came out at -4.524M (August 21) vs previous -4.264M. As of writing, WTI Crude oil (Nymex) and Brent Crude (ICE) were firmer around $43.27 and $45.91 respectively. 

Gold

As risk sentiment improves lifted by vaccine-related optimism, the precious metal is struggling to edge higher. The XAUUSD pair has consolidated into a tight range around the $1,930 level. 

Source: GO MT4

By Deepta Bolaky
 @DeeptaGOMarkets

Key upcoming events

• Trade Balance, Exports, and Imports (New Zealand)
• Leading Economic Index, Durable Goods, and Nondefense Capital Goods Orders (US)

Thursday, 27 August 2020  Indicative Index Dividends Dividends are in Points
ASX200	WS30	US500	US2000	NDX100	CAC40	STOXX50
1.674	0	0.225	0.079	0	0	0
ESP35	ITA40	FTSE100	DAX30	HK50	JP225	INDIA50
0	0	0.647	0	24.438	0	0

Disclaimer:  The articles are from GO Markets analysts,  based on their independent analysis or personal experiences. Views or opinions or trading styles expressed are of their own;  should not be taken as either representative of or shared by GO Markets.  Advice (if any),  are of a ‘general’ nature and not based on your personal objectives, financial situation or needs.  You should therefore consider how appropriate the advice (if any) is to your objectives, financial situation and needs, before acting on the advice.  If the advice relates to acquiring a particular financial product, you should obtain and consider the Product Disclosure Statement (PDS) and Financial Services Guide (FSG) for that product before making any decisions.

Next: Chart of the Day: AUDJPY – Potential price ceiling @76.80?
Previous: Chart of the Day: Tuesday 25th August