• Alphachain Team

Second Wave

Last week saw the DXY put in a thin week as price traded within a 1% range. The recent dampened risk appetite spread across markets as the USDJPY moved lower to approach 2-month lows. Conversely cable attempted to claw back some of the losses from the week prior though struggled to breach 1.3000 and now looks poised to move lower. The wave of Central bank meetings saw markets experience some volatility as the VIX broke above the 26.00 before retreating lower. Going into the week ahead, a number of speeches from FED Chair Powell are to be expected as well as a rate decision from New Zealand.


Warnings of a potential second wave

Warnings of a potential second wave continue to startle nations in Europe most notably the UK. PM Johnson outlined that numbers are indicating that a second wave is coming. While the PM wants to avoid a second national lockdown at all costs in a hope to keep the economy open, he added that extra measures will need to be taken if the virus continues to spread.


UK Health minister Hancock stated that officials are looking to hold a meeting on Sunday to discuss further actions that may be needed for the city of London if rules continue to be flouted. In addition to this London Mayor Khan is set to recommend a tightening of lockdown measures around the capital in a council meeting later today.


The panic and uncertainty surrounding the UK’s future is compiling as the furlough scheme is set to expire in October which will expose the true impact within the labour market. In light of this, Chancellor Sunak is expected to announce plans to extend four loan schemes this week to support business amid the worsening spread of the disease. At the time of writing, GBP/USD has slumped to six-day lows to trade beneath 1.2850.


The ECB

The ECB will be reviewing their €1.35tln PEPP program, which will assess the effect of the bond-buying scheme. Some policymakers are anticipating that the review could result to changes in their other programs.


The ECB will be looking to outline how long the measures should continue and whether part of the program can be transferred to longer asset-purchase schemes. ECB’s De Guindos referred to the current program being a temporary emergency plan which is serving to act for as long as the price stability objective is not met.


WTI Crude

WTI Crude surged around 10% last week to close above the $40 handle. Last week saw the JMMC meeting take place where officials refrained from making any changes to the output agreement. Extra comments came from the Saudi energy minister who stated that OPEC+ can call an extraordinary meeting next month to take additional measures if the situation warrants so.


UK Brent Oil put in a similar move whilst finding temporary resistance at a 61.8% retracement level on the daily timeframe. In recent reports, Goldman Sachs, believe that the end of the Libya export restrictions doesn’t mark an end to the oil market rebalancing story and still look to maintain their year-end forecast for Brent at $49/bbl. whilst outlining that they expect prices to increase to at least $65/bbl. by Q3 next year.


In the cryptocurrency space

In the cryptocurrency space, BTCUSD gained over 5% as buyers eye the $11,000 mark once more. Price for the Cryptoasset currently holds above the 50EMA with the stochastic in the overbought region. ETHUSD put in a choppy week as price attempted to push into the $400 level. Intraday support for the asset lies around the $350 level.

Here is a breakdown of the high impact data releases this week.

Monday

15:00 Fed Chair Powell Speaks. Markets to watch: USD Crosses

Tuesday

08:30 BOE Gov Bailey speaks. Markets to watch: GBP Crosses

15:30 FED Chair Powell Testifies. Markets to watch: USD Crosses

Wednesday

03:00 Official Cash Rate & RBNZ Rate Statement. Markets to watch: NZD Crosses

08:15 French Flash Services PMI. Markets to watch: EUR Crosses

08:30 German Flash Manufacturing & Services PMI. Markets to watch: EUR Crosses

14:45 Flash Manufacturing PMI. Markets to watch: USD Crosses

15:00 FED Chair Powell Testifies. Markets to watch: USD Crosses

Thursday

08:30 SNB Monetary Policy Assessment. Markets to watch: CHF Crosses

15:00 FED Chair Powell Testifies & Treasury Secretary Mnuchin Speaks. Markets to watch: USD Crosses

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