Summer Volatility Starts To Shine Through
Last week, the DXY continued rangebound as price attempted to trade higher though stalled around 93.80. Currently the DXY trades sub 93.00 as the USD starts off the week weaker. The summer volatility is starting to shine through as Cable and EURUSD remained lacklustre with buyers and sellers tussling for control. EURUSD remains at a key level as it holds beneath a multi-year bearish trendline. A breakthrough could trigger a further bullish run on the asset to at least 1.2500.
Due to an increase in Covid-19 cases, New Zealand PM Ardern has made a decision to extend the lockdown for an additional 12 days. In addition to this, the upcoming election has been pushed back by four weeks to October 17th. This comes after a dovish RBNZ meeting last week where the LSAP was increased to NZD 100bln whilst the rate was maintained as expected. The nation has extended their mortgage deferral to 31st March 2021 whilst the current wage subsidy has also been stretched out to cover around 470,000 jobs.
The recommitment to the phase one trade deal has been delayed after the US and China failed to meet over the weekend. China who were initially crippled economically struggled to keep up with the necessary purchases and terms of the agreements due to the lockdown imposed in the nation have now begun to ramp up their purchases of US goods in a hope to show some level of commitment.
WTI Crude Oil
WTI Crude continued to trade sideways around the $42.25 level. Chinese state oil firms are looking to potentially to ship at least 20mln bbls as they look to ramp up purchases for the US commodity. Amongst all of this, Trump has issued a new order to increase pressure on ByteDance after ordering the company to divest itself of any assets used to support TikTok in the US within the next 90 days.
The UK has seen a sudden jump in home sales after Rightmove reported the highest number of home sales agreed since it began tracking the data more than 10 years ago. This comes after the tax break announced earlier on in the year and a heightened demand for houses outside of the capital. As a result, London experienced a 2% monthly fall in asking prices whilst almost every other region in Britain recorded positive figures. The UK are looking to launch post-Brexit trade discussions with Canada and talks with the EU are also set to resume this week as negotiators look towards a deal being agreed in September.
In the cryptocurrency space
In the cryptocurrency space, the Bitcoin hash rate has hit record average highs as BTCUSD nears $12,000. The hash rate is an estimate of the amount of computing power miners are devoting to processing BTC transactions. A higher hash rate average indicates that miners have more confidence in profitability and therefore tends to correlate with prices. Currently BTCUSD continue to trade between $11,650 - $11,980. ETHUSD has broken previous resistance at $415 and attempted to push into the $450 level before price traded lower to hold around $430.
Here is a breakdown of the high impact data releases this week.
02:30 Monetary Policy Meeting Minutes. Markets to watch: AUD Crosses
08:15 French Flash Service PMI. Markets to watch: EUR Crosses
08:30 German Flash Manufacturing PMI, German Flash Service PMI. Markets to watch: EUR Crosses