Forex news for North American trading on August 21, 2020
Data on the US came out better-than-expected today, with the housing rebound continuing. The existing home sales data for July (accounts for 90% of US housing transactions) rose to 5.86 million vs. 4.70 billion in the previous month and above the estimate of 5.41 million. The sales pace was the strongest since 2006 with all regions posting double-digit gains. Moreover medium sales price jumped as inventories declined to a small 3 month supply. Gains attribute it to cheaper borrowing costs, pent-up demand, and the movement of city dwellers to suburban buyers on the back of the pandemic related shutdowns and the home workplace.
Also released today was better-than-expected Markit PMI data (preliminary). The manufacturing component rose to 53.6. That was the highest level since January 2019. The service PMI also was better than expectations of 54.8 vs. 51.0 estimate and 50.0 last month. It was the highest level since March 2019. The composite index was the highest level since February 2019 at 54.7 (vs. 50.3).
Baker Hughes recount provided a upside surprise by adding 11 oil rig counts in the current week. That was the largest increase since January and took the value off of the lowest level since 2005 last week.
The price of crude oil is still settling down on the day at $-0.53 or -0.27% at $42.29. However is off the lows of $41.46 and close the week above the 50% midpoint of the years trading range at $42.
Gold prices fell as the dollar strengthened. Spot gold is trading down around $9.70 -0.50% at $1937.53. The price action this week the price back above the $2000 level to a high of $2015.67, but the momentum could not be sustained and the price is closing below the $2000 level for the 2nd consecutive week. Last week’s close was at $1945.12
Spot silver is trading down around $0.58 or -2.14% at $26.66. For the week it is up around $0.22 from the closing level of $26.44 last Friday.
In the US debt market, the 30 year yield fell by about -10 basis points this week to 1.347%, while the 10 year fell about -7 basis points to 0.6331%. The 2 – 10 year yield spread also decline by around 7 basis points to 49 basis points at as the 2 year yield remains unchanged at 0.43%.
In the US stock market this week, the NASDAQ composite index led the major global markets with a 2.65% gain. The S&P index rose by 0.72%, the Shanghai composite rose by 0.61% in the Canada S&P/TSX index squeaked out a 0.01% gain. The rest of the global indices close lower for the week with Spain’s Ibex falling by -2.41%. The German DAX fell by -1.06%. The unique high index declined by -1.58%.
In the forex market this week, the JPY was the strongest of the majors while the EUR was the weakest. The USD is closing mixed with gains vs. the EUR, CHF and AUD and declines vs.the JPY, CAD, and near unchanged vs. the GBP and NZD.
Next week:
- It is Pres. Trumps turn along with his fellow GOP as they kickoff their Republican National convention on Monday. It will run through Thursday.
- The 44th annual Jackson Hole Summit hosted by the Kansas City Fed will be conducted online, Aug. 27 to Aug. 28. The year’s theme is “Navigating the Decade Ahead: Implications for Monetary Policy.” Fed chair Powell will speak on Wednesday. Bank of Canada’s Macklem will also speak on Wednesday, and Bank of England’s Daly will speak on Friday
Other key releases for the week includes:
- Monday New Zealand retail sales
- Tuesday US consumer confidence
- Wednesday US durable goods
- Thursday US preliminary 2nd quarter GDP. The prior release came in at -32.9% with the estimate for -32.5%. US initial jobless claims will also be released. This week the claims number move back above the million level to 1.1 million.
- Friday Canada GDP. US personal income and personal spending and the revised University of Michigan consumer sentiment (previously 72.8).