CFD Markets News and Forecasts — 03-09-2020

According to ActionForex, analysts at RBC Financial Group note that both the increase in Canada's exports (+11.1%) and imports (+12.7%) in July were boosted by recovering activity in the motor vehicle sector where production levels bounced back to significantly above year-ago levels in July after falling essentially to zero in April. 

"Part of that bounce-back is tied to the unusual pattern for production this year – auto plants normally shut down for a period of July but generally did not this year given the COVID-19 production disruptions in the spring. Exports of motor vehicle and parts were up 37% in June and imports rose 50%, with both building on 200%+ increases the prior month."

"There were also positive signs that the recovery in the industrial sector is gaining some added traction. Exports of industrial machinery and equipment were were up 11% in July (although still 14.5% below February levels.) Imports of equipment surged, in part reportedly boosted by purchases of cellphones from Asia but also reflecting a second-straight 9% increase in industrial equipment imports. The latter is also still below (-6.2%) February levels, but increases over the last couple of months are a positive sign that at least some business investment spending is returning."

"Services trade numbers were also released this morning, and those trade flows remained very weak – services exports were still down 24% from a year ago in July, imports -34%. But that is also not surprising with restrictions on border crossings still keeping trade in travel services extremely subdued. That ongoing weakness in the services side of the economy is one of the key reasons that we continue to expect economic activity in Canada to be running well-below long-run capacity limits at the end of this year. But the trade numbers for July are still consistent with an initial bounce-back that has also been somewhat sharper than expected."

U.S. State Department released an update on the U.S. withdrawal from the World Health Organization (WHO).

"The United States has long been the world’s most generous provider of health and humanitarian assistance to people around the world.  This assistance is provided with the support of the American taxpayer with the reasonable expectation that it serve an effective purpose and reach those in need.

Unfortunately, the World Health Organization has failed badly by those measures, not only in its response to COVID-19, but to other health crises in recent decades.  In addition, WHO has declined to adopt urgently needed reforms, starting with demonstrating its independence from the Chinese Communist Party.

When President Trump announced the U.S. withdrawal from that organization, he made clear that we would seek more credible and transparent partners.

That withdrawal becomes effective on July 6, 2021, and since the President’s announcement, the U.S. government has been working to identify partners to assume the activities previously undertaken by WHO..."

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The Institute for Supply Management (ISM) reported on Thursday that its non-manufacturing index (NMI) came in at 56.9 in August, which was 1.2 percentage points lower than the July reading of 58.1 percent. The reading represented growth in the services sector for the third straight month after contraction in April and May.

Economists forecast the index to decrease to 57.0 last month. A reading above 50 signals expansion, while a reading below 50 indicates contraction.

Of the 18 manufacturing industries, 15 reported increases last month, the ISM said, adding that respondents' comments were mostly optimistic and industry specific about business conditions and the economy as businesses are starting to reopen

According to the report, the ISM’s non-manufacturing Business Activity measure fell 4.8 percentage points to 62.4 percent from July’s figure and the New Orders gauge dropped 10.9 percentage points to 56.8 percent from July’s reading. Meanwhile, the Prices Index jumped 6.6 percentage points to 64.2 percent from July’s reading, the Employment Index increased 5.8 percentage points to 47.9 percent from the July reading, the Supplier Deliveries Index rose 5.3 percentage points to 60.5 percent from July’s figure and the Backlog of Orders Index edged up 0.7 percentage point to 56.6 percent from the July reading.

Commenting on the data, the Chair of the ISM Non-Manufacturing Business Survey Committee, Anthony Nieves, noted, "The past relationship between the NMI and the overall economy indicates that the NMI for August (56.9 percent) corresponds to a 2.8-percent increase in real gross domestic product (GDP) on an annualized basis.”

The latest report by IHS Markit revealed on Thursday the seasonally adjusted final IHS Markit U.S. Services Business Activity Index (PMI) stood at 55.0 in August, up significantly from 50.0 in July and higher than the “flash” figure of 54.8. This was the highest reading since March 2019 and signaled a strong expansion in business activity across the U.S. service sector.

Economists had forecast the index to stay unrevised at 54.8.

According to the report, output increased at the sharpest rate for nearly one and a half years, new orders grew at the quickest pace for over a year and employment rose at the fastest pace since June 2014. 

Statistics Canada announced on Thursday that Canada’s merchandise trade deficit stood at CAD2.45 billion in July, widening from a revised CAD1.59-billion gap in June (originally a CAD3.19-billion gap).

Economists had expected a deficit of CAD2.50 billion.

According to the report, Canada’s exports surged 11.1 percent m-o-m to CAD45.43 billion in July, with motor vehicles and parts contributing the most to the overall increase (+37.0 percent m-o-m).

Meanwhile, imports jumped 12.7 percent m-o-m to CAD47.88 billion in July, also driven by higher imports of motor vehicles and parts (+50.3 percent m-o-m). 

U.S. stock-index futures fell on Thursday, as investors took a breather after solid gains on Wall Street earlier this week. 

Global Stocks:

The U.S. Commerce Department reported on Thursday that U.S. the goods and services trade deficit widened to $63.6 billion in July from a revised $53.5 billion in the previous month (originally a gap of $50.7 billion). That was the highest trade gap since July of 2008.

Economists had expected a deficit of $58.0 billion.

According to the report, the July increase in the goods and services deficit reflected an increase in the goods deficit of $9.3 billion to $80.9 billion and a decrease in the services surplus of $0.8 billion to $17.4 billion.

In July, exports of goods and services from the U.S. climbed 8.1 percent m-o-m to $168.1 billion, while imports surged 10.9 percent m-o-m to $231.7 billion, in part, due to the impact of COVID-19, as many businesses continued to operate at limited capacity or ceased operations completely, and the movement of travelers across borders remained restricted.

Year-to-date, the goods and services deficit declined 1.8 percent from the same period in 2019. Exports plunged 17.5 percent, while imports tumbled 13.8 percent.

(company / ticker / price / change ($/%) / volume)

Bank of America (BAC) upgraded to Buy from Hold at Deutsche Bank; target raised to $29

FedEx (FDX) upgraded to Buy from Hold at Berenberg; target $280

JPMorgan Chase (JPM) upgraded to Buy from Hold at Deutsche Bank; target raised to $115

The data from the Labor Department revealed on Thursday the number of applications for unemployment decreased more than forecast last week, as the U.S. labor market continues its gradual recovery from its biggest shock in history, caused by the coronavirus pandemic.

According to the report, the initial claims for unemployment benefits totaled 881,000 for the week ended August 29. That brought the number of job losses over the past twenty-four weeks (since the U.S. went into coronavirus lockdown in mid-March) to near 59.3 million.

Economists had expected 950,000 new claims last week.

Claims for the prior week were revised upwardly to 1,011,000 from the initial estimate of 1,006,000.

Meanwhile, the four-week moving average of claims fell to 991,750 from an upwardly revised 1,069,250 in the previous week.

Continuing claims decreased to 13,254,000 million from a downwardly revised 14,492,000 in the previous week.

GBP fell against its major rivals in the European session on Thursday, weighed down by gloomy outlooks for Britain’s economy from the Bank of England's (BoE) policymakers and a lack of progress in UK-EU talks on a post-Brexit deal.

The BoE's Monetary Policy Committee (MPC) member Gertjan Vlieghe said on Wednesday that there was "a material risk" that it could take several years for Britain’s economy to return to full capacity after its coronavirus shock. Vlieghe also added that some sectors might not be able to return to their pre-pandemic size, leading to a reorientation of the economy. Meanwhile, the BoE's deputy governor Dave Ramsden said that the BoE had estimated the level of Britain's economic output would permanently be about 1.5 percentage points lower than it would have been without the pandemic. He also reiterated that the BoE had "headroom to do materially more QE if we need to". 

The European Union’s (EU) chief Brexit negotiator Michel Barnier said that they didn’t see any change in the position of the UK on key sticking points in talks on a post-Brexit trade deal and that he was “worried and disappointed” over the UK’s approach. “We didn’t see any change in the position of the UK, which is why I expressed publicly what I say, that I am worried and I am disappointed because, frankly speaking, we have moved, shown in many issues real openness in the past months,” Barnier said.

The dollar bear trend has only just begun - ING

Chris Turner, ING's Global Head of Markets and Regional Head of Research for UK & CEE, notes that US fiscal policy paralysis and a change in monetary policy strategy from the Federal Reserve make the case for the dollar bear trend extending well into next year. On this background, they revise up their end 2021 EUR/USD forecast to 1.25.

"If real interest rates are one of the best gauges of monetary policy settings then US monetary conditions are now the loosest they have been since 2012. These loose conditions have led to accusations that the dollar is being deliberately ‘de-based’. That term seems a little too pejorative, but what is clear is that the Fed has its foot firmly on the reflationary accelerator and a weaker dollar is part of the preferred monetary policy mix at this early stage in the recovery cycle."

"Arguably, the DXY should have traded weaker into 2012/2013 on the back of the decline in US real yields. Yet that period marked the height of eurozone debt tensions. What is different now is a period of relative calm in European politics – presenting an opportunity for the EUR/USD rally to extend into 2021 as the Fed keeps rates lower for longer."

"Equally, the trend towards more negative US yields has typically created a positive environment for portfolio flows into emerging markets. This year’s exodus of capital from EM has been far more aggressive than that seen during the 08/09 financial crisis. And if global policymakers can keep ‘V’-shaped hopes alive and second wave fears in check, we expect that the return of capital into EM will be a story that runs deep into 2021 – adding to the benign downtrend in the dollar."

"For the above reasons, we see the dollar downtrend extending through 2021 and raise our end year 2021 EUR/USD forecast to 1.25 from 1.10 previously."

FXStreet notes that EUR/USD extends its fall from trend channel resistance from late July at 1.2011 and the spotlight turns to the lower end of the channel and key price support at 1.1786/54. Failure to hold here would mark a top and a more important turn lower with support then seen next and initially at 1.1699, according to Credit Suisse.

“EUR/USD extends its aggressive rejection of trend resistance from late July at 1.2011 and the spotlight to the lower end of the uptrend channel from late July, currently seen at 1.1786. With key price support from the recent lows seen just below at 1.1764/54, we would look for an attempt to find a floor here at first.”

“With a potential momentum top in place and a bearish divergence  the risk for a top is seen increasing and below 1.1754 can confirm a top to open the door to a more concerted move lower with support seen next at 1.1699/89 – the August low and 38.2% retracement of the rally from late June – then what we look to be better support from the 55-day average and 50% retracement at 1.1598/90.”

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FXStreet notes that NZD/USD has had an impressive run over the past week but 0.6800 is an obstacle for now. Nonetheless, economists at Westpac expect the kiwi to break the aforementioned 0.68 barrier in the coming months.

“RBNZ Governor Orr appeared unconcerned about the high NZD this week, indicating the RBNZ does not believe it is significantly overvalued. At the same time, he reiterated the next set of tools to be deployed would be a negative OCR combined with low-cost bank loans. NZ yields continue to fall, but that doesn’t seem to have weighed much on the NZD.” 

“The NZ economy is expected to outperform the US economy during the year ahead. Moreover, we expect the weak USD trend to persist. We forecast NZD/USD to exceed 0.6800 during the months ahead.”

Bert Colijn, a Senior Eurozone Economist at ING, suggests that Eurozone's retail sales 1.3% decline in July is a small drop compared to the gain of the last few months and it's therefore too early to worry about a double dip for retail.

"If you’re looking for worrying signals on the economy, today’s services PMI provides more reason for concern than retail sales - despite a decline in July."

"As for retail sales, they likely overshot somewhat in May and June, as pent-up demand was fulfilled to some degree in the first months of reopening. The July decline was small compared to the recovery in the months before, meaning that sales were still roughly at pre-virus levels. In that light, July numbers are actually still strong and this means that retail probably maintains the lead in the eurozone recovery. As such, this should not be read as a sign that retail sales are heading for a double dip. A more significant drop in August would be worrying though."

"In the months ahead, the retail sales recovery will increasingly be curbed by increasing unemployment and fulfilled pent-up demand from the lockdown period."

FXStreet notes that gold has had a cumulative gain of about 30% so far this year ignited by the pandemic but economists at HSBC believe the recent rally may be overdone. Yet, a further dip in US bond yields can sustain a modest rally in yellow metal.

“The ‘nuts and bolts’ of Mr. Powell’s speech were largely expected. However, he did not touch on what could have been much more gold bullish topics of monetary policy, such as asset purchases and yield curve control. We believe that the rally in gold last Friday (28 August) has been overdone and should bond yields stay firm, or USD selling abate, gold could weaken.”

“We believe a further dip in US bond yields can sustain a modest rally in gold. For many months, gold was more impacted by US bond yields, especially the yield on the US 10-year Treasury note, than any other single factor, although historically gold is usually more influenced by the USD, with which it is inversely correlated, in our precious metals analyst’s view.”

eFXdata reports that Danske Research highlights 3 key factors which will likely set the path for the USD weakness over the coming months.

 "Fed sets the broad USD path – but post-US election surprises remain on our radar:

1- If the Fed fails to win credibility in its shift to FAIT, broad USD weakness could prove short-lived; this goes especially if the global recovery stalls into 2021.

2- If the Fed backs its regime shift with weighty action (QE boost or, even, negative rates), USD weakness could accelerate swiftly and extend into 2021. 

3- In our base case, the US election should not be instrumental for currencies, but if a Biden win fuels a backlash on the tech sector, reconciling trade rhetoric, and/or marked higher US corporate taxes, USD weakness could be prolonged," Danske notes. 

FXStreet reports that Reserve Bank of Australia’s somewhat surprising expansion of funding facility and a firmer USD tone point to consolidation near-term as the aussie rejected 0.74 for now, economists at Westpac apprise.

“A firmer tone to USD has been the main driver, with the aussie continuing to enjoy background support from global risk appetite and commodity prices, most obviously spot iron ore at $128/tonne.” 

“Q2 GDP slumped as expected but households appear ready to spend once restrictions loosen. The RBA meeting leant dovish, expanding the term funding facility and considering ‘further monetary measures.’ There was little reaction on the day and spec positioning is only modestly long, but AUD may be due for underperformance on some crosses.” 

“We opt for neutral on the week with DXY consolidating after its sharp decline, aided by ECB unease over euro strength. AUD/USD may well not retest 0.7400 in coming days but should find support around 0.7250.”

According to the report from Eurostat, in July 2020, a month marked by some relaxation of COVID-19 containment measures in many Member States, the seasonally adjusted volume of retail trade decreased by 1.3% in the euro area and by 0.8% in the EU, compared with June 2020. Economists had expected a 1.5% increase in the euro area. In June 2020, the retail trade volume increased by 5.3% in the euro area and by 5.1% in the EU. In July 2020 compared with July 2019, the calendar adjusted retail sales index increased by 0.4% in the euro area and by 0.7% in the EU.

In the euro area in July 2020, compared with June 2020, the volume of retail trade decreased by 2.9% for non-food products, remained unchanged for food, drinks and tobacco and increased by 4.3% for automotive fuels. In the EU, the volume of retail trade decreased by 2.3% for non-food products while it increased by 0.1% for food, drinks and tobacco and by 4.6% for automotive fuels.

In the euro area in July 2020, compared with July 2019, the volume of retail trade increased by 1.5% for food, drinks and tobacco and by 0.5% for non-food products while automotive fuel decreased by 10.8%. In the EU, the retail trade volume increased by 1.5% for non food products and by 1.1% for food, drinks and tobacco while automotive fuels decreased by 9.6%.

According to the report from IHS Markit/CIPS, UK service providers reported another rise in business activity during August, with the rate of expansion accelerating to its fastest for over five years. Higher levels of output were primarily attributed to the reopening of the UK economy after the lockdown period in the second quarter of 2020. Survey respondents often commented on a strong recovery in domestic consumer spending. Despite the improvement in business conditions since the start of the coronavirus disease 2019 (COVID-19) pandemic, latest data indicated a setback for employment numbers. The rate of job shedding across the service sector was the steepest since May.

The headline seasonally adjusted UK Services PMI Business Activity Index registered 58.8 in August, up from 56.5 in July and in expansion territory for the second month running. Moreover, the latest reading was much higher than the average in the second quarter (29.8) and signalled the fastest pace of output growth since April 2015. Higher volumes of business activity were linked to a post-lockdown bounce in both business and consumer spending during August.

Latest data also pointed to the sharpest increase in new work since December 2016. Companies reporting a sustained decline in new work generally cited restrictions on international travel, ongoing global economic uncertainty due to the pandemic and falling export sales. August data indicated that new work from abroad decreased for the seventh successive month and the speed of the downturn was little changed since July.

Looking ahead, service sector firms remain optimistic overall that business activity will expand over the next 12 months. That said, the degree of confidence eased for the first time since March. A number of firms cited concerns about the strength of the recovery as government support measures taper off. 

According to the report from IHS Markit, the recovery of the eurozone’s private sector economy lost momentum in August as growth eased markedly on July’s recent peak. After accounting for seasonal factors, the Eurozone PMI Composite Output Index fell to 51.9, down from 54.9 in the previous month. The index was, however, higher than the earlier flash reading (51.6) and represented moderate growth in activity. There was a divergence in performance in activity by sector during August. Manufacturing output rose markedly and at the fastest pace since April 2018. Although service sector activity also rose for a second month in succession, the rate of growth eased sharply and was only marginal. Underpinned by a strong performance in its manufacturing sector, Germany was the best performing country during August, although overall growth was a little softer than the previous month.

Levels of new business increased for a second successive month during August, although growth was modest and weaker than in July. New export sales were reported to have fallen again, extending the current period of contraction to nearly two years.  With activity rising at a slightly firmer rate than new business, private sector companies were comfortably able to keep on top of workloads. Latest data showed an eighteenth successive monthly fall in backlogs of work, although August’s contraction was only modest. Companies subsequently again made cuts to employment numbers in August, extending the current period of contraction to six months. 

Looking to the year ahead, business confidence remained in positive territory. Sentiment about the next 12 months was however slightly down compared to July.

The Eurozone PMI Services Business Activity Index recorded a notably slower rate of growth during August. After accounting for seasonal factors, the index declined to 50.5, from 54.7 in July. A marked slowdown of growth in France, plus returns to contraction in Italy and Spain, weighed heavily on overall service sector expansion.

Bloomberg reports that an early approval of a vaccine for the coronavirus and a win for Joe Biden in the U.S. presidential election would lift Asian currencies, according to UBS Group AG.

Asia ex-Japan currencies stand to appreciate by 3% to 4% against the dollar in the event such a scenario materializes, the bank said in a Sept. 2 report. The offshore yuan and Thai baht are likely to outperform, with the Chinese currency expected to strengthen to at least 6.7 against the dollar.

“The vaccine has potential to revive expectations of global growth rebound, thinning out the layer of uncertainty weighing on investments,” UBS strategists including Rohit Arora wrote in the report. “Under a Biden presidency, the foreign policy is likely to be more predictable.”

Despite persistent weakness in the dollar, a three-month gain in Asian currencies is at risk of stalling as concerns about the pandemic weigh on sentiment. A growing risk of a delayed or inconclusive result from the U.S. presidential election could also unnerve investors.

While a scenario that combines the early arrival of a vaccine and a win for President Donald Trump would be less supportive, Asian currencies are still likely to strengthen by 1% to 2%, according to UBS. The baht, Indonesian rupiah and Indian rupee would benefit mildly.

UBS will retain its core long exposure in the offshore yuan and South Korean won, while rotating out of the rupiah into a long rupee position, according to the report.

Source: https://www.bloomberg.com/news/articles/2020-09-03/early-vaccine-biden-win-would-boost-asian-currencies-ubs-says?srnd=markets-vp

FXStreet reports that USD/CNH faces some consolidation in the near-term, but it also risks a probable drop to the 6.8000 area in the next weeks, suggested FX Strategists at UOB Group.

24-hour view: “We noted yesterday that ‘the rapid decline appears to be overdone and this coupled with oversold conditions suggest further USD decline is unlikely for today’. We held the view that USD ‘is more likely to consolidate and trade within a 6.8240/6.8420 range’. Our view was not wrong even though USD traded within a narrower range than expected (between 6.8225 and 6.8385). Momentum indicators are still mostly neutral and further consolidation would not be surprising. Expected range for today, 6.8200/6.8430 range.”

Next 1-3 weeks: “Yesterday (01 Sep, spot at 6.8480), we highlighted that ‘such lackluster price actions upon a breach of major support indicates either USD is not ready for further losses or it is biding time for a more aggressive decline later on’ and added, ‘we believe it is latter scenario’. We expected ‘the current weakness to extend to 6.8300, possibly 6.8160’. USD subsequently plummeted and quickly exceeded the 6.8160 level as it dropped to a low of 6.8143. From here, we continue to see risk for further USD weakness even though oversold conditions could lead to a few days of consolidation first. Only a break of 6.8800 (‘strong resistance’ level was at 6.8950 yesterday) would indicate that the current weak phase in USD that started about 2 weeks ago (see annotations in the chart below) has run its course. Until then, the roundnumber support level of 6.8000 is likely beckoning to USD.”

Source: https://www.fxstreet.com/news/usd-cnh-does-not-rule-out-a-move-to-68000-uob-202009030632

During today's Asian trading, the US dollar continued to rise against the euro on signals of concern from the European Central Bank (ECB) about the significant strengthening of the european currency recently.

Earlier this week, the euro rose above the $1.2 mark for the first time since May 2018. Following this, the exchange rate quickly moved to a decline, which experts explain by the statement of the ECB's chief economist Philip Lane that the exchange rate "matters" in monetary policy.

Despite the fact that inflation in the euro zone remains extremely low, Lane's words were taken as a signal that the ECB considers excessive growth in the value of the euro in recent years. The strengthening of the currency eases inflationary pressure, as it reduces the cost of imports.

Usually, ECB representatives do not mention exchange rates, except in the context of the fact that this factor is one of several that the Central Bank evaluates when making decisions about further monetary policy.

"At the moment, regulators can do little to control exchange rates, but if the signals coming from the ECB have an effect, the euro may head towards the $1.17 mark, as traders will prefer to lock in profits after the recent rally," said experts at BK Asset Management.

The ICE index, which tracks the dynamics of the US dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona), rose by 0.22%.

CBA experts note that the US dollar is likely to return to a decline in the near future due to expectations of the imminent appearance of a coronavirus vaccine in US that support interest in risky assets.

According to the report from Federal Statistical Office (FSO), the consumer price index (CPI) remained stable in August 2020 compared with the previous month, reaching 101.2 points (December 2015 = 100). Economists had expected a 0.1% increase. Inflation was –0.9% compared with the same month of the previous year. 

The stability of the index compared with the previous month is the result of opposing trends that counterbalanced each other overall. Prices for clothing and footwear increased, as well as prices for hotel accommodation and mobile communication. In contrast, prices for airfares, international package holidays and housing rentals decreased.

In August 2020, the Swiss Harmonised Index of Consumer Prices (HICP) stood at 100.54 points (base 2015 = 100). This corresponds to a rate of change of -0.1% compared with the previous month and of –1.4% compared with the same month the previous year. Due to the effects of the pandemic, the same missing price imputation techniques used for the CPI were introduced for the HICP.

The HICP is a supplementary indicator for inflation based on a harmonised method across EU member countries. It enables inflation in Switzerland to be compared with that of European countries.

FXStreet reports that in opinion of FX Strategists at UOB Group, NZD/USD keeps the positive view for the time being.

24-hour view: “Yesterday, we held the view that ‘there is room for NZD to edge above yesterday’s 0.6779 peak but the major resistance at 0.6800 is likely out of reach’. Our view was not wrong as NZD rose to a high of 0.6789 before trading mostly sideways. Momentum indicators are turning neutral and for today, NZD is likely to trade sideways between 0.6740 and 0.6790.”

Next 1-3 weeks: “There is not much to add to Monday’s (31 Aug, spot at 0.6735) update. As highlighted, ‘the outlook for NZD is still clearly positive even though overbought conditions suggest the major resistance at 0.6800 may not come into the picture so soon’. In other words, NZD could consolidate for another 1 to 2 days first before mounting the next leg higher to test 0.6800. The next resistance above 0.6800 is at 0.6840.On the downside, the ‘strong support’ level has moved higher to 0.6660 from 0.6635.”

EUR/USD

Resistance levels (open interest**, contracts)

$1.1909 (2709)

$1.1872 (1932)

$1.1848 (2293)

Price at time of writing this review: $1.1800

Support levels (open interest**, contracts):

$1.1742 (1375)

$1.1697 (1164)

$1.1649 (1291)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date September, 4 is 99369 contracts (according to data from September, 2) with the maximum number of contracts with strike price $1,0500 (5007);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3413 (978)

$1.3351 (1370)

$1.3330 (1013)

Price at time of writing this review: $1.3294

Support levels (open interest**, contracts):

$1.3236 (130)

$1.3146 (92)

$1.3098 (638)

Comments:

- Overall open interest on the CALL options with the expiration date September, 4 is 21226 contracts, with the maximum number of contracts with strike price $1,3800 (2994);

- Overall open interest on the PUT options with the expiration date September, 4 is 19566 contracts, with the maximum number of contracts with strike price $1,3000 (1567);

- The ratio of PUT/CALL was 0.92 versus 0.97 from the previous trading day according to data from September, 2

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.

RTTNews reports that China's services activity expanded strongly in August as businesses continued to recover from the coronavirus pandemic, survey data from IHS Markit showed Thursday.

The Caixin services Purchasing Managers' Index fell marginally to 54.0 from 54.1 in July. However, a score above 50 indicates expansion.

The latest uptick extended the current sequence of growth to four months, signaling that the sector continued to recover from the marked drops in activity earlier in the year following the Covid-19 outbreak.

New orders increased on greater client numbers and the resumption of projects. Higher sales were largely driven by firmer domestic demand.

The sustained increases in activity and sales led firms to expand their workforce numbers for the first time in seven months.

Operating expenses faced by Chinese service providers rose at a quicker rate midway through the third quarter. The rate of input price inflation was the strongest seen since March. Services companies increased their output charges but the rate of inflation was moderate.

Although services companies generally expect business activity to be higher than current levels in one year's time, the overall degree of positive sentiment dipped to a three-month low in August.

The composite output index rose to 55.1 in August from 54.5 in July. The score signaled the second quickest since December 2010.

The uptick was supported by the strongest increase in manufacturing output since January 2011.

"Overall, the recovery of the manufacturing and services sectors from the epidemic remained the main theme of the economy," Wang Zhe, a senior economist at Caixin Insight Group said.

"Improvement in employment in the post-epidemic era requires longer-term market recovery and longer-term stability of business expectations," the economist added. During this process, support from relevant macroeconomic policies is essential.