CFD Markets News and Forecasts — 06-09-2021

Sentix reported on Monday its investor confidence index for Eurozone fell to 19.6 in early September from 22.2 in August. This was the lowest reading since April.

Economists had expected the indicator to drop to 18.3.

According to the report, investors' assessment of the economic situation in the Eurozone did not improve further this month. At 30.8 points, however, it remains at a high level. Expectations, on the other hand, declined for the fourth time in a row to only 9 points.

The report from IHS Markit and Chartered Institute of Procurement & Supply (CIPS) showed Monday that the pace of growth of the companies’ activity in the UK’s construction sector eased notably in August.

According to the report, the Markit/CIPS Purchasing Managers' Index (PMI) for the UK’s construction sector fell to 55.2 in August from an unrevised 58.7 in July. This was the lowest reading since February, as restricted supply of materials and transport began to weigh on overall construction activity.

Economists had forecast the indicator to decrease to 56.9. The 50 mark divides contraction and expansion.

According to the report, there were weaker expansions across housebuilding, commercial work and civil engineering activity as well as in new order growth. Moreover, construction companies widely noted sustained, and severe, supply chain disruption in August, which contributed to an accelerated increase in input prices, and one that was the second-steepest in the history of the survey. In addition, the rate of job creation softened to a four-month low in the latest survey period.

FXStreet reports that Axel Rudolph, Senior FICC Technical Analyst at Commerzbank, expects the aussie to drop towards the 0.7305 area in the near term. 

“We would allow for some near-term consolidation below the 0.7481 three-month resistance line, and a minor dip lower.”

“Initial support lies at the 20-day ma at 0.7305 and 0.7289, the 21st July low and these guard 0.7106, the August low.” 

“A close above the resistance line would target the 2021 resistance line at 0.7699.”

FXStreet reports that economists at Société Générale note, since the market shifts its attention to the ECB meeting on Thursday, ‘buy the rumour, sell the fact’ is an apt strategy that springs to mind.

“Discussions are certain to take place, but is there unanimity or consensus to move forwards and rest purchases to EUR10 B - EUR15 B per week from October? If there is not, last week’s price action will turn out to have been a head fake, causing investors to reverse steepening trades in EGBs and swaps and take profits in EUR/USD.”

“A hawkish message could nudge swaps back above zero and EUR/USD closer to the next resistance at 1.1910.”

FXStreet reports that FX Strategists at UOB Group suggest that Cable could be headed towards the 1.390-mark and above in the next weeks.

24-hour view: Last Friday, we highlighted that ‘solid upward momentum suggests that the current advance in GBP is likely to break 1.3850 and head towards 1.3885’. We added, ‘the major resistance at 1.3910 is likely out of reach’. Our view was not wrong as GBP soared to 1.3891 before pulling back. Deeply overbought conditions indicate that the current GBP strength is ready to take a breather. In other words, GBP is likely to trade sideways for today, expected to be between 1.3825 and 1.3890.”

Next 1-3 weeks: “As highlighted, vastly improved momentum suggests that GBP is ready to head higher to 1.3910. GBP subsequently soared to 1.3891 before easing off. The current positive outlook is deemed intact as long as GBP does not move below 1.3790.”

USD rose slightly against its major rivals in the Asian session on Monday, recovering after Friday’s decline, which was triggered by mixed U.S. August jobs report that cast some doubt on the Fed’s imminent tapering plans.

The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, rose 0.21% to 92.23.

The U.S. employment situation report for August, which was released on Friday, appeared to be mixed relative to economists’ estimates. The headline reading missed expectations (actual 235,000 vs. economists' consensus estimate of 750,000), while the unemployment rate fell in line with forecasts (to 5.2% from 5.4% in July) and hourly earnings increased 0.6% m/m, twice the expected pace. 

The uncertain August employment report forced investors to push back their expectations for the U.S. Federal Reserve's timetable for tapering. As a result, the U.S. dollar index declined to its lowest level since early August.

Progress on the labour front is crucial for the U.S. central bank. The Fed's Chairman Jerome Powell hinted in August that reaching full employment was a necessary criterion for the regulator to begin paring back its bond purchases.

• We will continue high-level opening up
• We must support a private economy

The Australian and New Zealand Banking Group (ANZ) revealed that job advertisements in Australia declined a seasonally adjusted 2.5 percent m-o-m in August to 195,995, after dropping 1.3 percent m-o-m in July (revised from a fall of 0.5 percent m-o-m). That marked the second straight month of decrease and the lowest number of job ads since April, which, however, still was more than a quarter above its pre-pandemic level.

The annual pace of job ads growth decelerated to 78.9 percent in August from 97.4 percent in the prior month.

“Job Ads has been more resilient this time around: the cumulative 3.7 percent fall over the past two months was miniscule compared with the 64 percent plunge last year during the national lockdown," noted ANZ Senior Economist, Catherine Birch. "This is in line with other key indicators, such as consumer confidence, which has fallen but is still well above the lows of 2020. Newly lodged job ads are also holding up better… Admittedly, it is likely that ANZ Job Ads will decline further over coming months, and we expect sizeable employment losses in locked down areas, with the national unemployment rate to lift back above 5 per cent. But given the momentum going into lockdowns, policy support and signs that activity should rebound once restrictions ease, we think the setback will be temporary."

The Federal Statistical Office’s (Destatis) report revealed Monday that new orders in the German manufacturing sector rose by 3.4 percent m-o-m in the seasonally terms in July, following an upwardly revised 4.6 percent m-o-m surge in June (originally a 4.1 percent m-o-m jump). Compared with February 2020, which was the month before coronavirus restrictions were imposed in Germany, new orders were 15.7 percent higher.

Economists had forecast a drop of a 1.0 percent m-o-m.

According to the report, the July marked m-o-m advance was caused by major orders. Excluding major orders, there was a decline of 0.2 percent m-o-m.

In other survey results, the domestic orders rose 2.5 percent m-o-m in July. Meanwhile, foreign orders surged 8.0 percent m-o-m as a 4.1 percent m-o-m fall in new orders from the euro area was more than offset by a 15.7 percent m-o-m climb in new orders from other countries.

New orders for intermediate goods decreased 0.5 percent m-o-m in July, while orders for consumer goods jumped 7.5 m-o-m and the orders for capital goods surged 5.4 percent m-o-m.

On y-o-y basis, factory orders were up 24.4 percent in July.

• Lockdown to be eased in all regions outside of Auckland, the epicenter of current virus outbreak
• Auckland will remain at the highest level of restrictions (Level 4) for at least one more week
• Moving to Level 2 is progress and it is positive, but it comes with warning
• We’re within sight of elimination but we cannot drop the ball
• Our case numbers at present are coming down but we continue to see persistent cases attached to current outbreak