CFD Markets News and Forecasts — 17-08-2020

FXStreet reports that economist at UOB Group Ho Woei Chen, CFA, assessed the latest set of economic indicators in the Chinese economy.

“China’s macroeconomic indicators in July affirm the stabilisation in the economy even as the pace of recovery appears to be slowing. Industrial production and retail sales lagged expectations in July but fixed asset investment (FAI) and jobless rate were in line with consensus forecasts.”

“The July surveyed jobless rate was unchanged from June at 5.7%, as it came off a high of 6.2% in February. We continue to expect the broad-based recovery in China’s economy to stabilize overall labour market conditions in the second half though certain sectors that are exposed to tourism and retail could remain weak.”

“Notably, the recovery in retail sales has not kept up with expectation and pose the greatest drag to growth in the second half. Consumption had contributed 57.8% of 2019’s GDP growth. As such, the government will continue to concentrate efforts to boost consumption demand and stabilise the jobs market. Another risk pertains to the resurgence of COVID-19 in parts of the world which could also upend the expected recovery in global demand. For now, we maintain our forecast for China’s full-year GDP at 1.8% with 3Q20 growth at 4.9% y/y and around 5.7% in 4Q20 (2Q20: 3.2%).”

FXStreet notes that AUD/USD remains in a short-term consolidation phase, which analysts at Credit Suisse expect to persist before the uptrend eventually resumes. Resistance is seen at 0.7190/96, then more importantly at 0.7243/46, while near term support moves to 0.7132/29.

“AUD/USD remains in a rangebound environment and we stick with our expectation of a lengthier consolidation phase above the crucial ‘neckline’ to the large ‘head & shoulders’ base at 0.7076.”

“Resistance is seen initially at the 0.7190/7196 mid-range highs, removal of which would see a shift higher within the range and suggest a renewed challenge of its recent highs at 0.7243/46. Although fresh selling is expected at this point as bears try to maintain the range, a break above here would end this range and see the upmove resume, with resistance seen thereafter at the late July and the 2019 high at 0.7284/95.” 

“Support moves initially to 0.7132/29, which includes the 21-day exponential average, which ideally holds. Removal of here could see a fall back to the aforementioned ‘neckline’ at 0.7076, where we would expect to see a more important effort to hold.”

• China recently made "large" agricultural purchases from U.S.
• Says he is still upset with China over COVID-19
• Supports restrictions on Huawei because "they spy on the U.S."

"The Bureau of Industry and Security (BIS) in the Department of Commerce (Commerce) today further restricted access by Huawei Technologies (Huawei) and its non-U.S. affiliates on the Entity List to items produced domestically and abroad from U.S. technology and software. In addition, BIS added another 38 Huawei affiliates to the Entity List, which imposes a license requirement for all items subject to the Export Administration Regulations (EAR) and modified four existing Huawei Entity List entries. BIS also imposed license requirements on any transaction involving items subject to Commerce export control jurisdiction where a party on the Entity List is involved, such as when Huawei (or other Entity List entities) acts as a purchaser, intermediate, or end user. These actions, effective immediately, prevent Huawei's attempts to circumvent U.S. export controls to obtain electronic components developed or produced using U.S. technology."

The full release

• China is "absolutely" keeping their word based on "epic" purchase of agricultural purchases in phase one trade deal 
• Huawei restrictions are needed because it "spies" on U.S.

The National Association of Homebuilders (NAHB) announced on Monday its housing market index (HMI) climbed 6 points to 78 in August from an unrevised July reading of 72. This was the highest reading in the 35-year history of the series, matching the record set in December 1998.

Economists had forecast the HMI to increase to 73.

A reading over 50 indicates more builders view conditions as good than poor.

All three HMI components registered gains this month. The indicator gauging current sales conditions jumped 6 points to 84 in August, while the component measuring traffic of prospective buyers climbed 8 points to record 65, and the measure charting sales expectations increased 3 points to 78.

NAHB Chairman Chuck Fowke noted: “The demand for new single-family homes continues to be strong, as low-interest rates and a focus on the importance of housing has stoked buyer traffic to all-time highs as measured on the HMI. However, the V-shaped recovery for housing has produced a staggering increase for lumber prices, which have more than doubled since mid-April. Such cost increases could dampen momentum in the housing market this fall, despite historically low-interest rates.”

Meanwhile, NAHB Chief Economist Robert Dietz said: “Housing has clearly been a bright spot during the pandemic and the sharp rebound in builder confidence over the summer has led NAHB to upgrade its forecast for single-family starts, which are now projected to show only a slight decline for 2020. Single-family construction is benefiting from low-interest rates and a noticeable suburban shift in housing demand to suburbs, exurbs and rural markets as renters and buyers seek out more affordable, lower density markets.”

U.S. stock-index futures rose on Monday after the U.S. and China delayed trade talks, as investors awaited quarterly earnings reports from retailers later in the week.

Global Stocks:

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

• China has been buying large amounts of agricultural products
• Looking to close loopholes to prevent Huawei from getting access to U.S. technology
• Says U.S. is eager for China to continue buying American farm products

• Notes that G7 finance ministers spoke via teleconference

Chevron (CVX) downgraded to Neutral from Overweight at Piper Sandler; target $108

The report from the New York Federal Reserve showed on Monday that manufacturing activity in the New York region slipped in early August.

According to the survey, NY Fed Empire State manufacturing index fell from 17.2 in July to 3.7 in August.

Economists had expected the index to come in at 15.0.

Anything below zero signals contraction.

According to the report, new orders index dropped sixteen points to -1.7, indicating that orders leveled off, and the shipments index fell twelve points to 6.7, pointing to a modest advance in shipments. Unfilled orders and inventories also declined. Meanwhile, employment inched higher and delivery times were steady. On the price front, input prices increased at about the same pace as last month, while selling prices increased for the first time in several months.

GBP traded mostly lower against its major counterparts in the European session on Monday. While the pound rose against NZD and was changed little against USD, it eased off against the rest of major rivals.

Market participants fixed their attention on reports of rising coronavirus cases in several countries, including Italy and Spain, which triggered the re-implementation of containment measures. Spain and Italy imposed new restrictions to stop the spread of the coronavirus, which include the closure of nightclubs. Italy also made it compulsory to wear a mask outdoors in some areas at night, especially around pubs and bars.

An upcoming new round of the UK-EU trade negotiations, which is to start on Tuesday, also weighed on the pound. Britain's chief Brexit negotiator David Frost stated last week that the UK wants a deal with at its core a free trade agreement like the one the EU has with Canada. He also suggested that the agreement with the EU can be reached in September. 

Meanwhile, escalating U..S.-China tensions dampened the risk sentiment. Reuters reported that the Trump administration is to tighten restrictions on Huawei and to prevent it from obtaining semiconductors without a special license. The announcement came after the U.S. president said on Saturday he could exert pressure on more Chinese companies, operating in the U.S. market, such as technology giant Alibaba (BABA) after he ordered China's ByteDance to divest the U.S. operations of TikTok within 90 days on Friday.

• Will make macroeconomic policies more targeted and effective
• Will guide lending rates lower

• Will add another 38 Huawei affiliates in 21 countries to the U.S. economic blacklist
• Will stipulate by a new separate rule that all companies on the economic blacklist will require a license when a company like Huawei on the list acts as a purchaser, intermediate consignee, ultimate consignee, or end-user
  

FXStreet reports that the Credit Suisse analyst team notes that the S&P 500 rally continues to lose momentum at the 3394 record high, while with a daily RSI momentum divergence in place, the risk for a correction lower is growing steadily.

“A neutral ‘inside range’ session to end the week for the S&P 500 leaves our immediate outlook unchanged and with a small ‘doji’ session in place from just ahead of the 3394 record high and with daily RSI momentum holding a small bearish RSI divergence, the risk for a correction lower continues to grow.”

“Support at 3355 needs to hold to avoid this to keep the immediate risk higher for a challenge on the 3394 record high. Beyond here can see an overshoot to potential trend resistance, today seen at 3419, potentially as high as 3432/36 which we then look to cap for a consolidation/corrective phase.” 

“Below 3355 can further increase the risk for a correction lower for a move back to the recent low and 13-day average at 3328/26. Only a close below here though would suggest a correction lower is finally underway, with support then seen next at 3301, then 3271.”

The next round of UK-EU trade negotiations is scheduled for 18-21 August.

FXStreet notes that it is likely that the COVID health crisis will last longer in the US than in Europe or China, and therefore that the US economy will be more permanently affected than others by the health crisis. Economists at Natixis expect activity to remain weak in the third quarter in the US and this weakness spreading to countries that are heavily dependent on the United States, leading to continued expansionary fiscal and monetary policy, a decline in capital inflows and a depreciation of the dollar along with a social crisis in the US.

“The lockdown measures are being extended in many states in the US, which means that US activity can be expected to remain sluggish in the third quarter of 2020. Currently, trends in unemployment, production prospects and capacity utilisation show a slightly weaker recovery in the US than in the Eurozone.”

“The US economy is likely to be permanently weakened by the prolongation of the health crisis, with internal consequences (social crisis, expansionary economic policies) as well as external consequences (weakness of countries economically linked to the US, decline in capital flows to the US).”

FXStreet reports that economists at Credit Suisse report that EUR/JPY is seeing its expected near-term consolidation beneath its April 2019 high at 126.84, but with an eventual break expected for a test of more meaningful resistance at 127.52/68 – the 2019 high and potential downtrend from late 2014.

“With high-level price support at 125.75 holding weakness stays seen as corrective ahead of a break-in due course for a test of what should be tougher resistance then seen next at 127.52/68 – the 2019 high and potential downtrend from late 2014. We would expect this to prove a tougher initial barrier and would expect an initial pullback from here. A direct break though can see resistance next at the 61.8% retracement of the fall from 2018 at 128.67.” 

“Near-term support moves to 126.11. Below 125.75 would warn of a deeper retracement lower with support seen next at 125.59/51, then the 13-day average at 125.23/17, ahead of which we would look for fresh buyers to show.”

FXStreet notes that the risk of a correction lower for EUR/USD is increasing after recent sharp gains. COVID trends in the Eurozone are moving in an unfavourable direction. If sustained it will more seriously challenge recent bullish EUR sentiment while the spread of COVID in the Us is now easing and there are signs US activity is regaining upward momentum, strategists at MUFG Bank apprise.

“After peaking on 22nd July, the growth rate of new US COVID cases has fallen back to 52,327 per day. An improving trend is evident in the number of people of hospitalized which has fallen back to 47,252. Tentative signs are now emerging that US economy is regaining upward momentum again although it is still early days. The improving trends could already be helping to lift US yields from lows at the start of this month, and ease bearish sentiment towards the USD. The main risk to the recent improvement in US cyclical momentum is the failure to agree on a more comprehensive fiscal stimulus package.” 

“COVID trends in Europe have clearly deteriorated over the past month as economies have re-opened. The growth rate of new COVID cases in major eurozone economies has increased sharply from a weekly average of 1,620 per day in the middle of July to 8,650 per day. It is still well below the peak from the start of April of just under 27k per day but the trend is clearly moving in the wrong direction which increases the risk of restrictions being re-imposed that would put a dampener on economic recovery momentum. It poses a threat to the sustainability of the EUR’s recent sharp strengthening against the USD. Admittedly, the scale of the COVID outbreak remains on a larger scale in the US even as relative tends are now improving in the USD’s favour.”

“The developments are increasing the risk of a correction lower for EUR/USD in the near-term and support our current tactical short trade idea. A break below support at 1.1700 will be required to trigger a deeper correction.”

FXStreet notes that in a highly polarised RORO world, the broader risk complex tends to dominate the AUD’s movements. The best measure of this risk sentiment comes from equity markets, which continue to provide the best signal for cyclical FX. Economists at ANZ think this continues until at least year-end. 

“Of particular interest is the correlation between the AUD and equities. Initially, the AUD’s post-March rally seemed as much about superior virus management as improvement in the broader risk complex. Since June, even with Victoria’s flare-up, the AUD/USD has sat stubbornly above 0.70. This suggests the aussie is maintaining its role as the global FX risk proxy, buoyed by extraordinary levels of liquidity and vastly improved sentiment in equity markets. In fact, equities, particularly US equities, have provided a better directional signal than domestic economics or rates in past three months.”

“The number of episodes where the AUD has traded in lockstep with US equities has increased since the GFC. Extended periods of high correlation are typically related to reflationary cycles following economic crises, similar to what we are experiencing currently.” 

“The current episode already looks unusually strong, even by post-GFC standards. The rolling r-squared on a 100-day regression between the AUD and S&P500 is almost at an all-time high. If the aussie were to follow the pattern it set post-GFC, equity market sentiment could remain the dominant signal for at least another three or four months.” 

“With most interest rates at zero and economic data still lacking relevance as a driver, there is a good chance RORO dynamics could persist. There are now fewer sources of distinction in FX markets that are not related to the pandemic. In this type of world, macro liquidity and global risk sentiment will remain more important than domestic fundamentals for the AUD.”

FXStreet reports that GBP/USD has enjoyed support at 1.30 so far in August amid the USD's consolidation but economists at HSBC think the cable's outperformance of late leaves it exposed to the downside.

“On the cyclical front, recent data may not have been as bad as expected and the BoE recently revised its GDP and inflation forecasts higher, albeit highlighting downside risks. However, labour market data as of July 2020 shows 730,000 jobs lost since March 2020. More job losses are likely, as the UK government's support schemes are set to end in the months ahead. The government's ability to continue to fund such schemes may be compromised by the scale of underlying debt, constraining further fiscal expansion. Even if there is further fiscal easing, a larger burden of bond purchases may be taken up by the BoE, with an extension of unconventional policies weighing on the GBP.” 

“The recent pick-up in COVID-19 cases in the UK could be further cause for concern. The UK government has responded with localised lockdowns, but the threat of wider restrictions remains.”

“The elevated level of the GBP is also vulnerable to a possible renewed focus on Brexit risks. There has been little evidence of progress in the negotiations, creating asymmetric downside risks to the GBP, especially if the tone around the negotiations remains downbeat in September. Even if the UK secures a partial free trade deal with the EU, it would increase constraints on trade and investment for the UK. This would likely require a weaker currency in order to offset the loss of competitiveness created by these burdens.”

FXStreet reports that it’s been sideways price action in oil markets for months now as a weak fundamental backdrop has kept prices from running too far to the upside while the downside has been limited by a number of outside influences and macro developments. All in all, key macro markets such as global equities, currencies and gold are likely to have an outsized impact on oil prices for the foreseeable future relative to oil fundamentals, per Rabobank.

“The fundamental story is rather dull at the moment and it’s really these non-fundamental and more macro related market drivers that are likely to have an out-sized impact on oil prices for the foreseeable future. As such, the US dollar is certainly a key market to watch. On top of the dollar, global equity markets and even gold are likely to have a major influence on oil prices as was on full display earlier this week as gold and the precious metals fell sharply while the oil complex rallied, which to our minds, appeared interconnected and possibly related to a cross-commodity sector momentum unwind.”

“Fundamentally speaking, the oil demand recovery is quite fragile as we see it and the risk of a second wave of virus-inspired lockdowns is high as we head into the fall in the Northern hemisphere. On top of the oil demand concerns, upside supply risk from the US is possible and even Libya and Venezuela can only go higher from current output levels.”

“As for market flows, we continue to keep a close eye on the macro backdrop and the desire for investors to own real assets given inflation fears. As of right now, commodities look cheap on both a historical perspective and a relative one so wide-scale buying of commodity futures such as we saw in the mid-2000s cannot be ruled out.”

Bloomberg reports that this month’s selloff in U.S. government bonds could spark a correction in equity markets before a new cycle of stock gains, according to Morgan Stanley.

“There is growing evidence that long term nominal yields are making a secular trough with several near term catalysts that may extend last week’s rise,” strategists including Michael Wilson wrote in a note on Monday. “Such a development could prove to be very challenging to many equity portfolios that likely embed higher long duration risk than may be appreciated.”

Ultimately, a selloff in equities would likely kickstart a new bull market in stocks, the note added, as higher long-term yields are usually associated with better economic growth the bank anticipates in the year ahead.

The yield on the U.S. 10-year Treasury bond is up 17 basis points this month, rising to as much as 0.7257% on Thursday, the highest since June, as inflation data starts to show signs that the Federal Reserve’s massive liquidity injections may be lifting economic growth.

A rising 10-year yield would tend to favor stocks in the financial, capital goods, energy and materials sectors, Morgan Stanley said.

FXStreet reports that the combination of positive fundamentals (return to pre-crisis corporate profitability, negative real long-term interest rates) and the effect of growth in the quantity of money on share prices suggests that European equities are currently cheap, according to economists at Natixis. 

“After the subprime crisis, earnings per share on the Euro Stoxx regained its pre-crisis trend. Companies are able to rapidly regain their pre-crisis profitability in particular by curbing wage increases.”

“PERs are expected to be high, as real long-term interest rates will remain negative, despite the expected slowdown in potential growth and a persistent rise in the equity risk premium. But as inflation normalises and nominal long-term interest rates remain very low, real long-term interest rates should be highly negative in 2021 (around -1.5%), driving PERs higher.”

“The price-to-book ratio is low relative to the past, which shows that equity market valuation is abnormally low.”

“The ECB’s monetisation of fiscal deficits will lead to strong growth in the quantity of money, which concerns both central bank money and money held by non-bank economic agents. It will also trigger a portfolio rebalancing effect: as the weight of cash in portfolios is too high, this money will be reinvested in other asset classes, including equities, driving up their prices. A return to previous portfolio weightings, given the pressure of the quantity of M2 money held by non-bank economic agents, would lead to a rise in share prices 20%, on top of that resulting from fundamentals.”

CNBC reports that President Donald Trump continues to trail Democratic challenger Joe Biden nationally as more than 60 percent of voters say America’s response to the coronavirus has been unsuccessful and just one-in-five believe the U.S. economy is on solid footing.

Those are the major findings from the latest national NBC News/Wall Street Journal poll, which was conducted during the pandemic that has killed more than 170,000 Americans and as the presidential race enters a new phase, with the party conventions beginning on Monday just days after Biden’s selection of Sen. Kamala Harris, D-Calif., as his running mate.

According to the survey, Biden leads Trump nationally by 9 points among registered voters, 50 percent to 41 percent, and the former vice president holds double-digit advantages over Trump on the coronavirus, immigration, health care, race relations and uniting the country.

What’s more, the poll shows Harris with a higher net personal rating than either Trump or Biden.

Still, Trump maintains his lead over Biden on the economy — which the poll finds is voters’ top issue heading into the election — and the president’s overall numbers have improved from last month, although the movement is within the survey’s margin of error.

What also stands out in the poll is how stable Biden’s lead over Trump has been during the past year, ranging from 6 to 11 points in the last nine NBC News/WSJ surveys.

“Clearly, Biden is in the lead. Clearly, Trump has a lot of problems,” said Democratic pollster Peter Hart, who conducted this survey with Republican pollster Bill McInturff.

But Hart stressed that the election is “not a done deal,” especially with a majority of voters saying they’re either uncertain or pessimistic about the job Biden would do as president.

“Biden is well-known, but not known well, and people are looking for direction on that,” Hart said in previewing the upcoming Democratic convention.

Trump’s challenge ahead of his convention, which begins on Aug. 24, is expanding support beyond his committed Republican base, with an approval rating and ballot position stuck in the low 40s.

“That seems to me to be short of where he needs to be to win an election,” said McInturff, the GOP pollster.

Biden’s 9-point national lead in the horserace is down from his 11-point edge in last month’s NBC News/WSJ poll.

FXStreet reports that according to FX Strategists at UOB Group, USD/CNH faces further downside pressure if 6.9300 is breached.

24-hour view: “Our expectation for USD to ‘move higher’ last Friday did not materialize as it traded in a quiet manner between 6.9396 and 6.9526 before closing at the low of 6.9396 (-0.14%). The soft price action upon opening this morning suggests the bias is tilted to the downside. That said, in view of the lackluster momentum, a break of last week’s low at 6.9280 is unlikely. Resistance is at 6.9470 but only a move above 6.9530 would indicate the current mild downward pressure has eased.”

Next 1-3 weeks: “On Tuesday (11 Aug, spot at 6.9620), we highlighted that ‘while USD could still weaken further out, for the next 1 to 2 weeks, USD is likely to consolidate and trade sideways within a 6.9300/6.9800 range’. USD is currently holding just above 6.9300 and if there is a NY closing below this relatively strong support level, it would indicate the start of a period of sustained weakness in USD that could lead to a move to 6.9050, possibly even to 6.8850. At this stage, the odds for such a scenario are quite high and only a move back above 6.9700 within these few days would indicate that USD is still trading in a consolidation phase.”

eFXdata reports that Bank of America Global Research discusses the USD outlook and sees a scope for stabilization over the coming weeks. 

"The USD is stuck in a tight range so far in August, following the strong sell-off in July. Market positioning is short and particularly stretched for real money. The consensus, based on our discussions with investors, remains very much bearish. However, August seasonality tends to favor the USD and some profit taking could keep the USD from weakening further in the short term. We see a number of possible offsetting forces that could affect the USD in the weeks ahead," BofA notes.

"The US pre-election period is starting and we expect markets to focus on the theme after Labor Day. The USD tends to strengthen ahead of the US elections, but this may not be a typical election. Vol also tends to increase before and after the US election, and we would expect this to be particularly the case if polls come closer in the weeks ahead. As we have argued recently, the USD implications for the day after the elections depend on the policies that the US will follow and nothing should be taken for granted at this point," BofA adds. 

Bloomberg reports that Goldman Sachs Group Inc. is the latest firm to boost its year-end price target for the S&P 500, as a relentless rally off the March lows leaves strategist predictions in the dust.

David Kostin raised his forecast for the benchmark U.S. gauge to 3,600 from 3,000, joining the likes of Yardeni Research founder Ed Yardeni and RBC Capital Markets’ Lori Calvasina who’ve upped their forecasts in recent weeks. The rally has caught many investors by surprise, with the S&P 500 now sitting at 3,372.85 -- 51% off its March lows -- and threatening to eclipse its February closing record. Kostin cited Goldman’s above-consensus U.S. growth expectations keyed off positive news on the vaccine front.

“As the last few months have demonstrated, equity prices depend on not just the expected future stream of earnings but the rate at which those earnings are discounted to present value,” Kostin wrote in a note Friday. “Looking forward, a falling equity risk premium will outweigh a rise in bond yields, and combined with our above-consensus EPS forecast, will lift the S&P 500 Index to 3,600 by year-end.”

Large stimulus injections have fueled the climb in the S&P 500 since the March sell-off sparked by the pandemic. The gauge briefly surpassed an all-time high last week, helped by better-than-expected economic and earnings data, and optimism about an early roll out of a vaccine.

Kostin said the U.S. election remains a significant risk to his prediction because of challenges in tabulating results in Covid-19 times. Though “the largest risk to our forecast is the timing of a vaccine and path of recovery from the pandemic,” he said.

FXStreet reports that AUD/USD is seen trading between 0.7050 and 0.7250 in the next weeks, noted FX Strategists at UOB Group.

24-hour view: “Our view for AUD to ‘drift lower’ last Friday was incorrect as it rose to a high of 0.7175 before ending the day at 0.7171 (+0.27%). AUD opened on firm note this morning and the improved upward momentum suggests further AUD strength towards 0.7210. For today, the major resistance at 0.7250 is not likely to be challenged. Support is at 0.7160 followed by 0.7140.”

Next 1-3 weeks: “We have held the same view since Tuesday (11 Aug, spot at 0.7150) wherein AUD has moved into a consolidation phase and is expected to trade between 0.7050 and 0.7250. AUD subsequently traded well within the expected range. The price action offers no fresh clues and we continue to expect AUD to trade between 0.7050 and 0.7250.”

During today's Asian trading, the dollar declined against most currencies. Uncertainty around the adoption of a new package of measures to support the US economy continues to put pressure on the dollar. In addition, the US and China postponed trade talks that were scheduled for last weekend.

The yen is falling against the euro and is growing weakly against the dollar after the release of data on a record fall in Japan's GDP in the second quarter. Japan's economy in the second quarter of 2020 fell by 7.8% compared to the previous three months after a 0.6% decline in the first quarter, according to preliminary official data. The decline in GDP was recorded for the third consecutive quarter and became a record, due to the negative impact of the COVID-19 coronavirus pandemic. Analysts on average predicted a 7.6% drop in GDP.

The yuan is rising against the dollar. The People's Bank of China (PBOC, the country's Central Bank) kept the rate on loans issued under the medium-term lending program (MLF) at 2.95% per annum, and also poured 700 billion yuan into the banking system under this program.

The ICE U.S. Dollar index, which shows the value of the us dollar against six major world currencies, fell 0.18% from the previous day.

Reuters reports that Britons bought and sold a record number of homes between mid July and early August as pent-up demand from the coronavirus lockdown and a desire to leave London bucked the usual summer slowdown, industry data showed on Monday.

Property website Rightmove, which says it is used by 90% of British estate agents, reported the highest number of home sales agreed since it began tracking the data more than 10 years ago, with transactions more than 20% higher than the previous record.

The most recent figures from the Bank of England - which cover June, before July's announcement of a tax break on moving home - showed a sharp rebound in demand for mortgages, but fewer loans were approved than before the pandemic.

"Rather than just a release of existing pent-up demand due to the suspension of the housing market during lockdown, there's an added layer of additional demand due to people's changed housing priorities after the experience of lockdown," Rightmove director Miles Shipside said.

Average asking prices for August - based on data collected from July 12 to Aug. 8 - were 4.6% higher than a year earlier as the normal summer softening in demand failed to materialise.

Only in London was there the typical 2% monthly fall in asking prices, with prices up almost everywhere else in Britain other than London's commuter belt.

"The out-of-city exodus has helped push prices to record levels in Devon and Cornwall, for example, where working from home means a different lifestyle much closer to your new doorstep," Shipside said.

FXStreet reports that FX Strategists at UOB Group see EUR/USD extending the side-lined theme between 1.1660 and 1.1880 in the next weeks.

24-hour view: “Last Friday, we held the view that the bias for EUR ‘is tilted to the downside towards 1.1765’. However, EUR dipped to 1.1781 before rebounding strongly. Despite the rapid bounce, upward momentum has not improved by much. That said, there is room for EUR to edge higher and test the 1.1880 resistance. For today, a sustained rise above this level is not expected (next resistance is at 1.1915). Support is at 1.1815 but only a move below 1.1790 would indicate the current upward pressure has eased.”

Next 1-3 weeks: “We continue to hold the same view from last Thursday (13 Aug, spot at 1.1795) wherein EUR is ‘still in a consolidation phase and is likely to trade sideways’. That said, upward momentum is beginning to tick up as EUR approaches the top of expected consolidation range of 1.1660/1.1880. While EUR could edge above 1.1880, only a NY closing above 1.1915 would indicate the start of fresh positive phase. At this stage, the probability for such a move is not high.”

Reuters reports that Japan's government will take "flexible, timely" action to support an economy hit by the coronavirus pandemic, Economy Minister Yasutoshi Nishimura said on Monday.

"We hope to do our utmost to push Japan's economy, which likely bottomed out in April and May, back to a recovery path driven by domestic demand," he told a news conference after the release of April-June gross domestic product data.

RTTNews reports that Japan's gross domestic product plummeted an annualized 27.8 percent on year in the second quarter of 2020, the Cabinet Office said on Monday's preliminary report.

That missed expectations for a decline of 27.2 percent following the 2.2 percent drop in the previous three months.

On a seasonally adjusted quarterly basis, GDP sank 7.8 percent - again missing forecasts for a fall of 7.6 percent following the 0.6 percent slide in the three months prior.

Capital expenditure was down 1.5 percent on quarter, which beat expectations for a fall of 4.2 percent following the 1.7 percent increase in Q1.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1962 (2741)

$1.1933 (2381)

$1.1908 (2371)

Price at time of writing this review: $1.1855

Support levels (open interest**, contracts):

$1.1783 (271)

$1.1762 (1392)

$1.1737 (720)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date September, 4 is 88173 contracts (according to data from August, 14) with the maximum number of contracts with strike price $1,0500 (5007);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3256 (1080)

$1.3196 (839)

$1.3152 (1510)

Price at time of writing this review: $1.3088

Support levels (open interest**, contracts):

$1.2997 (503)

$1.2941 (1471)

$1.2868 (1473)

Comments:

- Overall open interest on the CALL options with the expiration date September, 4 is 22707 contracts, with the maximum number of contracts with strike price $1,3800 (3396);

- Overall open interest on the PUT options with the expiration date September, 4 is 17297 contracts, with the maximum number of contracts with strike price $1,2900 (1473);

- The ratio of PUT/CALL was 0.76 versus 0.76 from the previous trading day according to data from August, 14

* - 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.