Tin tức thì trường

• Next virus bill will not bailout out states that were badly managed
• Any extension of PPP will be much more targeted to businesses that need money
• Vast majority of PPP loans above $2 million will be forgiven

The Commerce Department announced on Thursday the U.S. wholesale inventories fell 1.2 percent m-o-m in May, in line with the preliminary estimate. This was the largest drop in wholesale inventories since September 2009.

Economists had forecast the reading to stay unrevised at -1.2 percent m-o-m. In April, wholesale inventories rose by a revised 0.2 percent m-o-m (originally a gain of 0.3 percent m-o-m).

According to the report, durable goods inventories declined 2.0 percent m-o-m in May, while stocks of nondurable goods edged up 0.1 percent m-o-m.

In y-o-y terms, wholesale inventories decreased 4.2 percent in May.

"Any state that is having a serious problem, that state should seriously look at shutting down. It’s not for me to say because each state is different."

FXStreet notes that gold prices cleared an important psychological resistance at $1,800 per ounce yesterday and the stars are aligned for gold prices to continue to rise according to strategists at ABN Amro who expects gold to trade at $1,900 per ounce by year-end and at $2,000 per ounce by end-2021. 

“Firstly, central bank policy is a strong driver behind higher gold prices. Not only are official rates close to zero in a large number of countries, they will unlikely go up in our forecast horizon. Moreover, most central banks have announced quantitative easing.”

“Secondly, in a number of countries there are negative rates (official and/or government bond rates). Gold is not paying any interest rates. So negative rates are another major support to gold prices especially versus the euro.” 

“Thirdly, the US may not have negative official rates or government bond yields, but nominal rates corrected for inflation expectations (real rates) are in negative territory. As long as there are expectations that the Fed would move to a form of yield curve control, the upside in US Treasury yields is limited. So, if investors are concerned about inflation in the longer run this will be visible in inflation expectations and negative US real yields. Our US economist expects relatively stable US Treasury yields and no pick-up in inflation, because of the negative effect of the pandemic on the economy. So, we think that this driver should have less impact going forward.” 

“Fourthly, governments have embarked on large-scale fiscal stimulus to support the economy. As a result, fiscal deficits in a large number of countries have risen substantially, even to double digit numbers. This development has made some investors nervous, especially in combination with the substantial amount of monetary policy stimulus.” 

“Fifthly, and finally, the technical outlook is positive. Investors saw every dip in gold prices as a buying opportunity. Now the psychological resistance of $1,800 per ounce has been surpassed. It seems that investors will only be satisfied if the former peak in gold prices at $1,931 per ounce is reached and taken out. Above that the important psychological level of $2,000 per ounce is within reach.”

“Our new year-end forecast is $1,900 per ounce (was 1,700) and new forecast for end of 2021 is $2,000 per ounce (was 1,800).”

FXStreet reports that according to the Credit Suisse analyst team, S&P 500 is expected to see further consolidation beneath the top of the price gap from early June and downtrend from March at 3184/90, with key near-term support seen at 3119/13.

“The S&P 500 remains in its high-level consolidation range following its expected rejection from our next flagged resistance from the top of the price gap from early June and potential downtrend from March at 3188/90 and the completion of a small bearish ‘reversal day’ on Tuesday is seen adding weight to our view that we should now look for a fresh move lower in the broader high-level consolidation range.”

“Support remains seen at the lower end of the price gap from Monday at 3130/25, then more importantly the 13-day average and 38.2% retracement of the most recent swing higher at 3119/13, with fresh buyers expected here. A closing break can reinforce the view we are set for a much lengthier consolidation phase, with support seen next at 3092.”

“Resistance is seen at 3174 initially, with 3184/90 expected to remain fairly for now. Above though can quickly reassert an upward bias for a look at the 3223/33 June highs.”

“The VIX continues to hold key support from its 200-day average and June low at 26.22/23.54 and we look for a fresh rise from here in line with our corrective view above, with resistance seen initially at 33.20.”

The data from the Labor Department revealed on Thursday the number of applications for unemployment was lower than forecast last week as workers continued to returned gradually to their jobs in the wake of surging coroanvirus cases.

According to the report, the initial claims for unemployment benefits totaled 1,314,000 for the week ended July 4. That brought the number of job losses over the past sixteen weeks (since the U.S. went into coronavirus lockdown in mid-March) to nearly 50million.

Economists had expected 1,375,000 new claims last week.

Claims for the prior week were revised downwardly to 1,413,000 from the initial estimate of 1,427,000.

Meanwhile, the four-week moving average of claims fell to 1,437,250 from a downwardly revised 1,500,250 in the previous week.

Continuing claims decreased to 18,062,000 million from a downwardly revised 18,760,000 in the previous week.

GBP rose against other major currencies in the European session on Thursday, as the British pound remained supported by the UK finance minister Rishi Sunak’s coronavirus recovery plan, while hopes of a swift global economic recovery bolstered the broad risk-on sentiment.

On Wednesday, Sunak unveiled the government’s plans, pledging new measures worth up to GBP 30 billion that were intended to help "protect and create jobs". In particular, he introduced a kickstart scheme subsidizing jobs for the young, a stamp duty holiday on properties, a VAT cut for the hospitality sector and a “Eat Out to Help Out” scheme offering discounts at restaurants.

Meanwhile, the Brexit risks continued to weigh on the British currency. The UK and EU negotiating teams kicked off a new round of talks on a post-Brexit trade deal on Tuesday. Germany's Chancellor Angela Merkel said that progress in Brexit negotiations had been slim despite accelerated efforts from both sides. She also promised to "continue to push for a good solution", but added that the EU should "prepare for a possibility of a no-deal scenario."

FXStreet reports that the AUD/USD pair should continue to struggle with 0.70 handle as today is consolidating the renewed upside around 0.6985 zone, up 0.10% on a day, though downside is limited by bounce in iron ore prices, lukewarm US dollar tone and equity resilience, economists at Westpac apprise.

“The domestic outlook surely doesn’t argue for further A$ gains, with Victoria’s Covid-19 resurgence prompting a return to lockdown in Melbourne for 6 weeks. This will damage both Victoria’s economy and other states as interstate tourism falters again and consumer confidence is shaken.”

“Renewed strength in key commodity prices, with iron ore around $106/tonne, and global equities resilient despite the US’s coronavirus surge adds to the case for A$ resilience. But the aussie would still be pricey above 0.70, with risk/reward suggesting selling into the 0.70 handle on a multi-week view.”

FXStreet notes that USD/JPY remains under pressure, trading around the 107.30-region, but only below 107.20/16 would see the small base negated with next support seen at 106.80, analysts at Credit Suisse report.

“The pressure stays seen to the downside and below 107.16 would see the base neutralised to reinforce the broader sideways range with support seen next at 107.05, then 106.80/79. Removal of here can see a retest of the lows from May and June at 106.08/105.98. Beneath here would now see the completion of an important top.”

“Resistance is seen at 107.34/41 initially then 107.60, with a break above 107.78/80 needed to ease the pressure off the base ‘neckline’ to reassert an upward bias for strength back to 108.17/24, then the 200-day average at 108.38/43.”

Gold: Safety-trade to go on driving prices higher - ANZ

FXStreet reports that the yellow metal hit a nine-year high as the $1800 resistance was broken yesterday. Flight for safety will continue to drive gold prices higher as increasing coronavirus cases boost expectations for further central bank stimulus, per ANZ Bank. 

“Gold traded at a nine-year high after breaking $1,800/oz as the pandemic surge led to safe-haven buying.” 

“Globally, cases reached 12 million, with the US’s case numbers surpassing 3 million. This is raising expectations of further stimulus measures from central banks, with talk of the Fed controlling the yield curve with additional asset purchases.”

“Investors continue to pile into ETFs and futures market.”

FXStreet notes that AUD/USD is consolidating the renewed upside around 0.6985, up 0.10% on the day. Terence Wu, an FX strategist at OCBC Bank, believes the aussie may well be poised to extend higher if breach the resistance at 0.7000. In that case, the next target is set at 0.7060.

“The dips in the AUD are shallow and lack follow-through at this stage.”

“Despite the negative virus-related headlines, the pair is re-testing the 0.7000 resistance. If breached, the next northbound target will be 0.7060.” 

“Support at 0.6920 in the near-term.”

FXStreet reports that analysts at Natixis study if there is an equity market bubble in technology shares in the US and conclude that while the forward PER looks high given the poor earnings performance in 2020 and 2021, the long-term earnings trend justifies a higher PER than the actual PER. Only the valuations of Amazon and Facebook are absurd. 

“The PERs of Google, Apple and Microsoft are 30 to 35, which is high but the PERs of Facebook and Amazon are huge, 130 to 250!. We do not expect any earnings growth in 2020-2021 though the long-term earnings trend is strongly growing: a threefold increase to more than 18 in 10 years.”

“In Nasdaq 100, PER has risen drastically from 25 to 30 with zero expected earnings growth in 2021, which explains the increase in the PER. Earnings multiplied by 4.5 in 10 years.”

“Nasdaq excluding GAFAM shows a forward PER of 22, which is quite low, markedly lower than that of the total Nasdaq. Earnings are set to stagnate in 2021 but have been doubled from 2015 to 2020.”

Bloomberg reports that markets are still struggling to restore liquidity after the Covid-19 meltdown and that may leave them exposed to new shocks, according to JPMorgan Chase & Co.

“Liquidity conditions have improved considerably, though not fully, and overall functioning has mostly been restored, but markets remain in an unstable equilibrium and vulnerable to shocks,” strategists including Joyce Chang, Nikolaos Panigirtzoglou and Marko Kolanovic wrote in a report.

Strategists have been cautioning on tight liquidity and fragility for some time, citing everything from the growth of passive investing to high-frequency trading as factors that could exacerbate market stress, particularly when volatility spikes.

“Credit and bonds seem to be closer to a full recovery in terms of liquidity, while equities and FX still seem to be some way from pre-correction levels,” the report said.

Credit markets have seen an improvement in liquidity metrics for both cash and derivative products, and Federal Reserve programs have “materially” supported the high-grade bond market recovery, the report said.

In equities, central bank intervention reversed a negative feedback loop between volatility and forced selling by some investors, so things are calmer than they were before. But market depth for E-mini S&P 500 futures remains about 60% below levels seen before the March correction, the strategists said.

Liquidity in the currency market is “skating on thin ice,” according to the report, which said that even as volumes surged on recent risk aversion the market remains fragile, with low depth and stretched spreads.

In Treasuries, the Fed’s record asset purchases have restored “some semblance of normalcy” in market functioning, JPMorgan said.

“While liquidity has improved markedly, Treasury duration supply is set to increase 40% in the second half of the year, and regulatory relief is temporary, leaving the Treasury market susceptible to another bout of reduced liquidity,” the report warned.

FXStreet reports that EUR/USD is gathering upside steam as the improving outlook for growth outside of the US has helped to support risk assets and weighed on the US dollar more broadly. Economists at MUFG Bank expect the USD to be sold off if the pair reaches the 1.1495 March high.

“After failing to break back below the 1.1200-level in recent weeks, EUR/USD has rebounded and reached its highest level overnight since 11th June. The pair could now test the top of its current trading range between 1.1200 and 1.1400.” 

“A break above the high from 10th June at 1.1422 and then 9th March high at 1.1495 would open the door for a more significant US dollar sell-off.” 

“The US dollar remains vulnerable to further weakness as crisis conditions continue to ease. Real yields in the US continue to fall more than in other G10 economies and that is not yet fully reflected in the value of the US dollar.”

Reuters reports that the European Central Bank is prepared to get more innovative with its monetary tools if necessary, ECB Governing Council member Francois Villeroy de Galhau said on Thursday.

"To fulfil its price stability mandate over time, the Eurosystem will keep as long as necessary interest rates very favourable and liquidity very abundant," Villeroy, who is also head of the French central bank, said.

"And it will remain ready to be as innovative as necessary about its instruments," he added, writing in an annual letter to the French president.

FXStreet reports that Commerzbank’s Axel Rudolph expects the USD/JPY to test the 108.40 200-day moving average. Above this level lies the June high and 200-week moving average around the 110.00 mark.

“USD/JPY continues to oscillate around the 55-day moving average at 107.39 while remaining below the 200-day moving average at 108.40 which remains in focus, though.” 

“Above 108.40 lie the 109.85/110.01 June high and 200-week moving average. Directly above the 200-week moving average sit the 2017-2020 resistance line at 111.02. The 111.71/112.23 February and March highs add weight to this resistance area.” 

“Good support is spotted between the May and June lows at 106.07/105.99.”

RTTNews reports that the UK housing market showed signs of a recovery as buyer demand, sales and fresh listing improved noticeably following the lockdown related falls, according to the residential market survey results published by the Royal Institution of Chartered Surveyors.

A net balance of 61 percent of survey respondents reported a rise in buyer enquiries in June, which was a strong rebound from -94 percent registered in May, data showed Thursday.

At the same time, new instructions being listed onto the sales market rose firmly with the net balance reaching 42 percent compared to -22 percent in May.

The survey's gauge of newly agreed sales moved into positive territory for the first time since February. A net balance of +43 percent of contributors cited an increase in transactions in June. Sales are expected to rise over the next three months.

The house price balance rose to -15 percent from -32 percent in May. Nonetheless, house prices continue to remain under some pressure. The house price balance remained negative for the third successive month.

Further, the outlook for house prices turned progressively less negative in each of the last three months, with June's net balance rising to -12 percent from -43 percent previously.

FXStreet reports that GBP/USD has surged above 1.26, partly encouraged by the new £30 billion fiscal stimulus plan laid out by Chancellor of the Exchequer Rishi Sunak. The detailed program includes a job retention scheme and other means of boosting the economy, economist at Deutsche Bank reports.

“Chancellor Sunak announced a fresh package of fiscal stimulus measures to bolster the recovery, which could be worth up to £30 billion in total. In terms of the main announcements, the biggest is potentially the job retention bonus, whereby employers who bring back furloughed workers can qualify for a £1,000 bonus per employee, provided certain conditions are met. In theory, if all 9.4 million furloughed jobs were retained, then this could be worth £9.4 billion.” 

“The other main highlights include a temporary 9-month VAT cut from 20% to 5% for hospitality, accommodation and attractions, as well as a temporary Stamp Duty cut (the tax paid on home purchases) that will see the threshold rise to from £12K to £500K up to the end of March. And finally, though it was far from the costliest measure announced, one of the most headline-grabbing was an ‘Eat Out to Help Out’ scheme whereby diners will get a 50% discount of up to £10 per head when eating out, valid Monday to Wednesday throughout August.” 

“On the longer term implications, it’s worth noting that in spite of the fiscal largesse yesterday, Sunak said that ‘over the medium-term, we must, and we will, put out public finances back on a sustainable footing.’ So clearly a nod towards future fiscal tightening now that the national debt is over 100% of GDP for the first time since 1963. Furthermore, there was also the acknowledgement that the furlough scheme ‘cannot and should not go on forever.’ We should hear more this autumn when we get the next Budget and Spending Review from the UK government.” 

“For what it’s worth I suspect governments (including the UK) will talk a tough game on fiscal discipline going forward but the reality is that the fiscal genie is now out of the bottle and we’re set for a decade of MMT and helicopter money type policies.”

CNBC reports that don’t expect the Chinese yuan to become a “safe-haven” alternative to the dollar or U.S. Treasurys anytime soon, says Ebrahim Rahbari, global head of foreign exchange analysis at Citi.

“I’m very skeptical,” Rahbari told CNBC on Thursday, when asked if the Chinese currency could develop a safe-haven status of its own.

Rahbari explained so-called safe-haven assets typically have certain attributes. Firstly, the analyst said, they tend to offer a long-term store of value function. In the shorter-term, he added, they also provide “refuge” during “periods of crisis.”

“Clearly, the yuan doesn’t qualify,” Rahbari said.

“You can’t get in and out, both in terms of how easy it is to access … the local financial markets but also because the liquidity simply isn’t there in a lot of the … assets still,” he said.

As a result, even if the outlook for the Chinese economy and its financial markets is “broadly more benign,” the yuan has a “very, very long way ahead” before it can become a real alternative to the dollar and Treasurys, the Citi analyst said.

“For the time being, there’s a bit of a debate whether … the euro can have a bit of a window to … enter that fray again. But I think the yuan, there’s still a long, long time away,” Rahbari said.

Reuters reports that the Bank of Japan cut its economic view for all of the country's nine regions for the second straight quarter, the first such downgrade since Lehman Brothers collapsed in 2008, backing signs the economy could fall deeper into recession.

The move underscores just how much damage the coronavirus pandemic has done to the world's third largest economy.

In its quarterly report released on Thursday, the BOJ offered a bleaker view for most regions than three months ago due to recent data pointing to slumping factory output, consumption and capital expenditure.

"Exports have been shrinking further as COVID-19 has led to a plunge in global automobile sales," said a transport machinery maker in southern Japan in the report.

The July report said all of Japan's nine regional areas saw their economies "worsening" or in a "severe state" due to the outbreak which forced governments around the world to impose restrictions on businesses and movement earlier this year.

The warning comes ahead of the central bank's interest rate decision next week, when it is expected to hold off on loosening monetary policy further to gauge the impact of stimulus measures deployed in March and April.

During today's Asian session, the dollar fell against most major currencies as investors turned to riskier assets such as global stocks and raw materials.

The Chinese yuan rose to a four-month high against the dollar, while investors increased positions in Chinese stocks due to growing signs of recovery in the world's second-largest economy.

"Rising stocks and falling treasury yields are slightly negative factors for the dollar, but the market can't move too far because we still have to worry about the virus," said an expert at MUFG Bank.

Market participants are waiting for data on applications for unemployment benefits in the US, which will be released later on Thursday.

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), fell 0.15%.

FXStreet reports that at press time, the EUR/USD pair is trading at 1.1355, representing a 0.23% gain on the day, after reaching the 1.1370 level. Axel Rudolph, Senior FICC Technical Analyst at Commerzbank, expects the world’s most popular currency pair to test the June peak at 1.1422 and the 1.1495 March high where EUR/USD should be capped initially. 

“EUR/USD is heading for the June peak at 1.1422. This will remain the case while the cross remains above the two month support line at 1.1257 and, more importantly, above the 1.1168 June 22 low. This, together with the March high at 1.1495, represents quite formidable resistance which we would expect to cap at first.” 

“A break higher is eventually favoured and would target the 2019 high at 1.1570, then 1.1815/22, the 61.8% Fibonacci retracement of the move down from the 2018 peak and the September 2018 high.”

MUFG Research discusses the USD outlook and flags a risk for a reversal in the US equity markets but sees a scope for the USD to remain offered in the near-term.

"The evidence emerging in the high frequency data won’t be seen in the more familiar data for the markets until late this month or into August onwards but based on current conditions there are increasing risks of the data turning less favourable in the US relative both to the initial phase of recovery and to Europe," MUFG notes. 

"So we remain cautious over the sustainability of the rally in US equity markets. But much of these risks are well known in the markets that suggest Fed policy, expectations of more fiscal stimulus and the resilience of tech can propel equities higher. That implies continued USD underperformance for now," MUFG adds.

Reuters reports that Bank of Japan Governor Haruhiko Kuroda said on Thursday the economy will remain in a severe state but improve ahead as the impact from the coronavirus pandemic subsides.

“Japan’s economy is expected to improve as the impact of the pandemic subsides, supported by pent-up demand ... an accommodative monetary environment and the government’s stimulus package,” Kuroda said in a speech at a quarterly meeting of the central bank’s regional branch managers.

Kuroda also said Japan’s core consumer prices will likely fall for the time being due to sliding oil costs and the impact from the pandemic.

According to the report from Federal Statistical Office (Destatis), Germany exported goods to the value of 80.3 billion euros and imported goods to the value of 73.2 billion euros in May 2020. Destatis also reports that exports decreased by 29.7% and imports by 21.7% in May 2020 year on year.

Compared with April 2020, exports were up 9.0% and imports 3.5% after calendar and seasonal adjustment. Compared with February 2020 – the month before the corona lockdown, exports decreased by a calendar and seasonally adjusted 26.8%, and imports by 18.2%.

The foreign trade balance showed a surplus of 7.1 billion euros in May 2020. In May 2019, the surplus amounted to 20.7 billion euros. In calendar and seasonally adjusted terms, the foreign trade balance recorded a surplus of 7.6 billion euros in May 2020.

The German current account of the balance of payments showed a surplus of 6.5 billion euros in May 2020, which takes into account the balances of trade in goods (+8.5 billion euros), services (+1.1 billion euros), primary income (+0.4 billion euros) and secondary income (-3.5 billion euros). In May 2019, the German current account showed a surplus of 13.3 billion euros.

In May 2020, Germany exported goods to the value of 42.4 billion euros to the Member States of the European Union (EU), while it imported goods to the value of 38.4 billion euros from those countries. Compared with May 2019, exports to the EU countries decreased by 29.0%, and imports from those countries fell by 25.2%. 

EUR/USD

Resistance levels (open interest**, contracts)

$1.1467 (5662)

$1.1439 (1854)

$1.1415 (1747)

Price at time of writing this review: $1.1359

Support levels (open interest**, contracts):

$1.1286 (378)

$1.1264 (239)

$1.1238 (436)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date August, 7 is 50751 contracts (according to data from July, 8) with the maximum number of contracts with strike price $1,1400 (5662);

GBP/USD

Resistance levels (open interest**, contracts)

$1.2781 (1429)

$1.2728 (1235)

$1.2690 (654)

Price at time of writing this review: $1.2628

Support levels (open interest**, contracts):

$1.2525 (150)

$1.2437 (282)

$1.2400 (1103)

Comments:

- Overall open interest on the CALL options with the expiration date August, 7 is 17763 contracts, with the maximum number of contracts with strike price $1,3000 (2991);

- Overall open interest on the PUT options with the expiration date August, 7 is 18126 contracts, with the maximum number of contracts with strike price $1,2400 (1467);

- The ratio of PUT/CALL was 1.02 versus 1.03 from the previous trading day according to data from July, 8

* - 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.