The Chinese industrial production numbers of 5.6% for August
came in better than expected of 5.1% and better than the prior read of 4.8%.
Additionally, the Chinese retail sales grew in August by 0.5% higher than the expected
0.1% and better than the prior print of -1.1%. These figures reflected the
steady pace of the Chinese economy’s recovery.
Equities
The US
administration scrapped plans for an import ban on cotton and tomato from
China, while China announced that it would extend existing tariff exemption for
16 products from the US. These reports combined with the positive Chinese data
boosted Asian stock markets on Tuesday.
The Japanese
Chief Cabinet Secretary Yoshihide Suga won as expected the ruling party’s
leadership, as such the way is paved for him to replace the Japanese PM Abe.
Mr. Suga stated that he would keep on the current economic and foreign policy.
This week
investors wait for a variety
of important data with three central bank meetings. No change is expected in the Fed
monetary policy however, the market will pay attention to the Federal reserve’s
projections, especially the unemployment rates.
|
Stock Market |
Change % |
|
+1.2% | |
|
+1.0% | |
|
+2.0% | |
|
+0.4% | |
|
-0.1% | |
|
-0.5% | |
|
+0.2% |
Currencies
The US Dollar index has softened on Tuesday due to a
better risk-on sentiment caused by the Chinese positive data and resuming the
Coronavirus trials from AstraZeneca after putting them on hold last week. That
said, the technical outlook remains neutral with the price eyeing a test of the
support level at 92.34.
In turn, the Euro rallied on a weaker US Dollar.
Nonetheless, the EUR/USD technical outlook remains neutral while
below 1.1909. A daily close above this level would change it to positive.
GBP/USD
rebounded from a well-known support area around 1.2773 then rallied eyeing a
test of 1.3048. The Sterling pound fell last week by 3.6% due to the
controversial UK internal market bill introduced by the UK PM that risks
breaching in some parts of it the international law. This week, the bill has
cleared the first hurdle in the commons by 77 votes despite criticism. The UK
PM said that there would not be any use of the bill if a deal has been reached
with the EU, calling it a safety net.
Commodities
Despite clear
signs of recovery from the Chinese economy, OPEC has reduced its forecast for oil
demand growth in 2020 due to a lower than expected demand in Asia and worldwide
due to increased COVID-19 cases.
The oil price
has remained relatively flat this week with the US crude oil eyeing
a test of $34.66. A daily close below this support level may cause a fall
towards $30.93, while Brent oil could
be on its way for a test of $36.08 per
barrel.
Gold edged higher by 0.8% and due to the
multiple failures in closing below $1,921, XAU/USD could rally towards $2,015.
Looking Ahead
On the
economic calendar, investors expect the Eurozone ZEW sentiment index for
September by 1:00 PM (UAE time) and the US industrial production for August at
17:15.
