The RBA decided to maintain the current policy settings,
including interest rates, the yield on 3-year Australian Government bonds, and
the parameters for the expanded Term Funding Facility, despite growing concerns
over the increasing numbers of the Coronavirus worldwide.
According to the RBA governor, the global economy recovers gradually
from the negative effects of the pandemic, however, the recovery’s continuation will
depend on the containment of the virus.
Equities
Investor’s sentiment improved on the news of US President Trump was
discharged from the hospital following treatment from Coronavirus, as a result,
global stock markets rallied and closed in the green on Monday.
Pressures are building on both parties to approve a stimulus
package before the election’s day on November 3. Democrats dropped a $3.4 trillion
proposal and settled at $2.2 trillion, while Republicans increased their proposal
from $1.3 trillion to $1.6 trillion. Despite the progress announced from the
House Speaker Pelosi on Sunday, it is unlikely to see a deal next week as the
Congress will be out until October 19.
|
Change % | |
|
+1.5% | |
|
+1.6% | |
|
+1.8% | |
|
+0.8% | |
|
+1.1% | |
|
+0.8% | |
|
+1.0% |
Currencies
The US Dollar retreated on a better risk appetite caused by discharging
President Trump from the hospital. The US Dollar index remained below 94.04 eying a test of the 50-day
moving average. A close below this level could send the price even lower
towards 91.78.
The EUR/USD rose
on Monday to a two-week high at 1.1796. The price may rally towards 1.1909
while above 1.1713.
The GBP/USD benefited from a weaker US dollar and
tested on Tuesday the 1.3000 threshold for the first time in three weeks. A
failure in closing above 1.3048 could reverse the pair’s direction towards
1.2773.
Commodities
The oil price rose on better risk-on sentiment combined with
news of a possible storm mat take place in the Gulf of Mexico and put production
on hold. Additionally, lower supply from the strike in Norway that may reduce
the country’s production by equivalent of 8% of total production, as per Norwegian
oil and gas association.
The Brent oil closed above $39.60 eyeing a test of
$42.50. a close above that level may send the price even higher towards $45.15.
On the other hand, the US Crude could rally towards $42.23 while
above $36.32.
The Gold price benefited from the US dollar
weakness and rose on Monday to a near two-week high at $1,918. A failure in
closing above $1,921 could reverse XAU/USD price towards $1,861.
Looking Ahead
Eyes will be on the US and Canadian Balance trade numbers of
August at 4:30 PM (UAE time) and will tune in the ECB president Lagarde’s speech
at 5:00 PM, then the Fed Chair Powell will speak at 6:40 PM, and the Fed member
Harker will speak at 8:00 PM.
