The Japanese GDP YoY Q2 of -28.1% released earlier came in better than expected of -28.6% however, remained far worse than the prior of -2.3%. The global lockdown that took place in the second quarter of this year was the main reason behind this number. This figure did not have any observable effect of the Japanese price against major currencies.
Global stocks steadied on Tuesday following the European stock rebound yesterday as investors ignored concerns of the market decline that happened on Friday as some market saw it as taking profit operation at the end of the weekly session.
The US-China tensions continue to be one of the market’s concerns also but, it is unlikely to see any major development at least until we know the identity of the US president for the coming four years.
Investors' eyes are monitoring the US election race and preparing for either continuing with the current policy if Trump was elected for a second presidential term or witnessing a shift in the current US policy if Biden became the new master of the US White house.
The US Dollar index closed yesterday in the green for the sixth day in a row and pointed higher on Tuesday. The US dollar weakened by over 10% since mid-March to a 28 months low prompting the ECB Chief Economist Philp Lane to highlight the importance of the currency exchange rate, even if the ECB does not target it. Economies like the German and the French generate growth from net export and a strong Euro could significantly reduce these nations' exports. From a technical point of view, a close above 93.50 changes the technical outlook from negative to neutral.
The Euro on the other hand retreated yesterday due to its negative correlation with the greenback. EUR/USDhence, a close below 1.1750 changes the positive outlook of the pair to neutral.
The British pound retreated against the US Dollar due to an increase in the possibility of ending the EU/UK negotiations with no deal. Both sides are now entering the final stage if the negotiations and they need to reach an agreement by the European Council meeting by Oct 15 to have enough time to enforce it by the end of the year. A close below 1.3048 could end GBP/USDupward trend and change the technical outlook to neutral.
Rising numbers in COVID1-19 cases in the US weighed on the crude oil price and sparked concerns about demand for fuel. Brent oil, declined by nearly 0.5% to $41.78 a barrel while US oil fell by 0.8% to $38,85 per Barrel.
Gold has continued its sideways move on Tuesday after multiple failures since August 19 to break below $1,921. A close below this support changes the technical outlook of XAU/USD from neutral to negative and may send it to $1,859.
Today on Economic calendar, investors will be looking at the Eurozone GDP final read of the Q2 coming at 1:00 PM (UAE time) and the US consumer credit change for July at 11:00 PM.