The Chinese inflation number for August of
2.4% came in line with expectations, although was lower than the prior read of
2.7%, while the Chinese Producers Price
Index (PPI) number of August came in line with expectations at -2.0% however,
this read was better than the prior print of -2.4%. That said, these figures
did not have any noticeable effect on the Yuan price against major currencies.
Equities
On
Tuesday, AstraZeneca the company that partners with Oxford University in
developing one of the leading Coronavirus vaccines put on hold the third stage
trial due to the unexplained illness of a study participant. This reflected
negatively on the market sentiment and triggered a selloff in equities (especially
the tech stocks) and risky assets, and led investors to the safety of
government bonds. As a result, the US 10Y treasury yield fell to 0.6722.
|
Stock Market |
Change % |
|
- 3.4% | |
|
-3.2% | |
|
-4.4% | |
|
-1.2% | |
|
-1.8 % | |
|
-1.0 % | |
|
-2.3% |
Currencies
As
a safe haven, the US Dollar benefited from Tuesday’s Coronavirus vaccine’s update
and continued recovering from over two-year low and closed the daily
candlestick with a near 0.5% gain. Yet, a positive move of the US Dollar
index may require a close above 93.94.
The
Euro investors will tune in the ECB president press conference on Thursday at
4:30 PM (UAE time) to find out more about the central bank’s monetary policy
and whether there will be any verbal intervention to reduce the Euro exchange
rate. EUR/USD neared
on Tuesday critical support of 1.1750. A daily close below 1.1712 may encourage
bears to take the initiative.
The British Pound returned to feel the heat
of Brexit trade deal negotiations, especially after reports about the readiness
of the UK PM to abandon current talks and the possibility of even not honoring
the recent Brexit deal he stroke with the EU last year. On Tuesday GBP/USD closed
below 1.3048 hintings that the pair may fall towards 1.2773.
Commodities
Concerns
of lower global demand caused by the increasing Coronavirus cases worldwide
combined with the US dollar recovery weighed on the crude oil price. Today, Brent oil steadied above $39.30 per barrel
after falling on Tuesday by 5.0%, while the US oil steadied above $36.25 after
falling by 6.0%.
Gold
remained flat as failed again on Tuesday close below $1,921 indicating that
XAU/USD may reverse higher towards $2,015.
Looking Ahead
Today,
eyes will be on the US Mortgage applications due at 3:00 PM (UAE time) then the
Bank of Canada rate decision with rate statement at 6:00 PM.