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While the US dollar continued appreciating against other major currencies until the afternoon, at the end of the day the USDX, which measures the performance of the greenback against other major currencies, closed lower for the first time in five trading days.An especially strong recovery was seen in the Turkish lira (TRY) after it reached new all-time records over the course of this week. This could be directly attributed to the surprise decision by the Turkish central bank to raise interest rates by two percentage points. The central bank was previously pressured by Erdogan’s government to reduce rates, as the president pushed lower interest rates, even though they were one factor allowing the currency to recover from its crisis in 2018.Again a rather mixed sentiment was observed in the equity markets. While US stock indices closed with a steep downside on Thursday, some European indices like the Germany 30 or the Europe 50 managed to close even marginally higher compared to the previous day.Multiple key cryptocurrencies including Bitcoin and Ethereum traded higher on Thursday. Multiple events took place in that sphere, such as reported increasingly bullish ‘whale’ (i.e. large cryptocurrency holders) behaviour and the announcement that the EU is planning to finally regulate the sector to give legal certainty and reduce risks for investors.
As the US dollar overall weakened after the series of significant improvements in the previous days, the EUR/USD pair managed to bounce back at times even above 1.168.Fundamental data released on Thursday was quite mixed, with new home sales numbers in the US further improving in August to above one million, while new weekly jobless claims remained almost unchanged.The German IFO survey results clearly disappointed with business expectations results improving only at a relatively slow pace from 97.5 at the previous reading to 97.7 now. Businesses might be especially concerned about the impact of a likely second wave of coronavirus infections.On Friday in the US durable goods orders data will be published. For the EU the M3 monetary supply statistic as well as producer price index (PPI) data from Spain and producer and consumer confidence indicators from Italy can be expected.
Just as the dollar took a break and traded slightly weaker on Thursday, so were gold prices finally able to recover. Silver prices were also up, closing almost six per cent higher. However, these gains still appear marginal at best compared to the steep losses sustained at the beginning of the week.While precious metals have been following the sell-off trend in equity and other markets this week as has been the case at certain times during the sell-off at the start of the pandemic in March, analysts still see potential that gold could serve as a ‘save heaven’ in case of upheaval. Some see the risk surrounding the upcoming US presidential election as still significant as both sides are already accusing each other of fraudulent election practices and controversies which party should be declared the victorious under which circumstances.In terms of fundamental data, next week some significant statistics will be released including the PCE price index, ISM manufacturing index and non-farm payrolls data.
Oil prices were trading higher on Thursday, closing for the first time in the green this week. A barrel of WTI crude oil managed to rise above $40. However, on a monthly basis as of Friday morning the oil price is still clearly in the red.Analysts see the tightening supply situation in the US market, together with shrinking inventories as one factor allowing the market to balance out at this level, while concerns about further impacts on demand due to renewed restrictions following increased numbers of COVID-19 cases might reduce the potential for oil prices to improve.On Friday the US Baker Hughes Oil Rig Count will be published. Over the past three months the number of oil rigs in operation has steadily remained in a tight range of around 180 – this is merely a quarter of the operational capacity that supplied the market just a year ago.
Key US stock indices closed clearly lower on Thursday with the low from Monday being unsuccessfully tested for now and potentially working as a support level. Unless there is a huge rebound on Friday, this week will be the fourth week in a row, where equity indices like the US 500 close lower. This comes as the number of new jobless claims fails to improve, as on Thursday 870 thousand new claims were reported (860 thousand in the previous week).The stock price of consulting and professional service company Accenture (-7.24%) took a hit after earnings failed to meet investors’ expectations. The company furthermore is expecting low growth for the following two quarters.The stock price of the aerospace company Boeing (-3.38%) plunged to the lowest level since late May. As the airline prepares its 737 Max series for re-certification following the grounding after two fatal hull losses there seems to be a mixed sentiment in the market. Analysts from Goldman Sachs see significant potential given the expectation that the airline sector would balance itself out by 2024. However, Boeing’s delays with the 737 Max also come at a cost as a parts supplier for the program filed for bankruptcy. It remains to be seen how fast the production could resume once all approvals are received.While the earnings season is yet to start, next week a few companies will still release their quarterly results. This will include Weibo (Monday), Micron (Tuesday) as well as PepsiCo and Constellation Brands (Thursday).
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