Mounting anxiety that the second wave contagion would dent the pace of business reopening and the massive fiscal, monetary stimuli are a sweet blend for technology stocks.

Nasdaq (+0.74%) renews record after record as the cheap liquidity flows into the most admired tech players while cyclicals, such as financials and energy stocks, are left behind but not dumped. The overall risk sentiment remains relatively strong.


 

Stay on top of the markets with Swissquote’s News & Analysis

 


Equities in Asia ticked higher at the open but were mostly flat into the afternoon session.

The Reserve Bank of New Zealand (RBNZ) maintained its official interest rate at the historical low of 0.25% and the asset purchases unchanged at NZD 60 billion. But the policymakers pledged to add more stimulus and deploy more policy tools to support the economy, if needed, as they recognized that the downside risks prevail despite the post-Covid normalisation. The kiwi remained offered past the 0.65 mark, but the bias remains comfortably positive on the back of a globally improved appetite for risk and beta currencies.

European futures hint at a slow open following a strong Tuesday session.

There is a total lack of direction and little predictability across the market with one outstanding behaviour – buying the dips in equities and increasing hedges via safe-haven assets against a possibly sharp market rout. It is increasingly clear to everyone that most equity prices are artificially bloated.

In this respect, we see a stronger yen and Swiss franc, and a decent rally in gold. The price of an ounce advanced to $1773, the highest since 2012, and the market looks set for a further advance towards $1800 regardless of the rise in share prices. The major driver behind the gold rush is fear – fear of a seeing a burst in the actual risk bubble.

In the currencies market, the US dollar edges lower.

In the dearth of important economic data and event, the EURUSD looks set for further gains. Due later this morning, the latest Ifo survey will likely confirm an improved business sentiment in Germany. A strong read should help boosting interest in euro and euro-denominated equities.

Cable, on the other hand, consolidates gains near the 1.25 mark. Here also, the major driver is the soft US dollar, but the recent rise in optimism regarding a possible Brexit deal by the end of this year keep the sterling bears on the sidelines for the moment. Meanwhile, Boris Johnson announced the dramatic end of confinement measures in July, which is a big gamble to boost the British economy despite lingering risks on public health.

Elsewhere, the WTI rally gives signs of exhaustion above the $40 per barrel on the back of building US inventories. The latest API data printed a 1.75-million-barrel rise in US stockpiles last week, versus 300K expected by analysts. The more official EIA data should confirm a third straight week rise in inventories. Failure to extend gains above the $40 mark should trigger a temporary negative correction in oil, yet the downside should remain limited near the 100-day moving average, $33.80 pb.

This report has been prepared by AC Markets and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by AC Markets personnel at any given time. ACM is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD bounces after upbeat COVID-19 cure news

EUR/USD is trading above 1.13, rebounding from the lows. Gilead reported that its drug Remdesevir substantially reduces mortality among COVID-19 patients. The news boosted stocks and weighed on the dollar. US coronavirus statistics are due out.

EUR/USD News

GBP/USD recaptures 1.26 as the market mood improves

GBP/USD is trading above 1.26 as the market mood improves and the safe-haven dollar retreats. Investors are shrugging off Brexit concerns and focusing on hopes to cure coronavirus. US COVID-19 statistics are due out.

GBP/USD News

XAU/USD consolidates daily gains above $1,800

After advancing to its highest level since September of 2011 at $1,818 on Wednesday, the XAU/USD pair staged a correction and briefly dropped below $1,800 on Thursday.

Gold News

Cryptocurrencies: War for dominance hit the bedrock of the market

Bitcoin tried to regain market share and activated sales in the Altcoin segment. BTC/USD, ETH/USD and XRP/USD are looking for supports and a rebound to push them to new elative highs. The current compression on the XRP/USD chart could trigger an exploding movement.

Read more

WTI drops to fresh weekly lows below $39 amid virus risks, IEA forecast

WTI (August futures on Nymex) extends the steep declines seen on Thursday to drops over 1.50% in the European session this Friday. The oil bears breach the 39 level to hit the lowest levels in eight days at 38.76.

Oil News

Forex Majors

Cryptocurrencies

Signatures