EU compiles hit list targeting large US internet firms,non-dollar assets close down

Global equity market:

(Source: KVB PRIME)

The US equity market remained strong with manufacture industries stabilising and capital-concentrated business seeing a boost.

The NASDAQ climbed back by 3.09% to 12088.11, creating a new record rise for this month. The S&P500 closed up by 1.64% at 3534.22 and the Dow Jones rose 0.88% to 28357.52.

Europe’s market experienced some fluctuation yesterday - the DAX increased 0.67% to 13138.41,while the FTSE closed down by 0.25% at 6001.38.

The Chinese market saw a rise in both the index price and trading volume. The Shanghai Stock index climbed 2.64%, the SZSE Component index increased 3.15% and the GEM index went up 3.91%.

Crude oil forward contracts

WTI oil reconsolidated to around $40 but then went down during the North American session. It hit a bottom at $39.03 and closed down by 2.64% at $39.48 per barrel.

Brent oil also dropped by 2.45% to close at $41.73 per barrel.

Precious metal forward contracts

Gold climbed to daily highs of $1933 and dropped to a $1918 daily low. It then fluctuated and eventually closed at $1922.2, representing a drop of 0.37%.

Currency pairs

·            USDX down to 93.03(-0.054%)

·            EUR/USD down to 1.18118(-0.029%)

·            GBP/USD up to 1.30607(0.226%)

·            AUD/USD down to 0.72064(-0.296%)

·            NZD/USD down to 0.66464(-0.156%)

·            USD/CAD down to 1.3108(-0.136%)

·            USD/JPY down to 105.292(-0.394%)

Global Fundamentals

United States

Donald Trump's doctor has confirmed the US President has tested negative for the coronavirus following his hospitalisation earlier this month.

UK

Bank of England Monetary Policy Committee member JonathanHaskell, revealed he has an 'absolutely open mind' regarding negative interest rates, while BoE Governor Andrew Bailey opined thatthe central bank isn’t ready to implement negative interest rates.

UK Prime Minister Boris Johnson unveiled a new three-tier system of coronavirus restrictions for England, split between medium (tier 1), high (tier 2) and very high (tier 3)to ‘simplify and standardise’ rules whilst avoiding a second full nationwide lockdown.

Johnson warned that the number of confirmed COVID-19 has doubled during the second spike compared to the first lockdown period in March.

European Union (EU) regulators are making a 'hit list' of up to 20 large internet companies - potentially including Facebook, Apple, Amazon and Alphabet's Google - that could be facing new and tougher rules aimed at curbing their market power, the Financial Times reported.

The new initiative would see big technology platforms be made to comply with tougher regulations than their smaller competitors。

Australia

The Australian Government estimates the price of iron ore will drop to $55 per tonne by the end of this financial year, which is far lower than the current Chinese purchasing price from Australia,which is $123.05 including shipping.

Oil

prices kept dropping as Hurricane Delta began to weaken, though an increasing number of oil fields are returning to operation.

The Bureau of Safety and Environmental Enforcement (BSEE) stated that, as of yesterday, 69.4% of Mexican oil fields and 47.1% of gas fields remained shut down, curbing crude oil production by 1.28 million barrels per day and gas production by 1.276 billion cubic feet per day.

However, the data suggests production is slowly returning to normal; last week, 91.72% of fields were closed.

Today’s major asset analysis

EUR/USD and GBP/USD

The euro and pound both reconsolidated yesterday;despite efforts taken by the UK Government, a new rise in COVID-19 cases looks imminent, which lays another question mark on the UK’s ability to stage an effective economic recovery.

Furthermore,the EU-UK Brexit negotiations are slated to end on Thursday, potentially bringing further complications. Subsequently, the GBP and EUR are facing more pressure.

Intraday, the EUR’s first support is at the weekly EMA (or 50% retracement from the trend since 9th October at 1.177) and a further support will be around 1.17. The resistance looks to be around 1.182.

On the other hand, the GBP price has deviated from the weekly average relatively substantially. The support is around 1.30 with a second at 1.28, while the resistance is around 1.3072.

[EUR/USD, four-hour chart] (Source: KVB PRIME)

[GBP/USD, four-hour chart] (Source: KVB PRIME)

AUD/USD

The Australian economic recovery has hit a challenging period with commodity prices going down further. The price of iron ore is pushing down, while China’s purchasing price is higher, which gives more power to Chinese buyers –Australian international trade is therefore under greater pressure than before.

The Aussie is facing the same issue;as discussed yesterday, most currencies will need to reconsolidate in the short term. The AUD, for example, has dropped through both the weekly and daily EMAs.

Intraday, the support is around 0.7148, while the resistance is around 0.72015.

      [AUD/USD, four-hour chart] (Source: KVB PRIME)

Gold

The price of gold has drawn back after last Friday’s boost. The price is around $1912 now and looks to be supported around 38.2% of the retracement seen since 7th October.

Further support can be found around 1904.7 and the upper resistance is around 1920; however, investors should note the trading volume is shrinking significantly. 

[XAU/USD, four-hour chart] (Source: KVB PRIME)

USD Index

The USDX closed down slightly yesterday, even as most of the index’s component currencies (except GBP) reconsolidated downwards.

The price is supported around $93 and now seems to be climbing back as more USDX-supportive fundamentals are released.

Today’s upward resistance is around 93.4, while the support remains at 93.

[USDX, four-hour chart] (Source: KVB PRIME)

Reuters (2020), Bank of England has 'absolutely open mind' on negative rates: Haskel, https://www.reuters.com/articl...

BBC (2020), Covid rules: How will the three-tier lockdown system work?, https://www.bbc.co.uk/news/exp...

Financial Report (2020), EU targets Big Tech with ‘hit list’ facing tougher rules, https://www.ft.com/content/c8c...

MarketScreener(2020), BSEE Bureau of Safety and Environmental Enforcement: Monitors Gulf of Mexico Oil and Gas Activities in Response to Hurricane Delta, https://www.marketscreener.com...