September Sell-off extended

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Daily Outlook – 22 Sep 2020

By: Andria Pichidi

  • Risk-off remains strong, sinking stocks and richening bonds as virus developments and geopolitics impacted.
  • The USA100 has trimmed early losses and is currently -1.4% weaker. The USA30 is -2.9% and USA500 is -2.3% weaker at 3,242.
  • Treasuries rallied and the longer maturities richened measurably over the course of the morning until rates inched up as stocks tried to recover.
  • Europe – Resurgent virus cases have heightened worries/uncertainty stateside; Governments implement new restrictions. UKGov. calls for work from home Could this be seen in the US as well?
  • China debating whether to release a ‘blacklist’ of US firms before or after the US election
  • RBA: “intervention is a policy option, as is negative interest rate ”
  • Bank stock remains under increasing pressure.
  • Oracle and TikTok are sparing over ownership, threatening the deal
  • Powell: reiterated the sentiment from the FOMC statement that the economy has picked up from its depressed Q2 level and many economic indicators have shown “marked improvement.
  • TUI starts program to cut overhead cost base by 30%; Whitbread into consultation over 6,000 jobs cuts – BoE odds for a cut rising?
  • Tesla Battery day!

EUR – hit a 29-day low – below PP and currently at 1.1740. S1 at 1.1710

GBP – rounding top formation could be confirmed if it breaks September’s low at 1.2760 (S1)

JPY – firm in the mid of 104 area. Currently above PP

CAD – shot higher as the price of crude oil fell. Sustains a move above 1.3300

NZD – drifted to 0.6650 closings yesterday below 20-DMA

Gold – broke Descending triangle, 50-DMA, and closed outside BB. Currently retests 1900 barrier

Oil – Evening star confirmed – currently at 39.76

TODAY: Swedish Riksbank meeting, Fed Chair Powell testifies before the Committee, BoE Gov. Bailey speech, US Existing Home sales, and EU Consumer Confidence.

Biggest mover (AUDJPY – 0.40%) The Aussie and Kiwi dollars are down sharply, and presently making new lows, as are many other higher beta currencies, including more from the developing/newly developed world, and which forms part of the prevailing picture of risk-off hedging in global markets. Overall remains in a free fall for 7 days, breaking 20- and 50-DMA as daily indicators turning negative. Intraday is traded close to S1 as fast Mas resume decline and lower BB is extended lower. 1H ATR at 0.15 and Daily ATR at 0.789


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