European coronavirus vaccine orders expanded,global stock markets rebound

Market Recap

Global equity market

(Source: KVB PRIME)

There is talkacross the market that incumbent US President Donald Trump will promote the release of a COVID-19 vaccine before the planned general election on 3^rd November. US stocks have risen as a whole due to this news.

The Dow Jones and NASDAQ rose more than 1% in early trading. As of closing, the Dow rose 1.35% to 28308.46, the NASDAQrose 0.61% to 11626.17 and the S&P 500 index rose 1% to 3,431.28.

European stocks also rose across the board:the German DAX index closed up by 2.36% at 13066.54, whilethe UK FTSE 100 index rose 1.71% at 6104.73.

The first batch of A-share GEM reforms and its pilot registration system went public. The GEM emerged from the V-shaped rise in early trading and remained high in the afternoon.

At closing time, the GEM index rose 1.98% and the first batch of 18 new stocks rose across the board. The Shanghai index rose 0.15%, the Shenzhen Component Index rose 1.40% and the Science and Technology 50 rose 0.20%.

Precious metal forward contracts

Gold surpassed its intraday highest level of $1961.75 during the European trading hours and rose by about $35 from the daily lowest level. During the US session, the price of gold began to fall and not only lost all gains, but eventually closed down by 0.56% at $1928.79 per ounce.

Silver broke through the $27 mark during the day, but (similarly to gold) it eventually closed down by 0.49% at $26.60 per ounce.

Crude oil forward contracts

WTI crude oil fluctuated in the range of $42.4-42.8 during the day. After the opening of the US market, it hit a highest intraday level of $42.86.

However, after the ‘Marco’ tropical storm warning was cancelled, WTI crude oil experienced renewedpressure and eventually closed up by 0.26% at $42.38 per barrel.

Brent crude oil closed up by 1.72% at $45.02 per barrel.

Currency forward contracts

·        USDXclosed up at 93.27 (0.03%)

·        EUR/USDclosed down at 1.17868 (-0.064%)

·        GBP/USDclosed down at 1.30614 (-0.205%)

·        AUD/USDclosed up at 0.71619 (0.008%)

·        NZD/USDclosed down at 0.65287 (-0.125%)

·        USD/CADclosed up at 1.32156 (0.296%)

·        USD/JPYclosed up at 105.953 (0.180%)

Global Fundamentals

United States

The US ‘Capitol Hill’ website reported that TikTokformally filed a lawsuit against President Trump's first executive order, issued on 6^thAugust,yesterday. TikTok said in a press release that it‘wouldn’t sue the government if not necessary, but we have no choice as we want to take action to protect our rights, as well as the rights of our communities and employees’.

The President’s executive order prohibits American individuals and companies from conducting transactions with TikTok and its Chinese parent company Bytedance, and any related transactions are set to be banned in 45 days (20^thSeptember).

The US Customs Department previously issued an announcement stating that goods exported from Hong Kong to the US must be labelled as ‘Made in China’ instead of the ‘Made in Hong Kong’marking, commencing 25^th September.

Hong Kong’sSecretary for Commerce and Economic Development, YauTenghua, revealed today that the implementation date of the relevant measures has been postponed by 45 days to 9^thNovember.

The US Security and Environmental Enforcement Agency predicts that the US Gulf Area has shut down 1.523 million barrels per day (close to 82.4%) of its production capacity; approximately 56.92% of the region’s natural gas production capacity has now been closed.

According to the Xinhua News Agency, the US Republican National Congress formally nominated the incumbentPresident Donald Trump as the 2020 Republican presidential candidate yesterday afternoon. At the same time, the New York State Attorney General is currently investigating claims thatthe Trump Organizationexaggerated the value of its assets in order to obtain favourable loan terms and insurance tax benefits.

Europe

The European Commission (EC) expanded its negotiations with the vaccine manufacturer Moderna; Moderna has confirmed that it has held high-level talks with the EC regarding the supply of vaccines to Europe and will provide 80 million doses of the treatmentto the EU under the current framework contract.

Australia

The CEO of theFortescue Metals Groupopined that its trade relationship with China supports the Australian mining industry and the significant recovery of the Chinese economy helps iron ore prices.

Today's currency forecast

EUR/USD

Yesterday, the Euro pairreturned to the weekly average as we expected and is currently falling at a slow rate. The price is still suppressed by both of the moving averages.

Technically and fundamentally, the strategy of placing short positionsover the short and medium term remains valid. If the short position is opened near 1.1835, then you can continue to hold; 1.175 is the first target and 1.172 is the second target.

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

GBP/USD

The pound broke through the 1.3075 support yesterday and the overall strategy continues to be based on the M-top pattern. The GBP will be without strong fundamentals in the near future, so we still take 1.303 as the first target position in the near term.

It should be noted that the recent volatility is relaxing, so the time period of the proposed layout can be lengthened.

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

USD/JPY

As we have predicted, the USD/JPY pairhas broken its recent position. If the price can reach above 106.3, we will be able to continue to hold and use the average golden ratio of recent volatility as our basis for trading.

Around 28-32 pips could be held as each stronghold point, but we need pay attention to high pointsto reduce our positions.

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

Gold

The recent risk events have gone‘flat’ and small and mediumsized capital traders have begun to hesitate; the market’s overall sentimentseems highly inconsistent.

Yesterday, the US storm warning still failed to pushinvestors to decide to enter the market. In fact, the position placement of large amounts of capital is often slow and subtle - the price is one of the main factors they consider.

However, the current price doesnot seemgood for them today and before 1900, medium and large capital is unlikely to enter the market. It is recommended to continue to operate with $10 as a strategic point.

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