Market Quick Take - August 17, 2020 Market Quick Take - August 17, 2020 Market Quick Take - August 17, 2020

Market Quick Take - August 17, 2020

Ole Hansen

Head of Commodity Strategy

Summary:  Last week ended with US equity markets perched near the top of the range, while European indices were a bit wobblier int the close of the week. This week we look forward to the US political season heating up with the Democratic Convention starting today as accusations swarm that President Trump is attempting to sabotage the election by disrupting the postal system.

What is our trading focus?

  • S&P 500 Index (US500.I) and NASDAQ 100 Index (USNAS100.I) – US equity futures are slightly higher in early session despite a mixed Asian session impacted by rising new COVID-19 cases in various countries including South Korea. S&P 500 futures have been trading a narrow range the past three sessions with the 3,350 level as the obvious support area and 3,380 as the key resistance level.

  • STOXX 50 Index (EU50.I) - European equities are under pressure this morning as the EUR continues to strengthen with several industry associations across the continent saying it is putting pressure on export-driven companies. The first support level in STOXX 50 is around 3,269 so traders should watch this level today if tested.

  • Spot Gold (XAUUSD) and Spot Silver (XAGUSD) - have both ticked higher this Monday with the dollar and bond yields both trading softer. Silver currently trades within a wide $26 to $27.5 range. Last week's rise in U.S. bond yields helped drive a drop in speculative longs in both metals to an eight-week low. While still a potential concern from a bullish perspective, the rising volatility in gold futures spreads and the dislocation to spot gold traded in London have been cited as reasons why funds have moved long exposure from COMEX gold futures into Exchange-traded funds instead. Focus this week will be on whether bond yields manage to stabilize, FOMC minutes and the dollar, which trades weaker this Monday.

  • Brent Crude Oil (OILUKOCT20) and WTI Crude Oil (OILUSSEP20) - remain stuck in a tightening range with the caution being expressed in key oil market reports last week being offset by signs an energy demand recovery in the U.S. is gaining traction. On the other hand, declining refinery margins due to bulging stocks of diesel and gasoline could trigger rising crude oil stockpiles into September. Focus on OPEC+ as they meet on Wednesday to discuss the latest market developments. For the past nine days, WTI crude oil has touched, but not yet closed above its 200-day MA, today at $42.65/b while the 50-day MA provides support at $40.20/b.

  • USDJPY last week, USDJPY completed a reversal of the prior breakdown below the 106.00 area and is back in the technical limbo between 106 and perhaps 110.00. The clear driver of this reversal was the backing up of long yields in the US, a development that bears close watching this week as we highlight below. If yields continue to rise without triggering excessive volatility across assets, USDJPY could work sharply higher, while if yield rises bring concerns that long rates will impact the narrative on how the multiples for risky assets are priced, USDJPY may have a tougher time heading higher.

  • EURUSD the suspense for EURUSD traders continues this week as last week saw no resolution, with the bulls unable to take the 1.1900 area to the upside and likewise, the 1.1700 area holding as support. The latest US futures positioning data shows another record net speculative long of 200k contracts, a warning sign that additional upside for EURUSD may prove tough going. Economic data is rarely a major catalyst these days, but the most interesting macro data this week are the regional manufacturing surveys today (Empire) and Thursday (Philly Fed) as well as the latest jobless claims data from the US, also on Thursday and the flash PMI’s out of Europe this Friday.

What is going on?

  • Berkshire Hathaway (BRKA:xnys) added shares in Barrick Gold (ABX:xtse) worth $563 million according to 13-F filings released Friday afternoon. Warren Buffett has long been critical of gold as an investment and the move was by some taken as a sign that he is signalling a shift in his views on the market. Potentially a move to hedge against future inflation or potentially just a move into a stock that pays a dividend compared with the banking stocks he sold.

  • OPEC+ monitoring committee will meet on Wednesday to assess the state of the market. Once again comments from Russia and Saudi Arabia will be watched closely, especially with regards to those members still struggling to deliver the promised production cuts.

  • Biden is rumoured to announce a big climate policy push this week at the Democratic party convention earmarking $2trn in spending over the next four years. A Biden administration will likely mean the US will return to the Paris climate accord and energy policies to protect the environment rolled back under the Trump administration will be reinstated. Biden will be negative for the oil and gas industry and very positive for the green energy industry.

What we are watching next?

  • Government bond yields – we continue to watch government bond yields, especially at the long end of the curve, after last week’s strong uptick in yields. A persistent rise in yields would begin to test the narrative driving risky assets higher as valuation models would require a repricing lower on a sizable yield rise. At what yield level, for example on the US 10-year benchmark, this would begin to increase volatility and impact other markets is unknown, but there is likely some link in last week’s rise in yields with the volatility in precious metals markets. The post COVID-19 panic high in the US 10-year benchmark was 95 basis points, versus the current level near 70 bps, and the low earlier this month near 50 bps, so focus on yields would likely intensify at around 100 bps for this benchmark.

  • US Democratic conventions starts today - it's not much of a convention, given the limitations imposed by COVID-19 in the US, but the Democratic convention starts today and runs through Thursday. Most polls suggest the Biden/Harris ticket has a commanding lead in the polls, even if Dems may have concerns about voter enthusiasm for the ticket. As well, US President Trump’s new postmaster general has reduced funding for the postal service in a clear bid to sabotage the US election and will be called to testify before Congress this week.

Economic Calendar Highlights for today (times GMT)

  • 1230 – US Aug. Empire Manufacturing Survey
  • 1300 – Canada Jul. Existing Home Sales
  • 1400 – US Aug. NAHB Housing Market Index

Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app:

Apple Sportify Soundcloud Stitcher


Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (
- Analysis Disclaimer (
- Notification on Non-Independent Investment Research (

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.