Market Quick Take - August 10, 2020 Market Quick Take - August 10, 2020 Market Quick Take - August 10, 2020

Market Quick Take - August 10, 2020

Macro 5 minutes to read
Peter Garnry

Head of Saxo Strats

Summary:  Equity futures are starting higher with especially European equity futures bid extending on the gains in Asia. The USD is weaker against the EUR and JPY while continuing to strengthen against various EM currencies with most notably the BRL, TRY and CPL. Gold is licking its wounds from Friday but is stabilising together with US real yields. Brent crude is also starting the week a bit firmer on Saudi Arabia's oil outlook.

What is our trading focus?

  • S&P 500 Index (US500.I) and NASDAQ 100 Index (USNAS100.I) – US technology stocks are range trading a bit extending on the mixed Friday session following a few disappointing earnings releases among technology companies in the mid-cap segment. S&P 500 on the other hand is pushing higher and is now only 1% away from new all-time highs. Trump’s extending of emergency support for US families and the low US real yield are holding up equities.

  • German DAX (DAX.I) - is responding to the positive session in Asia with especially Australian and South Korean equities moving higher as the European continent is depended on Asia bouncing back due to its importance for Europe’s export machine. Last week’s highs at 12,796 is the next critical price point for traders before an attempt at 13,000 could come into play. The rally in EURUSD has also firmly ended over the past week adding a bit of support for European equities.

  • Spot Gold (XAUUSD) and Spot Silver (XAGUSD) - have both managed to hold above Friday’s low which was triggered by the real yield reversal following stronger than expected U.S. jobs data. However, following a breath-taking three-week rally, both metals probably need to consolidate their gains before eyeing additional upside potentials. The latest COT report covering speculators behavior in the week to August 4, found that for a second week hedge funds had failed to join the exuberance being exhibited by record ETF flows. Both metals witnessed a second week of net-selling, primarily driving by fresh short positions. Most noticeable in silver where funds in a two-week period to last Tuesday cut bullish bets by one-third while the metal surged by more than 22%. Focus on the dollar, U.S. real yields, US-China developments as well as earnings from Barrick Gold Corp.

  • Brent Crude Oil (OILUKOCT20) and WTI Crude Oil (OILUSSEP20) - have kicked off the week on a firmer footing after Saudi Aramco predicted demand, despite regional covid-19 problems, will continue to recover through the rest of the year. Chances of a strong recovery in U.S. shale oil production meanwhile received a further knock after the number of active drill rigs fell to lowest since 2005. Market however remains summer rangebound with the latest news potentially not enough to kick some life back into the market. A trio of monthly oil market reports, projecting supply and demand, await the market this week with EIA reporting on Tuesday, OPEC on Wednesday and IEA on Thursday.

  • EURUSD – the USD has recovered from a cycle low following Friday’s job report which supported short-covering. According to the latest COT report, speculators lifted their dollar short across ten IMM currency futures to a nine-year high in the week to August 4. However, just like the previous five weeks, the expanding dollar short position was almost solely driven by another rise in the euro net long to a fresh record of €22.6 billion. On that basis the dollars short-term outlook remains closely tied to developments between these two major currencies.  Focus on resistance at 1.19 with consolidation risk to 1.1625 (the 38.2% retracement of the latest strong rally wave in July).

What is going on?

  • US President Trump issues executive orders to extend coronavirus economic relief which has already been criticised over the weekend by the Democrats as unconstitutional and insufficient. Trump’s order provides $300 per week in special unemployment benefit with $100 per week more coming from states.

  • EM currencies still under pressure with USDTRY trading higher again today as the capital bleeding has no ending in sight yet for Turkey as currency reserves are drying up. USDZAR is a bit firmer this morning but USDBRL and USDCPL are the biggest movers today seeing the Latin American currencies decline by almost 2%. So far, the weaker EM currencies have not created spill over effects into other markets and EM equities remain quite bid and close to the highs back from January.

  • Chinese technology companies are trading lower highlighting the continuing impact from Trump’s executive orders banning TikTok and WeChat in the US. News that Huawei is running out of processor chips due to US sanctions also added to the negative sentiment around Chinese technology stocks.

What we are watching next?

  • Where’s the next round of US stimulus? The two sides were unable to come together in the latest round of negotiations which caused Trump to issue executive orders on special unemployment benefits. The Democrats are aiming for a large stimulus package of $3.4trn while Trump wants to keep it around $1trn. The negotiations have not become easier by the fact that the US election is upcoming in less than three months. Given the importance of fiscal stimulus in keeping the economy going the stimulus deal on extending emergency support for the US economy is important for markets.

  • US-China trade deal review meeting on August 15 to discuss the progress so far on the trade deal signed earlier this year. Under the first phase of the trade deal China pledged to boost purchases of US goods by around $200bn over the 2017 levels across agricultural and energy sectors. So far, China has bought 5% of the energy products needed to meet the phase one first year goal. China has said the COVID-19 crisis has delayed purchases.

  • The US 10-year real yield hit cycle low on Thursday at –1.08% driving rallies last week in technology stocks and gold. The relentless decline in past two months have caused entropy in markets to down significantly and driving up cross-correlations to an extend where the market’s fragility could sudden burst into a new violent volatility jump.

  • US July CPI numbers are due Wednesday with consensus looking for a 0.3% m/m jump extending on June’s 0.6% m/m jump. Real yields have been one of the market’s obsessing points the last couple of months as their collapse have been driving the ‘everything bubble’ across all asset classes despite the ongoing pandemic and economic fallout. Real yields are measured using break-even rates which are tied to inflation-projected government bonds, but others are using realised inflation numbers and as such the CPI number could get a fair amount of attention this week.

Economic Calendar Highlights for today (times GMT)

  • 0600 – Norway Jul. CPI
  • 0830 – Eurozone Aug. Sentix Investor Confidence
  • 1215 – US Jul. Housing Starts
  • 1400 – US Jun. JOLTS Job Openings
  • 1230 – US Jul. Average Hourly Earnings
  • 2350 – Japan Jun. Current Account


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research 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. To the extent that any content is construed as investment research, you must note and accept that the 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 under relevant laws.

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

Saxo Bank (Schweiz) AG
The Circle 38

Contact Saxo

Select region


All trading carries risk. Losses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money. To help you understand the risks involved we have put together a general Risk Warning series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. The KIDs can be accessed within the trading platform. Please note that the full prospectus can be obtained free of charge from Saxo Bank (Switzerland) ltd. or the issuer.

This website can be accessed worldwide however the information on the website is related to Saxo Bank (Switzerland) Ltd. All clients will directly engage with Saxo Bank (Switzerland) Ltd. and all client agreements will be entered into with Saxo Bank (Switzerland) Ltd. and thus governed by Swiss Law.

The content of this website represents marketing material and has not been notified or submitted to any supervisory authority.

If you contact Saxo Bank (Switzerland) Ltd. or visit this website, you acknowledge and agree that any data that you transmit to Saxo Bank (Switzerland) Ltd., either through this website, by telephone or by any other means of communication (e.g. e-mail), may be collected or recorded and transferred to other Saxo Bank Group companies or third parties in Switzerland or abroad and may be stored or otherwise processed by them or Saxo Bank (Switzerland) Ltd. You release Saxo Bank (Switzerland) Ltd. from its obligations under Swiss banking and securities dealer secrecies and, to the extent permitted by law, data protection laws as well as other laws and obligations to protect privacy. Saxo Bank (Switzerland) Ltd. has implemented appropriate technical and organizational measures to protect data from unauthorized processing and disclosure and applies appropriate safeguards to guarantee adequate protection of such data.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.