Moderate USD recovery

Financial and commodity markets analytics

The Market Watch review. 26.08.2020

In today's release, we’ll cover the following topics:

  • Growth of US stock indices.
  • Decline in gold prices.
  • US oil reserves.
  • Trump meets with healthcare workers on coronavirus.

The current week began with growth and, as a result, the key US stock index S&P500 renewed historical highs. Prior to the opening of the American session, futures for this index traded at $3440 - 1% higher than the previous value, which was set in February this year. At the same time, the demand for USD remains stable.

Let me remind you that the stock market crash that we saw in March this year triggered an incredibly strong growth in the US dollar. This was followed by a gradual recovery of stock indices and, as a consequence, the weakening of the American currency. But today this pattern does not work, which may be due to a general increase in interest in USD, against the backdrop of growing risks. In this case, we are talking about a decrease in demand for assets of developing countries.

Now let's move on to the precious metals market. After an incredibly strong rise in gold prices in the second half of July and early August, we are seeing the development of a fairly strong correction. The decline in quotes indicates that investors and traders are preparing for a significant reduction in the volume of liquidity injected by the Fed into the US economy. Any confirmation of this information will not only put strong pressure on gold, but also strengthen the USD.

It is also necessary to pay attention to another commodity asset - oil. We have already received a report on the change in crude oil inventories from the API, according to which the US oil inventories continue to decline. If this information is confirmed in the official report of the US Department of Energy, the demand for "black gold" will increase, continuing to support oil quotes.

I will conclude today's review with one more very important news for financial markets - the meeting of US President Donald Trump with medical workers in the Oval Office. We are talking about the coronavirus, so the appearance of any information about the results of the meeting may be accompanied by a surge in trading activity in the financial markets.
That’s all for me. Closely monitor the news background and be prepared for all the surprises of the market.


Analyst

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