European Commission's decision to limit the effects of the economic crisis brought on by the novel coronavirus (Covid-19) outbreak came to the fore in the Eurozone on the last trading day. 2.65B euros of macro financial support will be given, provided that the 8 member states of the European Union implement various reforms to support their economic recovery, the Commission announced in a statement. Meanwhile, EU High Representative for Foreign Relations and Security Policy Josep Borrell said the foreign ministers of member states would convene an extraordinary meeting on Friday to discuss key talks in the Eastern Mediterranean, Belarus and Lebanon. Furthermore, German Health Minister Jens Spahn expressed skepticism about the first Covid-19 vaccine approved by Russia and said, "The matter is not to be the first one, but to have an effective, tested and safe vaccine." On the macroeconomic calendar, industrial production in the Eurozone rose 9.1 percent in June, below expectations of 10.0 percent compared to the previous month, while it contracted 12.3 percent, above expectations for a 11.5 percent decline compared to the same month of the previous year, according to Eurostat.
On the US side, significant market news and macroeconomic data flows were recorded during the last trading day. US President Donald Trump criticised his Democratic rival Biden's stance on China, saying, "If I don't win the election, China will own the US." Also, Trump announced that an agreement had been reached with Moderna, an American biotech company, for the production and delivery of 100 million doses of coronavirus vaccine. U.S. Treasury Secretary Steven Mnuchin said he could not speculate on whether there would be a compromise on the Covid-19 bill, but President Trump said he wanted to move forward on a very fair proposal on the bill. White House Chief Economic Adviser Larry Kudlow noted that China continues to buy U.S. goods, particularly commodities and added that Donald Trump's executive orders provide significant economic incentives. United States Permanent Representative to the United Nations (UN) Kelly Craft, will change the draft resolution, which will be submitted to the United Nations Security Council (UNSC), in order to make the arms embargo against Iran a permanent embargo. Boston Fed President Eric Rosengren, on the other hand, argued that financial support should continue so that the economic recovery could lose strength due to the outbreak. Looking at the macroeconomic calendar, OPEC crude oil production rose by 0.98 million barrels per day in July to 23.17 million barrels per day compared to the previous month, while global oil production rose by 1.29 million barrels per day to 88.75 million barrels per day, according to an oil market report released by the Organization of Petroleum Exporting Countries (OPEC). The report predicted that for 2020, demand for OPEC oil would fall to 23.4 million barrels per day and global oil demand to 90.60 million barrels per day. In addition, the U.S. Consumer Price Index (CPI) stood at 0.6 percent, above market expectations of 0.3 percent on a monthly basis in July, while meeting expectations of 0.8 percent on an annual basis and 1.0 percent, according to Labor Department data.
In Britain, the data set announced by the Office for National Statistics (ONS) was critical for markets. Gross Domestic Product (GDP) in Britain shrank by 20.4 per cent in the second quarter of the year compared with the previous quarter and by 21.7 per cent compared to the second quarter of the previous year, according to the preliminary data. Expectations for the period were 20.5 per cent decline month-over-month and 22.4 per cent fall year-over-year. Also according to ONS data, industrial production in June met the expectations of 9.2 per cent on a monthly basis, and increased 9.3 per cent on monthly basis and it decreased by 12.8 per cent on annual basis, below expectations of 12.5 per cent decline. Manufacturing production inceased 11 percent above the expectations of 10.0 per cent and on annual basis it fell by 14.6, slightly above the expectations for a 15.0 per cent decline on an annual basis. In addition, the foreign trade balance during this period, was minus £ 5.1 billion. ‘Hundreds of thousands of people have already lost their jobs, and I regret to say that more will be lost in the coming months," said British Finance Minister Rishi Sunak, who made the assessment following the data released by the ONS. "Tough choices will have to be made, but we will overcome this," he said. On the other hand, British Trade Minister Liz Truss said that the trade talks with the United States have been advanced in many areas and both sides have reaffirmed their commitment that the aim of the talks is a wide-ranging and ambitious agreement, but that talks in Boston later this year have been postponed by a joint decision to spring 2021.
Asia & Turkey
News from China was significant on the last trading day. China's Foreign Ministry said the U.S. ban on TikTok had nothing to do with national security and Beijing's stance on U.S. sanctions was clear and consistent. Chinese Foreign Ministry spokesman Wang Wenbin reported that they continued their policy of opposing any formal relationship between the United States and Taiwan. China's State Council announced that support policy for foreign trade and foreign investments will be accelerated and foreign companies will be encouraged to establish research and development centers in China. It was also noted that loans to small foreign trade companies would be increased. Meanwhile, US media reported that US and Chinese negotiators will meet in the coming days on details of the implementation of the Phase 1 Trade Deal, and that the Beijing will raise issues of TikTok and WeChat. In Turkey, Treasury and Finance Minister Berat Albayrak stated that Turkey's economy is very strong emphasizing, "Turkey will be one of the least affected countries among the countries experiencing contraction due to the Q2 performance. Q2 will be positive for us." Pointing out that the Turkish economy is in a transformation from competitive exchange rate to export rather than imports, Albayrak said that a strong process started and investments would be directed with interest less dependent on the exchange rate. In addition, Energy Minister Fatih Dönmez reported in his social media account that Turkey is continuing its seismic research activities in the Eastern Mediterranean.
10Y Bond Yields
While the yields on government bonds are determined by trading in the secondary market, the higher the yield means that the state is borrowing at higher interest rates, and the lower the yield means that the state is borrowing at lower interest rates.
Technically, it appears that the dollar index is preparing for a triangular pattern that decreases slightly by narrowing the field of movement. If the index, which may experience a price squeeze within a short-term triangle, can break 93.00 and 92.80 supports due to nature of the pattern, it can continue its value losses by following 92.50 support. In case of possible attacks above the triangle, 93.60 and 93.90 resistances above 93.40 can be followed.
It seems that the price swings of euro/dollar, which are offset by band movement, to the lower of the minor rising trend, are not consistent. If the pair, which continues its pricing under the pressure of the positive trend, can exceed the 1.1840 resistance above by holding on to the minor trend, then it can also follow 1.1870 and 1.1900 resistances to end the band movement. In a strong movement towards the area below the minor trend, the retreats can gain momentum to 1.1780, 1.1750, and 1.1720 supports.
USDTRY volatility rose with TRY-oriented sales and renewed its peak, preserving its earnings. As long as the pair does not swing below the minor channel, which we follow in terms of maintaining pair's upward potential, the pair will possibly follow 7.3600, 7.4000 and 7.4600 resistances. In case of possible loosening below the minor channel, operations in favor of TRY may be accelerated towards 7.2800 and 7.2400 supports.
The pair, which ended their gains in favour of the pound at the upper limit line of the Intermediate ascending channel, appears to have retreated decisively. If the pair, which is going to return its earnings through trade moves, breaks 1.3020 support, 1.2980 and 1.2940 supports will be on our radar. 1.3100 and 1.3140 resistances can be monitored for possible upward attempts by the pair to recover.
USDJPY ended its negative trend with hard purchases and continued its upward movements, moving above the strong fibonacci 61.8 percent expansion line. We expect the pair to continue its buying course and stay above the 61.8 percent expansion line. In this case, it can exceed 107.00 resistance and bring up 107.30 and 107.60 resistances. On the other side, 106.40 and 106.10 supports can be followed for possible price sag which can be observed below the expansion line.
The yellow metal, which lost value after posting its strongest decline in nearly 5 months due to aggressive selling, is seen to be facing retreats in the rising trend. If the commodity, which we think will recover with these responses on the new trading day, can exceed 1954 resistance, then it can also test 1990 level, which was Fibonacci 61.8 percent retracement after 1972. In the event of a weakening of the responses, the commodity could perform loosening towards 1918 and 1900 supports.
Technically, crude oil has a buyer-weighted pricing, settling above the 50-period simple moving average. As long as the closes above 41.80 level indicated by the moving average is permanent, we expect the commodity to continue its upward movements. If it exceeds 43.40 resistance, 44.00 and 44.60 resistances will also be on our radar. 41.20 support can be tracked through sales transactions in the possible transition of commodity towards the area below the moving average in the intermediate support position.
The precious metal, which limits its downward operations in a rising trend marked by a 200-period weighted moving average, appears to be headed to recover its losses with the reactions it faces in this region. If the commodity can exceed 26.20 resistance above by moving its recovery behavior to the fourth trading day of the week, it can also track 26.55 and 26.90 resistances. 25.50 and 25.15 supports can be followed in the retreats that can be observed in the commodity in case the responses lose volume.
DAX Index ended the retracement movement in the minor price channel in the ascending trend, and it appears to be holding on and heading towards the buyer's course. if it keeps its positive pricing and exceeds 13 160 resistance on the new trading day, we will follow 13 280 and 13 400 resistance levels. 12 940 and 12 820 supports can be monitored in the downward easing that can be experienced in case of weakening the demand for rise in the index.
|Support||12 940||12 820||12 700|
|Resistance||13 160||13 280||13 400|
SP500 index, which has seen support in the descending line of the minor price channel, is looking to rebound and break resistance. If the index exceeds critical resistance level of 3 400 with upward movements strongly, it will also test 3 426 and 3 452 by breaking the trend's resistance. In case, the index does not reach the volume that can break the trending resistance, 3 350 and 3 324 supports can be followed.
|Support||3 350||3 324||3 298|
|Resistance||3 400||3 426||3 452|
Technically, the leading cryptocurrency seems to be making a band move in search of direction. Bitcoin, which is trying to preserve its earnings by clinging to the band zone, can continue its pricing on the rising trend and break the upper limit line of the retracement channel with 12 000 resistance above 11 700 resistance, while also raising 12 300 resistances. Bitcoin's possible price below the band zone, 11 200 and 11 000 supports can be monitored.
|Support||11 200||11 000||10 700|
|Resistance||11 700||12 000||12 300|
|06:00||German CPI (MoM) (Jul)|
|08:00||IEA Monthly Report|
|12:30||Export Price Index (MoM) (Jul)|
|12:30||Import Price Index (MoM) (Jul)|
|12:30||Initial Jobless Claims|