Forex news from the European trading session - 8 September 2020
Headlines:
- US August NFIB small business optimism index 100.2 vs 99.0 expected
- Nasdaq futures down 2% as risk remains skittish
- UK government legal department head quits over Brexit - report
- Germany's Scholz: Latest signals from London do not raise hopes for a Brexit agreement
- Dombrovskis set to take over as European trade commissioner
- France July trade balance -€6.99 billion vs -€6.21 billion expected
- Germany July trade balance €19.2 billion vs €15.9 billion expected
- Japan's Suga says that Abenomics will continue
Markets:
- USD and JPY lead, GBP lags on the day
- European equities lower; E-minis down 0.8%
- US 10-year yields down 3 bps to 0.687%
- Gold down 0.8% to $1,919
- WTI down 5.3% to $37.68
- Bitcoin down 1.4% to $10,012
The week finally feels like it is getting started and boy, is it getting started with a bang.
The market mood was much calmer at the start of European trading but that quickly evolved into a full-fledged risk-off run across all asset classes as stocks sank.
US futures erased earlier gains, with Nasdaq futures leading losses as it fell from nearly flat levels to be down by over 2% currently. S&P 500 futures also took a similar cue, falling from gains of around ~0.7% to be down by ~0.8% now.
Alongside a rally in bonds, it is sparking risk aversion in the market with European equities slumping and oil also seeing a drop of over 5% ahead of US trading.
That in turn kept the likes of the dollar and yen more firm, with commodity currencies among the notable losers amid the risk-off wave.
AUD/USD fell from 0.7300 to 0.7245 while USD/CAD climbed from 1.3090 to 1.3170 levels, with both pairs holding at key near-term levels before the turnaround.
The pound was the biggest loser though as Brexit woes weighed further on the currency, with cable seeing a drop from 1.3130 to 1.3022 before keeping just above that.
Elsewhere, EUR/USD slipped from 1.1810 to 1.1778 but is holding closer to the 1.1800 handle for now. Meanwhile, gold is down as well to $1,919 as the dollar firms.
Looking ahead, it is all over to how Wall Street will react coming back from the long weekend, as investors digest further the SoftBank news since the end of last week.
Now that there is a face to the mask - and that face being nothing more than a big gambler - it will be interesting to see how the market will interpret the maniacal rise in tech shares and if they are resilient enough to hold on i.e. BTFD.
