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Europe Roundup: Sterling heads lower after early gains, European shares dips,Gold edges back from record peak, Oil falls as rising virus cases overshadow demand recovery-August 4th,2020

Market Roundup

• French June Government Budget Balance  -124.9B, -117.9B previous

• Spanish Unemployment Change -89.8K, 5.1K previous

• Eurozone PPI (YoY)  -3.7%, -3.9% forecast  -5.0% previous

• Eurozone PPI (MoM)  0.7%,0.5% forecast, -0.6% previous

Looking Ahead - Economic data (GMT)

•12:55 US Redbook (MoM) 1.1% previous

• 12:55 US Redbook (YoY) -8.7% previous

• 13:30 Canada Jul RBC Manufacturing PMI  47.8 previous

• 13:45 US Jul ISM NY Business Conditions  39.5% previous

• 13:45 US Jul ISM-New York Index  806.0 previous

• 14:00 US IBD/TIPP Economic Optimism 44.0 previous

• 14:00 US June Durables Excluding Defense (MoM)  9.2% previous

• 14:00 US Jun Factory Orders (MoM)  5.0% forecast,8.0% previous

• 14:00 US Jun Factory orders ex transportation (MoM) 2.6% previous

• 15:20 New Zealand GlobalDairyTrade Price Index -0.7%-0.7%

 Looking Ahead - Economic events and other releases (GMT)

•No significant events

Fx Beat 

EUR/USD: The euro edged higher against dollar on Tuesday as investors awaited U.S. stimulus breakthrough. Euro held its ground against dollar despite strong U.S. manufacturing data . Focus remains on deadlocked stimulus negotiations in the U.S. which will continue on Tuesday. Focus was also on the European Central Bank’s breakdown of its bond purchases, released late on Monday, which showed Italy continued to benefit from oversized ECB purchases of its debt in June and July under both the emergency and conventional bond buying programmes. Immediate resistance can be seen at 1.1799 (38.2% fib), an upside break can trigger rise towards 1.1829 (23.6%fib).On the downside, immediate support is seen at 1.1711(50%fib), a break below could take the pair towards 1.614 (61.8%fib).

GBP/USD: Sterling gave up its earlier gains against the dollar on Tuesday as concerns of a second wave of virus infections and a central bank policy meeting later this week kept investors from away from the market . Signs that dollar weakness has been the major driver of pound gains can be seen from the performance of the British currency versus the euro and the Japanese yen. Sterling’s recovery has been impressive in recent weeks. It registered its biggest monthly rise in more than a decade in July even though prospects of a breakthrough in Brexit negotiations with Europe before a December deadline remain elusive. Immediate resistance can be seen at 1.3113 (Daily high), an upside break can trigger rise towards 1.3182 (23.6% fib).On the downside, immediate support is seen at 1.2976 (38.2%fib), a break below could take the pair towards 1.2777(50%fib).

USD/CHF: The dollar strengthened against the Swiss franc on Monday as as dollar rebound faltered   as political wrangling over a U.S. relief plan and a gloomy economic outlook weighed on the currency. Despite a slowdown in new U.S. virus cases and encouraging factory data, investors are reserving judgement on whether a U.S. economy with 30 million people out of work can really lead the world’s recovery. Top White House officials and Democratic leaders in the U.S. Congress were due to try again on Tuesday to narrow gaping differences over a fifth major coronavirus-aid bill. Immediate resistance can be seen at 0.9163 (38.2%fib), an upside break can trigger rise towards 0.9212(50% fib).On the downside, immediate support is seen at 0.9100 (23.6% fib), a break below could take the pair towards 0.9051 (31st July low).

USD/JPY: The dollar edged higher against the Japanese yen on Tuesday as strong U.S. manufacturing data and upbeat tech stocks boosted dollar against yen, though broader worries about the coronavirus and global economy kept gains in check. An industry gauge released overnight indicated U.S. manufacturing activity expanded in July at the fastest pace in more than a year, which helped Wall Street shares rise on Monday.However, some investors remain cautious due to worries about a resurgence of the coronavirus and a diplomatic tussle over Chinese tech companies’ operations in the United States. Strong resistance can be seen at 106.41 (50% fib), an upside break can trigger rise towards 107.13(50 DMA).On the downside, immediate support is seen at 105.49 (5 DMA), a break below could take the pair towards 105.13  (38.2% fib).

Equities Recap

European shares slipped on Tuesday as disappointing earnings reports from Diageo and Bayer took the shine off a jump in growth-linked cyclical stocks, while investors awaited signs of progress on more U.S. fiscal stimulus.

At (GMT 12:15),UK's benchmark FTSE 100 was last trading down at 0.04 percent, Germany's Dax was down by 0.64 percent, France’s CAC finished was down by 0.19 percent.

Commodities Recap

Gold was little changed on Tuesday, hovering below the previous session's record peak as fears over the pace of economic recovery amid surging coronavirus cases were offset by upbeat U.S. manufacturing data.

Spot gold   was down 0.1% at $1,975.57 per ounce by 0951 GMT, about $9 shy of the all-time high hit in the previous session. U.S. gold futures  rose 0.4% to $1,994.20.

Oil prices eased on Tuesday amid concerns that a fresh wave of COVID-19 infections will see a global demand recovery stalling due to tighter lockdowns, just as major producers ramp up output.

U.S. West Texas Intermediate (WTI) crude futures were down 68 cents, or 1.7%, at $40.33 a barrel at 1020 GMT, while Brent crude futures were 72 cents, or 1.7%, lower at $43.43 a barrel.

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