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Witness the outbreak of history

05 Aug, 2020

Gold Price broke the $2,000 level

Data and news released yesterday:

The coronavirus pneumonia has been diagnosed over 18 million 680 thousand cases by August 5th, Beijing time, and over 700 thousand cases have been accumulated. The total number of the coronavirus pneumonia cases in the United States has exceeded 4 million 910 thousand cases, and the cumulative death rate exceeds 160 thousand.

On the hope of more stimulus measures from the U.S. government, the U.S. stock market closed on high level yesterday, the US dollar ended its two-day continuous rise, and the gold price soared by more than US $40 to US $2,000 level.

The White House and Democratic leaders of Congress have made some progress in the discussion on the fifth large-scale coronavirus assistance bill, but they still have differences on a series of issues.

The amount of bonds purchased by the European Central Bank in July decreased by nearly 40 billion euro month on month.

The EU may seek a compromise by setting up a dispute settlement mechanism for any future government assistance provided by the UK to its enterprises, rather than forcing the UK to follow the EU's own rules from the beginning.

The API report: US crude oil inventory decreased by 8.587 million barrels to 520 million barrels last week.

 

Market Volatility:

The U.S. dollar index fell 0.31% to around 93.24, up 0.34% earlier; although the yield of us five-year treasury bonds fell to a record low of 0.1902%, the yield of 10-year Treasury bonds fell about 5 basis points to about 0.51%.

The euro rose 0.35% to around 1.1803; earlier, it fell 0.35% to about 1.1721; speculative selling hit the euro once, triggering a stop loss below 1.1750.

The British pound fell more than 100 points in the European session and closed near 1.3070 as the Bank of America predicted that the Bank of England would cut its interest rate to 0% in November, and the Bank of England would increase its asset purchases by 100 billion pounds in November.

The USD/JPY fell 0.22% to around 105.72, used to rise 0.2% to about 106.20, and the upper resistance level was around 106.60-106.70. The outlook for the US dollar against the yen remains uncertain, although it is stressed that there is still room for a substantial rebound.

The spot gold broke through the historical level of US $2,000. At one time, spot gold rose by more than 2% to a record high of US $2,019.92/oz, due to the ultra-low interest rate environment and the hope that the United States will introduce more stimulus measures to protect the economy hit by the coronavirus, as well as the dollar's test of the low point more than two years ago.

The WTI crude oil futures in September rose by US $0.69, or 1.68%, to US $41.70/barrel, while Brent's October crude oil futures settled at US $44.43/barrel, up 0.63%.

 

Future forecast of CWG:

The data in the Asian session of this trading day was light; in the European market, the final value of the service industry purchasing managers' index in France, Germany, Britain and the euro area in July was released, and the monthly retail sales rate in the euro area would also be announced; in the US session, the number of small non-farm workers' ADP employment changed, and the trade account and non-manufacturing price index data were released. In addition, the US EIA crude oil inventory change data last week should also be closely watched.

Institutional Analysis: AIG strategists said U.S. bond yields would hit a record low if U.S. employment data on Friday fell short of expectations. If U.S. employment data falls below expectations on Friday, it could trigger a buying spree of safe haven assets, and US bond yields will fall to historic lows. Economists expect a sharp slowdown in hiring, with median expectations for new jobs in July at 1.5 million, far below June's 4.8 million.

 

Financial calendar:

Economic data:

15: 50 final value of Markit / CDAF service industry purchasing managers index in France in July

15: 55 final value of Markit / BME service purchasing managers index in Germany in July

16: Euro zone Markit service PMI final value for July

16: 30 U.K. Markit / CIPS service PMI final value for July

17: Monthly retail sales rate in June in euro zone

20: ADP July 15 changes in US employment

20: 30 US June trade account

Canada June trade account

22:00 US July ism non-manufacturing price index

22:30 US EIA crude oil inventory changes last week

Central Bank News:

20: Japan's central bank governor Kuroda delivered a speech with former chairman of the Federal Reserve, Yoshihiko Kuroda

 

CWG financial knowledge:

ADP employment change in the United States (1000): the ADP employment population is the result of an anonymous survey of the employment status of about 500000 U.S. business customers, according to the automatic data processing company of the United States. The calculation method of the data is similar to the monthly labor market data of the U.S. Department of labor, and it is published two days before the release of the labor department data. Therefore, the data is usually regarded as the first reference index before the monthly non-farm employment report, but the indicators are volatile. If the data is better than expected, it is good for the US dollar, otherwise, if the data is less than expected, it is negative for the dollar.