Tuesday, August 18, 2020

Capital Markets: Canada Loses a Finance Minister And the U.S. Dollar Declines

From Marc to Market:

Canada Shrugs Off Loss of Morneau and Gold Reclaims $2000 Threshold 
Overview: The NASDAQ rallied 1% yesterday to record highs as the Dow Industrials struggled, and the S&P 500 was able to eke out a small gain. The coattails were short, and the strength of the yen may have contributed to a 0.2% loss of the Nikkei. Still, its 6.2% advance this month is the best among the G10. Chinese equities posted small gains, but amid rising infections and anticipating new lockdown measures, South Korea's Kospi took it on the chin, falling nearly 2.5%.

New US actions against Huawei took a toll on Taiwanese chip makers and weighed on the broader index. India's 1% gain led the region. European shares are flattish, and the Dow Jones Stoxx 600 remains within the range set before the weekend. US shares are also little changed. Benchmark 10-year yields are mostly 1-2 bp softer, which puts the US 10-year yield near 67 bp. The dollar is under modest pressure, falling against nearly all the currencies today. Among the majors, sterling, the yen, and the Canadian dollar are up just shy of 0.5% to lead. Russia, Mexico, and South Africa lead the emerging market currencies higher. Turkey stands out as a notable exception. Gold has re-taken the $2000 level. The next technical target is near $2025. Oil is firm but flat within its recent ranges. The $43.50 capped the rally earlier this month in the September WTI contract.

Asia Pacific
The US tightened its attempt to isolate Huawei.
It extended its sanctions to cover 38 more affiliates in 21 countries. The goal is to cut its access to semiconductor chips. This hit Taiwanese chip producers. Separately, and contrary to the assessment of many private economists, US trade adviser Navarro said in an interview yesterday that China is "absolutely" keeping its word on purchases of US goods. President Trump has also praised Chinese agriculture purchases. Separately, reports suggest some 14 mln barrels of oil in seven super-class tankers are on their way to China now.... 

US Dollar futures 92.53, down 0.33.