Friday, 28 August 2020
- Dollar buoyed by yields surge jump after Fed’s inflation shift
- In landmark shift, Fed rewrites approach to inflation, labor market
- Asian stocks may be choppy despite U.S. Fed inflation shift, COVID outlook
- Oil dips as U.S. rigs, refiners appear to have avoided worst of storm
Major Currency Rates at 8:45 AM
The dollar held gains against major currencies on Friday, after the Federal Reserve’s aggressive new strategy to lift employment and increased tolerance for higher inflation pushed U.S. bond yields up.
The dollar’s index rose against six major currencies and was last trading at 93.061, turning around a sharp decline seen on Thursday.
New Approach to Inflation / Labor Market by US
The Federal Reserve on Thursday rolled out a sweeping rewrite of its approach to its dual role of achieving maximum employment and stable prices, putting new weight on bolstering the U.S. labor market and less on worries about too-high inflation. The New approach implies that the government is not worried about inflation and near zero interest rates is going to stay for years.
USD / INR TECHNICAL LEVELS BASED ON DAILY CHART
Yesterday Dollar rupee broke crucial 74 level in selling by foreign banks and Expiry in Exchange segment. Dollar Rupee is now standing near a very crucial weekly support of 73.70. A break of 73.70 will put lot of pressure on downside and next technical support is at 72.61. However we expect Reserve Bank of India to protect this free fall of rupee and we again advise importers to book their imports of next 15 days. Alternatively they can use option strategies to protect upside.
Asian equities are likely to have a bumpy ride on Friday after U.S. stocks scaled new peaks for a third straight day and bond yields surged on the Federal Reserve’s average-inflation strategy, as well as a promising development in curbing the coronavirus pandemic.
Australian S&P/ASX 200 futures lost 0.15% in early trading.Japan’s Nikkei 225 futures added 0.09%, while the Nikkei 225 index closed the overnight session down 0.35% Hong Kong’s Hang Seng index futures rose 0.05%.
Oil prices fell in early trade on Friday as a massive hurricane raced inland past the heart of the U.S. oil industry in Louisiana and Texas, with a storm surge weaker than predicted.
U.S. West Texas Intermediate (WTI) crude futures fell 16 cents, or 0.4%, to $42.85 a barrel, adding to overnight losses. Brent crude LCOc1 futures for October, set to expire on Friday, fell 9 cents, or 0.2%, to $45.00 a barrel, while the more active November contract slipped 7 cents to $45.53.
MAJOR ECONOMIC EVENTS FOR Friday, 28 August 2020
|11:30||GBP||Nationwide HPI (MoM)||1.7%|
|11:30||EUR||GfK German Consumer Climate (Sep)||1.2||-0.3|
|18:00||USD||Core PCE Price Index (MoM) (Jul)||0.5%||0.2%|
|18:00||USD||Goods Trade Balance (Jul)||-70.99B|
|18:00||USD||PCE price index (MoM) (Jul)||0.4%|
|18:00||USD||PCE Price index (YoY) (Jul)||0.8|
|18:00||USD||Personal Spending (MoM) (Jul)||1.5%||5.6%|
|18:00||USD||Retail Inventories Ex Auto (Jul)||-0.8%|
|19:15||USD||Chicago PMI (Aug)||52.0||51.9|
|22:30||USD||U.S. Baker Hughes Oil Rig Count||183|
Disclaimer : All information in this report is collected from various sites on internet. The technical analysis is authors own views. We do not take any responsibility for any errors and omissions.