(25 AUGUST 2020)DAILY MARKET BRIEF 2:German GDP beats expectations.

The US dollar remains steady near the 93 mark and the US 10-year yield is little changed at about the 0.66% handle.

So are the EURUSD and GBPUSD, where the fluctuations are almost fully driven by the US dollar appetite.

The EURUSD tested 1.1780 on the downside but rebounded past the 1.18 mark on Tuesday. Released this morning, the German final GDP data confirmed a 9.7% decline in the second quarter output, a stone’s throw better than the 10.1% contraction penciled in by analysts. The euro gave a positive kneejerk reaction, but the optimism on data didn't last. As the rapidly surging coronavirus cases especially in southern European nations, could be a turn-off for traders betting on a relatively faster European recovery story, we could soon see a more sustainable pullback in euro versus the greenback. Germany issued a travel warning against unnecessary travels to France's Ile-de-France and Cote d-Azur regions due to rthe rapidly spreading new cases. The next target for the euro bears stands at 1.1685, the minor 23.6% retracement on March – August rebound.

Cable fluctuated within the 1.3050/1.3150 range. The medium-term sterling outlook remains negative on lingering pandemic and Brexit risks to the British economy, hence we continue seeing price advances as interesting top-selling opportunities for traders looking for an eventual setback below the 1.30 mark, which should happen as soon as the pound takes over the reins of its destiny.

Gold treaded water near the $1930 per oz as investors piled into the stock markets on the back of a little convincing shot of optimism. It is hard to tell whether the actual stagnation in gold prices would give way to a further downside move, or a jump. But the combination of squeezed yields and rising inflation expectations offer a solid medium-term bullish case for gold bulls, even at the current high levels.

WTI crude remains little changed near $42.50 per barrel, with a pattern of lower highs for the fifth straight session hinting at a deeper downside move towards the $40 mark. Oil investors will be watching the API data today. While a deeper fall in US oil inventories could throw a floor under the oil weakness, a rise could back a further price pullback.