(31 AUGUST 2020)DAILY MARKET BRIEF 2:GBP/USD is slightly down

(31 AUGUST 2020)DAILY MARKET BRIEF 2:GBP/USD is slightly down

31 August 2020, 10:01
Jiming Huang
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Japan’s Nikkei 225 has surged 1.42%. The index fell last Friday after Prime Minister Shinzo Abe's resignation caused uncertainty over the next fiscal and monetary stimulus moves. Nevertheless, Japanese equities have recovered on the news that Chief Cabinet Secretary Yoshihide Suga, who is a close ally of Abe, intends to join the race for the position. Nikkei’s rally is also driven by the news that Warren Buffett's Berkshire Hathaway had acquired more than 5% stakes in each of the 5 major Japanese trading firms, including Itochu, Marubeni, Mitsubishi, Mitsui & Co., and Sumitomo.

South Korea’s KOSPI has tumbled 0.94% after initial gains, dragged down by disappointing factory data for July, which fell short of expectations.

In Australia, the ASX 200 is down 0.11% after starting on an upbeat note. The Victoria state saw a record 44 deaths caused by the new coronavirus on Monday.

In the commodity market, oil prices are cautiously up despite the fears of oversupply. Currently, WTI is up 0.24%, and Brent has gained 0.46%, driven by global stimulus measures and China’s recovery in the service sector. The weak US dollar also bodes well for oil prices.

The dovish Fed and the weak USD are also pushing gold prices up. The cost of the metal has increased by 0.11% for the day so far, to $1,977 per ounce. Elsewhere, silver has surged 1.70%.

In FX, the US dollar is set to conclude the worst month in about five years, as the sentiment is still dominated by Fed chief Jerome Powell’s speech of last Thursday. The central bank’s new approach to inflation, whose target is at 2%, suggests that the interest rate will be maintained close to zero for a longer period. EUR/USD is moving sideways, but the USD Index is down 0.07%. Investors are waiting for the speeches from other Fed officials, including Vice Chairman Richard Clarida and Atlanta Fed President Raphael Bostic, who will speak later today.

GBP/USD is slightly down, currently trading at 1.3348. Markets in Britain are closed for the Bank Holiday.

By Strategy Desk