Daily Analyses

21.10.2020

Fundamentals

Europe

News and data releases were intense in Eurozone. European Central Bank (ECB) President Christine Lagarde said the Bank would maintain its supportive policy in response to the ongoing coronavirus crisis. Lagarde, who quoted the ECB's 1.35 billion euro Pandemic Emergency Purchase Program (PEPP), which has so far used 590 billion euros, noted that PEPP is helping to lower long-term interest rates.

Jens Weidmann, a member of the ECB Governing Council, said European countries' joint borrowing moves against the economic contraction created by the coronavirus should be a one shot situation, and the idea of large-scale borrowing was worrying. On the other hand, the European Commission stated that the chief Brexit negotiators would meet again, that the two sides must meet for a possible deal, and that the EU wants to intensify talks. In addition, Italian Prime Minister Conte said the EU's financial support programmes should begin implementation from the beginning of next year.

According to Destatis, producer price index (PPI) in September, increased 0.4 percent from minus 0.1 percent last month compared to the same month last year. And it declined by 1.0 percent, above the expectations 1.4 percent decline. According to data released by the ECB, the current account in the Eurozone was +19.90 billion euros in August.

US

There was significant news in the US yesterday. First, US President Donald Trump said that they want to agree on the Covid-19 aid bill and intend to raise more than $ 2.2 trillion, explaining that ‘if a deal arises, we expect the Republicans in the Senate to move in this direction.’ Drew Hammill, a spokesman for House Speaker Nancy Pelosi, said a 45-minute meeting between Pelosi and Treasury Secretary Steven Mnuchin approached an agreement on the new coronavirus aid package. But White House Chief of Staff Mark Meadows argued that Pelosi was the biggest obstacle against putting forward a new package to help the economy in the face of the crisis caused by the Coronavirus outbreak.

On the other hand, the U.S. Supreme Court has ruled that in the state of Pennsylvania, Mail ballots can be counted until November 6, despite objections from the Republican Party. In addition, Fed Vice-Chair Randal Quarles noted that the confusion in the markets was triggered by Covid-19-linked vulnerabilities. In the macroeconomic calendar, home sales in the United States rose 1.9 percent month-over-month in September to 1.46 million, below market expectations of 1.41 million, according to the Commerce Department.

Britain

In Britain, the Brexit-driven statements were significant. British Prime Minister Boris Johnson said it was the EU that ended the negotiations in the Brexit talks, explaining that continuing the negotiations would depend on the EU making fundamental changes to its situation. Johnson also said it would be in everyone's interest to have a deal in the Cyprus region. Speaking after the meeting of chief Brexit negotiators Barnier and Frost, a UK Government spokesman argued there was no basis for a resumption of a trade deal with the EU. UK Industry Minister Nadhim Zahawi said if the EU did not treat Britain like a sovereign state, they would keep their thoughts on a no-deal Brexit.

On the other hand, the UK Government announced that young healthy volunteers will be infected with the Covid-19 virus for the development of vaccine studies in the country, and £ 33.6 million would be allocated for this study. Alok Sharma, the Business Minister, said the trials would be tightly controlled, and this step was an important step for speeding up vaccine development efforts.

In addition, Bank of England (BoE) Monetary Policy Board member Gertjan Vlieghe stressed that reducing monetary stimulus step by step would not cause problems for the economy, but that monetary easing policy remains an “important” tool for them. Vlieghe also added that they continue to discuss the possibility of negative interest rates.

Asia & Turkey

We completed the Asian markets with a calm stream of news. Chinese Foreign Ministry spokesman Zhao Lijian stated that the lifting of the United Nations Security Council's arms embargo on Iran and the ban on international travel imposed on some Iranian officials preserves the multilateralism of the international community and the authority of the UNSC.

On the other hand, after Canada granted asylum to pro-democracy protesters in the Hong Kong Special Administration zone, Chinese Ambassador to Ottowa Song Peyvu said, "If Canada cares about the health of 300 thousand Canadian citizens living in Hong Kong and the safety of a large number of Canadian companies operating in the region, it should support the fight against violent crime." Bank of Japan (BoJ) board member Makoto Sakurai said the Bank should take swift and appropriate measures if the Coronavirus outbreak delays Japan's fragile economic recovery.

In Turkey, President Recep Tayyip Erdogan, after a Cabinet meeting, reminded that the amount of natural gas discovered in the Black Sea Tuna-1 well reached 405 billion cubic meters, and added that Fatih drilling ship will start drilling in Turk Ali well next month, and the incoming data pointed to fruitful discoveries. Meanwhile, as tensions continue between Ankara and Athens in the Eastern Mediterranean, the Greek administration urged the European Commission to suspend the Customs Union agreement between the EU and Turkey.


Indicators

MSCI iShared ETF’s

Msciisharedetfs
MSCI iShared ETF’sDownload Image

MSCI ETF indices are a measure of stock market performance for a particular region. Exchange traded funds track ETF returns and risk measurements before taking action against the region to be invested.

10Y Bond Yields

10Ybondyields
10Y Bond YieldsDownload Image

Yields on government bonds are determined by buying and selling in the secondary market, while a high yield means that the state borrows at a higher interest rate, and a low yield means that the state borrows at a lower interest rate.


US Index

USIndex

From a technical point of view, it seems that the dollar index couldn't overcome the descending trend, retreated and ended the minor price channel. If the index breaks 92.60 support in line with the pressure to retreat on the new trading day, it can accelerate its decline towards 92.30 and 92.00 supports. 93.10 and 93.40 resistances can be tested in possible upward attempts of the index.

Support92.6092.3092.00
Resistance93.1093.4093.70

Parities

EURUSD

We saw that euro/dollar, which faced responses in price swings towards the lower of the main ascending trend, recovered and broke the minor wedge. If it holds above the upper boundary line of the wedge in the continuation of this movement, which signals that the pair will continue its upward movements in favor of the euro, we will follow 1.1940 after 1.1870 and 1.1900 resistance levels. If pair does not put pressure in this region due to weakening responses, 1.1820 and 1.1780 supports will be on our radar.

Support1.18201.17801.1750
Resistance1.18701.19001.1940

USDTRY

As US index shows a weak performance, we observed that USDTRY halted its upward movements at Fibonacci 100.0 percent expansion line due to the fact that the CBRT will increase interest rates in October MPC meeting. Showing a slight decline, which can be considered as a profit realization, the pair may break 7.8200 support below. In this case, we will follow 7.7800 and 7.7400 supports. On the other side, 7.8800 and 7.9200 can be followed as resistance levels for possible upward movements.

Support7.82007.78007.7400
Resistance7.88007.92007.9600

GBPUSD

GBPUSD faced strong resistance at the upper boundary line of the descending trend in its upward movements. The currency pair limited its falls within the minor channel. We will follow 1.3020 and 1.3060 resistance levels, in case, the upper limit line can be exceeded in new attempts on the third trading day of the week. On the other hand, if the pair continues to stay below the upper boundary line, movements will possibly head for 1.2940 and 1.2900 supports.

Support1.29401.29001.2860
Resistance1.30201.30601.3100

USDJPY

Technically, USDJPY showed a band movement, settling below the intermediate descending trend. After a short-term balance in the band, the pair, which we expect to move downwards in the descending trend, can first end the minor trend, and then continue towards 105.00 and 104.80 support levels. In possible price spurts to break the descending trend, we will follow 105.50 and 105.70 resistance levels.

Support105.00104.80104.60
Resistance105.50105.70106.00

Commodities

XAUUSD

The precious metal tested the upper boundary line of the minor descending channel by recovering with purchases in response and now, it is trying to preserve its gains by settling in this region. If the commodity, which is struggling to hold on to a weakening recovery below the boundary line,breaks 1905 support by loosening with sales pressure on them, it will follow 1892 and 1878 supports. On the other side, if it breaks the descending trend with its upward movements, we will follow 1930 and 1942 resistance levels.

Support190518921878
Resistance193019421956

USOIL

Technically, it seems that crude oil is preparing for a low wedge pattern, narrowing the area of movement in its pricing. If the commodity exceeds the upper boundary line of the wedge by maintaining positive pricing behavior in the rising trend, it will target 43.00 and 43.80 resistance levels above 42.20. In possible retreats, on the other hand, we may observe a strong support in the rising trend, located below 40.80 and 40.00 levels.

Support40.8040.0039.20
Resistance42.2043.0043.80

XAGUSD

The precious metal broke the descending trend by maintaining its upward movements in a moderate manner in the minor price channel. If the commodity exceeds 25.40 above by holding on to the trend, it will possibly test 25.70 and 26.00 resistance levels. On the other hand, 24.80 and 24.50 supports will be on our radar, if the commodity does not become permanent in this region.

Support24.8024.5024.20
Resistance25.4025.7026.00

Indices

DAX30

As DAX Index retreats, Fibonacci 61.8 per cent fan line appears to be working as a strong support. We believe the German index will maintain the desire to recover as long as it does not become permanent below the fan line in question. And if it exceeds 12 930 and 13 060 in its upward movements, 13 200 resistance will be our target. In the possible transition of the index below the fan line, the depreciation can deepen towards 12 670 and 12 540 supports.

Support12 67012 54012 400
Resistance12 93013 06013 200

SP500

SP500 gained value through upward transactions by clinging to the rising trend and encountered profit realizations at the upper boundary line of the minor price channel. Depending on the realizations experienced, the index can also follow 3 376, which is the 50.0 percent retracement, after 3 435 and 3 408 levels. On the other hand, 3 491 and 3 520 resistances can be followed in the possible recovery movement of the index.

Support3 4353 4083 376
Resistance3 4913 5203 552

Cryptos

BTCUSD

We watched the leading cryptocurrency broke the minor-descending wedge pattern, rising with moderate purchases. Due to the nature of the pattern, we expect Bitcoin to maintain permanence above the upper wedge barrier in the first phase. Then, 12 600 and 12 800 resistance levels will be on our radar, if it can exceed 12 400 resistance. 12 000 and 11 800 supports can be monitored for possible falls.

Support12 00011 80010 600
Resistance12 40012 60012 800

Economic Calendar

CountryTime (GMT)Action
eu 08:30 ECB President Lagarde Speaks
eu 08:45 ECB's Lane Speaks
eu 11:00 ECB's De Guindos Speaks
uk 13:10 MPC Member Ramsden Speaks
canada 13:30 Core CPI (YoY) (Sep)
canada 13:30 Core CPI (MoM) (Sep)
canada 13:30 Core Retail Sales (MoM) (Aug)
canada 13:30 CPI (MoM) (Sep)
canada 13:30 New Housing Price Index (MoM) (Sep)
canada 13:30 Retail Sales (MoM) (Aug)
canada 13:30 Wholesale Sales (MoM)
usa 13:50 FOMC Member Brainard Speaks
usa 14:30 Seevol Cushing Storage Report
usa 15:00 FOMC Member Mester Speaks
usa 15:30 Crude Oil Inventories
usa 15:30 Cushing Crude Oil Inventories
eu 17:00 ECB's De Guindos Speaks
usa 19:00 Beige Book

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