DAILY MARKET REPORT - Thursday, Aug 06, 2020 - GBP surged after BOE comments



The Bank of England kept interest rates at 0.1% and to keep its asset purchasing facility at £745bn for August. The Central bank said the unemployment will jump, with the rate at 7.5% at the end of 2020, before gradually declining from the start of next year and inflation is expected to fall further below the 2% target. The Bank has also revised downwards its estimates of growth going forward with UK economy predicted to grow by 9% in 2021, and 3.5% in 2022, this compares with previous growth estimates of 15% and 3% respectively.


Wall Street ended higher on Wednesday after White House negotiators said they aim to reach a deal on a new corona-virus relief package by the end of the week. On the earnings calendar, Moderna Inc. (MRNA) reported a loss of $116.7 million in its second-quarter on Wednesday. While the company revenue jumped a 406% year-over-year, from $66.4 million last quarter compared with $13.1 million during the same quarter a year ago.


Crude oil prices slightly retreated from the previous session highs. On Wednesday, the EIA reported the U.S. stockpiles of crude fell 7.4 million barrels last week following an even larger decline the week before that.


In the currency market, the British pound surged to fresh 5-month high boosted by strong construction PMI numbers and BOE comments. Meanwhile, the Australian dollar edged lower after Australia's Prime Minister Scott Morrison has said that COVID-19 will cost the nation at least A$7 billion.


Gold price climbed new all-time high on Wednesday as investors have been rushing towards safe-haven assets due to geopolitical tensions, US-China trade tensions and global economic uncertainty.

Economic Outlook

On the data front, UK Construction surged to 58.1 in July 2020 from 55.3 in the previous month, beating the market expectations of 57.0.

On Wednesday, the US announced the latest ADP employment numbers, which indicated that private sector employment grew by only 167K jobs in July, while analysts had expected an increase of 1.5M.

On the US-China front, “With parent companies based in China, apps like TikTok, WeChat, and others are significant threats to the personal data of American citizens, not to mention tools for CCP content censorship,” Mike Pompeo said at a press conference on Wednesday.

Coronavirus update:

Coronavirus has infected over 16.4 million people worldwide and claimed 6,53,353 lives. The United States recorded 52,810 new Covid-19 cases and 1,388 virus-related fatalities on Wednesday, according to Johns Hopkins University data. Mexico overtook Britain to become the third hardest-hit country in virus deaths - after Brazil and the US - with more than 46,600 fatal cases.

Technical Outlook

The yellow metal price hovers near the record high of 2055 on Thursday, any break above this level the next important resistance to watch 2070.


The important levels to watch for today: Support- 2028 and 2010 Resistance- 2055 and 2070.

EUR/USD: The currency pair slightly retreated and trading around 1.1850 during the European session after hitting a fresh session high of 1.1915.


The important levels to watch for today: Support- 1.1830 and 1.1780 Resistance- 1.1880 and 1.1915.

Quote of the day: We don’t have to be smarter than the rest; we need to be more disciplined than the rest – Warren Buffet.

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