Daily Market Commentary 26th August 2020

Surging equity markets hit the wall overnight. The explanation was not forthcoming in the economic data or Geo-Political events and must be chalked up to a correction as record markets took a breather. US/China trade talks have again resumed and assessments are being made as to whether China is fulfilling it’s commitments to ‘Phase-One’ of the trade agreement. Progress has been made and the communication channels are once again open. US New Home Sales surged 13.9%, while New Home Prices rose 3.5%, confirming a strong recovery in this leading sector.

The virus numbers continue to decline as the virus looks to be under control. The US FDA approved an important treatment, the ‘convalescent plasma’, which has a strong success rate for patients. US Consumer Confidence dipped overnight, as did the Dollar, with the EUR trading 1.1820 and the GBP bouncing to 1.3140.

Commodity currencies welcomed the US/China trade developments, as the AUD moved to 0.7180, while the NZD trades 0.6535. These trade exposed currencies remain vulnerable and under great threat, especially considering the lock-downs their economies are suffering.

The Fed will open the Jackson Hole Symposium later in the week and markets may focus on monetary policy. The virus pandemic appears continued and trade prospects on the rise.