Riyadh begins property acquisition for major road development projects    Saudi minister explores strategic industrial and mining partnerships with top Russian firms    Riyadh's Creative District to welcome Italy's Istituto Marangoni    CMA approves major reforms to ease investment account access for foreign and local investors    Saudi Arabia reaffirms OPEC+ compliance as June crude supply hits 9.35 million bpd    Lithuanian politicians taken to shelters after Belarus airspace violation alarm    EU leaders agree to send delegation to Libya after previous group expelled from country    Armenia and Azerbaijan move closer to peace, pushing Russia out from the South Caucasus    Trump says he will hike tariffs on Canadian goods to 35%    France's Lady Liberty artwork goes viral as a new Statue of Liberty could be in the works    Saudi population reaches 35.3 million in 2024, majority under 65    GASTAT: Industrial Production Index rises by 1.5% in May    Theo Hernández: Al Hilal can compete with Europe's best    Abdullah Al-Qaisoom wins silver at Asian Youth and Junior Weightlifting Championship    Aubameyang's future at Al Qadsiah in doubt after cryptic post comparing Saudi League strikers    Makkah Deputy Emir leads washing of Holy Kaaba    SFDA approves 'Winrevair' for rare pulmonary hypertension treatment    HONOR returns to Esports World Cup as Official Smartphone Partner for 2025 The renewed commitment will see HONOR elevate mobile esports competition with cutting-edge AI technologies and industry-leading hardware    Michael Madsen, actor of 'Kill Bill' and 'Reservoir Dogs' fame, dead at 67    BTS are back: K-pop band confirm new album and tour    Sholay: Bollywood epic roars back to big screen after 50 years with new ending    Ministry launches online booking for slaughterhouses on eve of Eid Al-Adha    Shah Rukh Khan makes Met Gala debut in Sabyasachi    Pakistani star's Bollywood return excites fans and riles far right    Exotic Taif Roses Simulation Performed at Taif Rose Festival    Asian shares mixed Tuesday    Weather Forecast for Tuesday    Saudi Tourism Authority Participates in Arabian Travel Market Exhibition in Dubai    Minister of Industry Announces 50 Investment Opportunities Worth over SAR 96 Billion in Machinery, Equipment Sector    HRH Crown Prince Offers Condolences to Crown Prince of Kuwait on Death of Sheikh Fawaz Salman Abdullah Al-Ali Al-Malek Al-Sabah    HRH Crown Prince Congratulates Santiago Peña on Winning Presidential Election in Paraguay    SDAIA Launches 1st Phase of 'Elevate Program' to Train 1,000 Women on Data, AI    41 Saudi Citizens and 171 Others from Brotherly and Friendly Countries Arrive in Saudi Arabia from Sudan    Saudi Arabia Hosts 1st Meeting of Arab Authorities Controlling Medicines    General Directorate of Narcotics Control Foils Attempt to Smuggle over 5 Million Amphetamine Pills    NAVI Javelins Crowned as Champions of Women's Counter-Strike: Global Offensive (CS:GO) Competitions    Saudi Karate Team Wins Four Medals in World Youth League Championship    Third Edition of FIFA Forward Program Kicks off in Riyadh    Evacuated from Sudan, 187 Nationals from Several Countries Arrive in Jeddah    SPA Documents Thajjud Prayer at Prophet's Mosque in Madinah    SFDA Recommends to Test Blood Sugar at Home Two or Three Hours after Meals    SFDA Offers Various Recommendations for Safe Food Frying    SFDA Provides Five Tips for Using Home Blood Pressure Monitor    SFDA: Instant Soup Contains Large Amounts of Salt    Mawani: New shipping service to connect Jubail Commercial Port to 11 global ports    Custodian of the Two Holy Mosques Delivers Speech to Pilgrims, Citizens, Residents and Muslims around the World    Sheikh Al-Issa in Arafah's Sermon: Allaah Blessed You by Making It Easy for You to Carry out This Obligation. Thus, Ensure Following the Guidance of Your Prophet    Custodian of the Two Holy Mosques addresses citizens and all Muslims on the occasion of the Holy month of Ramadan    







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US fiscal talks progress, US attack on Chinese apps goes beyond TikTok
Published in The Saudi Gazette on 06 - 08 - 2020

GENEVA — US stocks extended gains as investors saw progress on negotiations for the US's next fiscal stimulus package as White House made some concessions to end the deadlock, although Democrats ask for more. A deal is not reached yet, but House speaker Nancy Pelosi said Democrats are determined to seal a deal by Friday. So, the expectation that good news will soon hit the wires keeps investors on track for buying more US equities.
Elsewhere, the sentiment is mixed. Major Asian indices traded in the red on escalating US-China tensions, as US Secretary of State Mike Pampeo said he wants to see ‘untrusted Chinese apps' being removed from the app stores, bringing the fight beyond Tiktok. Equities in Shanghai (-0.38%) and Hong Kong (-1.59%) lost, the Nikkei retreated 0.51%, while the ASX 200 (+0.31%) was led higher by mining, energy and industrial stocks.
The US dollar slipped below the 93 mark, as the US 10-year treasury yield rose to 0.54%. Strong demand in US treasuries despite the skyrocketing US sovereign debt continues keeping the US sovereign yields near their all-time low levels, certainly because there is little alternative to ‘risk-free' US sovereign holdings with government debts rising globally.
Speaking of risk haven, gold extended its breathtaking rally above the $2,050 per oz on Wednesday. There is astonishingly thin profit taking and no alarming sign of exhaustion at the current levels. Still, a downside correction will likely happen with the dust settling in Beirut and drag the price of an ounce within the $2,000/1,980 per oz area.
If support holds at this zone, we could see consolidation and a further positive attempt in gold prices. If not, there could be a rapid unwind in short-term speculative long positions and a sharp price retrace.
Data-wise, the European July services PMI figures released yesterday were strong, even though the numbers slightly missed analyst expectations. Still, the major European indices closed in the positive territory. The FTSE outperformed its peers, as mining stocks led by gold miners pushed the commodity-heavy index above the 6110p mark.
Activity in FTSE futures (-0.57%) hint at downside correction at the open, but the British blue-chip index is expected to see support from a solid rise in oil and commodity prices and to consolidate above the 6000p mark.
The boost in oil prices following the Beirut blast pushed WTI crude above its 200-day moving average of $43 pb on Wednesday, but decent offers blocked the way higher above this level. Supply side shocks tend to have a short-lived positive impact on oil prices, provided that the global oil market is already flooded with excess supply.
Only an upside revision in demand expectations could carry the oil rally sustainably higher. Otherwise, investors will continue hunting top selling opportunities to push the price of a barrel near and below the $40 handle.
The EURUSD nearly, fully recovered early-week losses against a broadly softer US dollar and is preparing to attack the 1.19 offers for the second straight week. The pair's upside potential mostly depends on the global US dollar performance. Further slide in the greenback will pave the way for an advance toward the 1.20 handle.
Cable consolidates gains above the 1.31 mark on the back of a weaker US dollar, as well. The highlight of the day is the Bank of England (BoE) policy decision.
The BoE is expected to maintain its interest rates and asset purchases policy unchanged at this month's meeting, but there is a chatter that moving toward the year-end, the bank should allow banks to borrow at negative rates, or increase the volume of funds available at the bank rate to further relax the financial conditions.
Hence, the BoE doves should bring a certain downside pressure on sterling against the dollar and the euro.
— The writer is senior analyst at Swissquote Bank


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