Market Commentary – September 25, 2020

Kevin Jock

25th September 2020

The U.S. Dollar remains the strongest currency over the week, followed by Yen, as people are avoiding risk. European stocks cautiously inch higher. Sterling rebounds slightly, with some support the new jobs support scheme.

The U.S. Dollar Index, that measures the strength of the U.S. dollar against a broad basket of currencies, rebounded from a low of 91.75 to 94.50. The rebound happened since the Federal Reserve keep the interest rates at the bottom until the end of 2023. The uptrend of US dollar has put significant pressure on commodities like gold and silver. Metals has suffered a significant decline from the recent highs.


Figure 1 (Source: IS Prime): XAUUSD Intraday


Asian stocks were set to open higher. It appeared that the US stocks rally supported global sentiment although the US data was weaker than expected and there is uncertainty about a stimulus package.

Headliner to Review

  • The employment figures in the US were worse than expected. US Unemployment Claims increased from 866,000 to 870,000 while it is expected that it would decline to 845,000. Continuing Jobless Claims decreased from 12.75 million to 12.58 million compared to the expected 12.3 million.

  • The Swiss National Bank (SNB) Chief Thomas Jordan the economic situation is slightly worse than expected. It still takes time for the economic recovery. The SNB keeps its monetary policy decision and policy rate unchanged at -0.75%.

  • Bank of England Governor Andrew Bailey said interest rates are likely to stay low for some time. He said, “It’s critically important that we use the tools of policy to deal with challenges and issues we face.”

  • Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin said $380 billion in unused aid could help US households and businesses if lawmakers approve. It is expected a new fiscal stimulus will be launched for the economic recovery. Rising tensions between Republicans and Democrats have made it unlikely before Nov 3 election.

Headliner to Watch

  • Public Sector Net Borrowing will be released, expecting to rise from 25.9 billion to 40.6 billion.

  • US Durable Goods Orders m/m and Core Durable Goods Orders m/m will be released, expecting to decrease from 2.6% to 1.0% and 11.4% to 1.1%.

  • FOMC Member Williams will speak at GMT 03:10 on 26 Sep.

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Antony Tan
Ben Li
Kevin Jock