Market Commentary – September 29, 2020

Kevin Jock

29th September 2020

Sterling increases broadly yesterday after Bank of England (BoE) Deputy Governor voiced strong opposition to setting negative interest rates, saying that the benchmark could not be lowered any further without counter-productive results. “I see the effective lower bound [for interest rates] still at 0.1 per cent which is where Bank rate is at present. It is useful to stress that,” Dave Ramsden, deputy governor for markets and banking, said.


Figure 1 (Source: IS Prime): GBPUSD 1-Year Chart


Australian dollar recovers mildly as markets are expecting RBA rate cut in October. Dollar is the weakest one currently, paring back some of the gains last week.

COVID-19 has spread to almost every country globally for 9 months, infecting at least 33 million people worldwide and has killed more than 1 million people. The US accounts for more than 20% global deaths and has most fatality count, with more than 200,000 deaths. US is not in a good place as the number of infections per day still keeps at around 40,000. The top five nations right now are US, India, Brazil, Russia and Colombia. There is upward trend in Europe.


Headliner to Review

  • European Central Bank (ECB) Pandemic Emergency Purchase Programme (PEPP) has been extremely helpful and efficient, Christine Lagarde, President of ECM told EU Committee on Economic and Monetary Affairs.
  • From the summary of Bank of Japan (BOJ), “We may need to debate the appropriate monetary policy path from the perspective of how to balance the need to contain the pandemic and keep the economy alive,” The BOJ kept policy unchanged this month and offered a more upbeat view of economy than in July. It is suggested that there is no immediate expansion of plan was needed.
  • Tokyo Core CPI y/y increased from -0.3% to -0.2%, compared with the expected -0.3%. The core consumer price index for Japan’s capital, which includes oil products but excludes fresh food prices.

Headliner to Watch

  • US CB Consumer Confidence will be released, expecting to increase from 84.8 to 90.0.
  • US Goods Trade Balance expected to decrease from -79.3 billion to -81.8 billion.
  • Prelim Wholesale Inventories m/m expected to increase from -0.3% to -0.1%.
  • Economic figures in UK including M4 Money Supply m/m, Mortgage Approvals and Net Lending to Individuals m/m will be released soon.
  • China Manufacturing PMI expected to increase from 51.0 to 51.3 while Non-Manufacturing PMI expected to decrease from 55.2 to 54.6.

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Antony Tan
Ben Li
Kevin Jock