DAILY ANALYSIS 29 AUGUST 2022

• Indices from Asia-Pacific are trading lower at the start of a new week, reacting to the disastrous US trading session on Friday. Nikkei drops 2.5%, S&P/ASX 200 trades 1.9% lower and Kospi dips 2.0%. Indices from China trade 0.1-1.2% lower
• European and US index futures are trading lower at the beginning of a new week. DAX futures currently trade almost 200 points below Friday’s cash close

• ECB Schnabel said that rates must be raised even if it leads to a recession
• ECB Villeroy said that he expects a significant rate hike at September’s meeting and that rates will get to neutral levels by year’s end
• ECB Rehn said that the central bank is monitoring the exchange rate and that he is concerned about current euro valuation. ECB Kazaks also said he is not happy with were EUR trades
• John Kirby, member of US National Security Council, said that US and Iran are closer to the deal than they were 2 weeks ago but some issues remain unresolved
• Bloomberg estimates that if deal is reached, Iran may be able to quickly release oil to the markets as it has over 90 million barrels stored on tankers
• Goldman Sachs expects the UK economy to enter recession in Q4 2022. The bank also lowered the 2022 UK GDP forecast from 3.7 to 3.5%. Forecast for 2023 was lowered from 1.1 to 0.6%

• Chinese industrial profits dropped 1.1% YoY in the January-July period, down from +1.0% YoY for January-June period
• Australian retail sales increased 1.3% MoM in July (exp. 0.3% MoM)
• Cryptocurrencies are plunging on the overall increase in risk-aversion. Bitcoin trades 0.9% lower and drops below the $20,000 mark. Ethereum drops 2.2%  while Dogecoin trades 3.3% lower
• In spite of an increase in risk-aversion, oil is trading higher. Both Brent and WTI trade around 1.2% higher at press time
• Precious metals are trading lower amid USD strengthening – gold drops 0.7% while silver trades 1.2% lower
• USD and CAD are the best performing major currencies while JPY and GBP lag the most

USD index (USDIDX) extends gain at the beginning of a new week. Index launched a new week with a bullish price gap and broke above the short-term downward trendline. USDIDX trades at the highest level since September 2002.