NZD and GBP under pressure. Wall Street indices are stabilizing

07.09.2020 10:35|Conotoxia Ltd Analyst Team

After last week's sell-off on Wall Street, today's stock indices in Asia seem to be falling. Investors may be dissatisfied with the fact that Tesla shares have not been included in the S&P 500 index, which, among other things, the market has been playing hard before, hoping for another inflow of capital from index funds.

At the weekend, the Financial Times reported that SoftBank became significantly involved in the trade of options on American shares, which was only to fuel further increase in the market recently. The amount of the transaction was in the order of USD 4 billion and one of the largest bets on the Nasdaq exchange. Today, the shares of the Japanese conglomerate were sold out by investors as soon as they found out how much risk the company took. Softbank's shares fell by more than 7%. Returning to the United States, where initially the futures contracts fell by more than 1%, they now return to the opening area. After two consecutive declining days on Wall Street, American politicians have said that they want to introduce more economic stimulus packages.

At the beginning of the week, oil was also falling. The barrel of WTI oil was cut by over 3% for a while, and then the losses were reduced to around 1%, i.e. to USD 39.50. One of the reasons seems to be the reduction of the price for October supplies by Saudi Arabia, when the summer season for traveling by car is over and because many countries are still struggling to control the epidemic.

In turn, the New Zealand dollar (NZD) seems to fall on the currency market this morning after the RBNZ (Reserve Bank of New Zealand) reported that it is preparing a package of additional monetary policy measures and will introduce them if needed. The market expects that next year interest rates in the NZD will be negative. The GBP/USD exchange rate also seems to be declining after Prime Minister Boris Johnson may announce a move away from the negotiating table rather than a compromise on Brexit.

Today is a day off in Canada and the United States due to Labour Day, so it seems that the markets will only be fully operational tomorrow. Let us recall that already on Thursday 10th September the decision on interest rates of the European Central Bank will be published. After the Fed has changed its inflation target, the market seems to be counting on the ECB to relax its monetary policy.


Daniel Kostecki, Chief Analyst Conotoxia Ltd.

Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.

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71.98% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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