Global stock markets started the week quite strong
Market Focus US stocks surged, with tech shares pushing Nasdaq Composite to a record high. The DXY continued to fall for a fifth day while US Treasuries dipped. On the same note, the S&P 500 index headed towards its fifth increase as Amazon shares achieved the $3,000 threshold for the first time and Tesla extended its 5-day rally to about …
US stocks surged, with tech shares pushing Nasdaq Composite to a record high. The DXY continued to fall for a fifth day while US Treasuries dipped. On the same note, the S&P 500 index headed towards its fifth increase as Amazon shares achieved the $3,000 threshold for the first time and Tesla extended its 5-day rally to about 40%. Overall, the dollar’s weakness has been the story of the day as it has officially slid to its weakest level since June 10 with risk-on sentiment diminished the demand for havens and drove equities higher.
Global stock markets started the week quite strong with Stoxx Europe 600 Index climbed 1.6% and developing countries’ stocks added 2.5% as a result of the Chinese markets pushing a global equity benchmark toward a one-month high.
GBPUSD is trading higher, reaching 1.25. The overall risk-on market sentiment is boosting Sterling. Even though BOE Gov Bailey reportedly raised the potential option in negative interest rates, the market seems unaffected. The USDCAD, on the other hand, dropped to 1.3518 on Monday, finding support at the lowest level in two weeks, and rebounded back up to 1.3560 to close the day.
Gold rose slightly by about 0.50% on the day, extending its well-performance despite a risk-on market while the demands for the greenback fades away. In terms of black gold, like most commodities, WTI is still struggling to find sustainable demands with the ongoing COVID-19 crisis.
EURUSD has surged above 1.13 price level, hitting the highest level in nearly two weeks. The sudden surge in the pair is mainly driven by the unexpectedly better ISM Non-Manufacturing PMI number of 57.1 and China’s bullish equity market. Both statistics weighed down on the safe haven dollar as investors regain confidence amid the intensifying coronavirus situation in the US. According to EURUSD’s 4-hour chart, the pair appears to be sitting well above its moving average, which in turn, suggests the pair would retain its bullish momentum in the short term.
Resistance: 1.1350, 1.1388, 1.1420
Support: 1.120, 1.1230, 1.1265
Following the weakened DXY, the USDJPY pair has made a slight dip in its price for the day. However, this is an uncommon scenario as USDJPY usually moves higher with the US stock markets. One plausible explanation is that despite the market’s risk-on sentiment, concerns over potential risk of the coronavirus’ outbreak still preserves the upbeat momentum of yen. Under this mixed situation, with yen’s strength, USD’s weakness, and growing equity markets, USDJPY is likely to stay choppy between 107.40 and 107.70 range in the upcoming trading days.
Resistance: 107.45, 107.67, 108.18
Support: 106.00, 106.63, 107.05
AUDUSD is approaching a one-month high at 0.7000 as the global appetite for equities improved. Additionally, the commitment from the Chinese government to uphold the economy has also helped the AUD to gain some traction as well. Looking at the chart, AUDUSD appears to struggle a bit at the resistance around 0.6980. At the same time, the RSI has just pulled away from the overbought zone, which in turn, implies the AUDUSD price is overstretched and a pullback is expected to take place before the pair rise again.
Resistance: 0.6985, 0.7015, 0.7060
Support: 0.6800, 0.6855, 0.6900
Due to US Independence Day, liquidity was drained out in forex market
Market Focus Investors continue to weigh signs that global economies are on the mend against relentless new outbreaks of the virus. US payrolls data Thursday fueled optimism of a V-shaped recovery in the world’s biggest economy. Australia’s Retail Sales for May printed 16.9%, slightly above estimate of 16.3%, a big leap from previous -17.7%. While China’s June month Caixin Services …
Investors continue to weigh signs that global economies are on the mend against relentless new outbreaks of the virus. US payrolls data Thursday fueled optimism of a V-shaped recovery in the world’s biggest economy.
Australia’s Retail Sales for May printed 16.9%, slightly above estimate of 16.3%, a big leap from previous -17.7%. While China’s June month Caixin Services PMI grew past-49.9 expected and 55 prior to 58.4.
Due to US Independence Day, liquidity was drained out in forex market, all major pairs were traded in tight range.
Cable has broken its downward trend line from mid-June and bounced to challenge 38.2% Fibonacci at 1.253, but failed to advance beyond this level. The bullish reversal may move ahead of itself, if price can retrace towards1.24 without breaching lower, then the current bullish run could be sustainable.
Resistance: 1.253, 1.267, 1.2788
Support: 1.24, 1.2268, 1.218
Aussie is kept within a tight range, depressed liquidity from US Independence Day has added noise to price momentum. The near-term trend favors the bull as price sits comfortably in Bollinger’s upper region, but whether it could overcome resistance band of 0.6967 – 0.702 within the next few trading days remains questionable.
Resistance: 0.6967, 0.702, 0.712
Support: 0.6897, 0.6803, 0.6669
Gold’s bullish bias is still intact and RSI shows price is far from overbought, which provides plenty space for the precious metal to climb. Bulls are looking over $1786 hurdle, and $1800 target remains a distinct possibility. On the flip side, failure to defend $1760 could result in a bearish reversal, which would possibly prompt some aggressive selling.
Resistance: 1786, 1819, 1836
Support: 1761, 1742, 1722
The US non-farm payrolls data is better than expected
Market Focus The US Nonfarm Payroll report showed that the country has added 4.8 million new jobs in June while the unemployment rate dropped to 11.1%, both much better than anticipated. However, other employment related data such as the Average Hourly Earnings missed market’s expectations. Ahead of the release, equities were up, and data further boosted the market’s optimism. The …
The US Nonfarm Payroll report showed that the country has added 4.8 million new jobs in June while the unemployment rate dropped to 11.1%, both much better than anticipated. However, other employment related data such as the Average Hourly Earnings missed market’s expectations. Ahead of the release, equities were up, and data further boosted the market’s optimism.
The good news and the upward momentum were short lived as new COVID-19 cases continue to increase in the US with over 51,000 new cases reported. As a result, major cities in New York and California have declared the postponing re-opening of indoor activity.
Wall Street trimmed early gains, with the three major indexes closing the day with only modest gains. US bond yields were marginally higher. Gold bounced back from 1757 and closed the day around 1776. Crude Oils remained within similar levels, with WTI stuck around 40.00 a barrel. Additionally, concerns over COVID-19 and the global economic recovery are weighing down on the USDJPY as the investors began to question the safe haven qualities of the greenback. On the other hand, amid a mixed market sentiment throughout the day, AUDUSD pair experienced a seesawed day with minor gains and losses for a second consecutive day.
US Unemployment rate turned out to be much better than market’s expectation (Actual: 11.1%; Forecast: 12.3%), which in turn, initiated a rally across major Wall Street’s indexes. As a result, the safe-haven metal dropped down to 1757. Nevertheless, the gold has surged back from the lows and is currently trading at daily highs, nearing the 1780 range. The bullish momentum remains intact in XAUUSD but is facing strong resistance approaching the 1800 region. A consolidation between 1765 and 1775 seems more likely as the market waits for further data and market sentiment amid the second wave of coronavirus.
Resistance: 1800, 1789, 1780
Support: 1760, 1753, 1748
The EURUSD was rejected at the 1.1300 area earlier today and has retreated towards 1.12300 during the US afternoon trading session. The better than expected US Non-Farm Payrolls have elevated market sentiment on Thursday, weighing down on the demand for the greenback. However, the euro still fails to take advantage of the dollar’s weakness as the unemployment rate across the Euro area continues to tick up. We expect the pair to first find a support around 1.1240 area before rebounding back to the 1.1300 levels.
Resistance: 1.13000, 1.13300, 1.13626
Support: 1.11760, 1.12080, 1.12240
After hitting above 1.3600 in the early trading hours, the Loonie is unable to gain traction and dropped below 1.35670. The strong US data pushed the greenback higher today, but the pair remains quite flat as oil price has supported CAD to offset the USD strength. Overall, as various US cities are going back under lockdown, the likelihood of the greenback to sustain its strength becomes slim. With that being said, we believe there is still space for the pair to move lower if a new round of selling momentum takes place.
Resistance: 1.3623, 1.3673, 1.3720
Support: 1.3560, 1.3524, 1.3485
Dollar weakened across the board and the dollar index dropped
Market Focus ISM Manufacturing PMI rose to 52.6 from previous 43.1, beating estimate of 49.5. The printed figure was the highest number recorded in a year. ADP’ private-sector jobs rose by 2.369 million in June, ADP Research Institute vice president said “as the economy slowly continues to recover, we are seeing a significant rebound in industries that once experienced the …
ISM Manufacturing PMI rose to 52.6 from previous 43.1, beating estimate of 49.5. The printed figure was the highest number recorded in a year. ADP’ private-sector jobs rose by 2.369 million in June, ADP Research Institute vice president said “as the economy slowly continues to recover, we are seeing a significant rebound in industries that once experienced the greatest job losses.”
China decided to impose new security laws in Hong Kong after a year of pro-democracy protests. The national security law is aimed at punishing acts of secession, subversion of state power, terrorism and “collusion with foreign and external forces to endanger national security. According to the draft bill, China will establish a new bureau in Hong Kong to analyze the security situation and collect intelligence. US Secretary of State Michael Pompeo said Hong Kong could no longer be considered sufficiently autonomous, and Donald Trump is considering revoking some or all of its special trade privileges.
Key highlights of FOMC minutes:
Fed officials agreed on need for more analysis for Yield-Curve-Control.
Planning on beefing up its forward guidance for interest rates in the coming months.
Fiscal policy could potentially represent a big downside risk.
Negative interest rates did not appear to be an attractive policy tool.
Dollar weakened across the board, the dollar index dropped 0.23% to 97.15. Most majors were climbing against the greenback prior to US market open. Possible mover could be Biopharmaceutical New Technologies’ announcement on Wednesday that the COVID-19 vaccine that they co-developed with Pfizer triggered a strong immune response in the early stage of human trials, thus triggering risk-on mood.
USDJPY is hovering above the edge of the upward trending support line, currently trading at 107.46. A clear downward breakout might push price toward 100 SMA and 50 SMA cross. Otherwise, any moves beyond 200 SMA should strengthens the current upward trend. RSI retraces back to 50 midline after briefly touched 70 overbought yesterday.
Resistance: 107.93, 108.55, 109
Support: 107.09, 106.53, 106
Cable was trapped in the Bollinger’s lower region since last Wednesday, and finally made a bullish reversal during yesterday’s US session. The pair continued to stay within the upper region throughout Wednesday and broke the downward trendline since mid-June. RSI is approaching 70, and price sitting outside of Bollinger upper bound, these combined to favor bear in the near term.
Resistance: 1.2536, 1.2627, 1.2753
Support: 1.2427, 1.2363, 1.2268
USDCHF is capped below SMA100 and SMA50. Price tested 0.9443 three times in the last five trading days, it has yet to make a lower-low on the four-hour chart, if it does then bear will take the driver seat. Looking downward, 0.9391 will be the first resistance line followed by 0.9325.
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