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Daily market analysis

January 20, 2021

Daily Position Report

Market Focus

U.S. stocks rose, led by gains in tech shares and small caps, with Wall Street parsing the latest earnings ahead of a flood of reports this week.

The S&P 500 Index rebounded from Friday’s selloff after a three-day weekend that brought little by means of fresh macro news. Ten-year Treasury yields climbed back toward 1.1% and the dollar weakened. Crude oil and emerging markets also advanced. Goldman Sachs Group Inc. turned lower even after reporting that profit more than doubled. Bank of America Corp. shares edged higher after its results. General Motors Co. rose to a record after Microsoft Corp. invested in its self-driving car startup. Netflix Inc. reports results after markets close.

Janet Yellen encountered early Republican resistance to President-elect Joe Biden’s $1.9 trillion Covid-19 relief plan in her confirmation hearing to become Treasury secretary. Donald Trump is in the final hours of his term, with Biden to be sworn in at noon Wednesday in Washington.

Hong Kong Stocks at 20-Month High as Record China Cash Floods In. The market moves on Tuesday show that investors are coming back to the reflation trade, betting that the incoming U.S. administration will use its legislative firepower to propel economic growth. Biden’s stimulus package includes measures like a minimum-wage hike and substantial expansion in family and medical leave — programs that have already triggered Republican opposition.


Market Wrap




Main Pairs Movement

The greenback held modest losses for a second session amid light turnover after U.S. Treasury Secretary nominee Janet Yellen noted a preference toward a market-driven approach to American currency policy. The loonie gained ahead of the Bank of Canada’s monetary policy meeting on Wednesday.

The euro gained on improved risk sentiment, as well as corporate and options demand after several billion euros in higher struck options expired. The pound ticked higher after Bank of England Chief Economist Andrew Haldane said the bounce back from Covid may be sharper than the financial crisis. The Canadian dollar gained for the first time in three days.

USD/JPY is +0.2% after climbing as much as 0.4% to 104.09. The yen fell amid cross demand against the euro and Australian dollar, according to multiple Asia-based FX traders.


Technical Analysis:

GBPUSD (4 Hour Chart)

Sterling is edging above 1.36 as market eagerly Treasury Secretary nominee Janet Yellen’s testimony. The U.K. parliament is set to process the Brexit deal as Britain ramps up its vaccination campaign.

For technical aspect, MACD indicator is retreating from negative mire and spiraling the momentum at 0 level. RSI give another strong signal, indicator continues pick-up from neutral level to 55 as of writing, suggesting a positive phenomenon. As price action, sterling been through a “v shape pattern” reverse from last lowest level at 1.3618. For short-term, combing evidence that probably would give it an upward momentum. However, in bigger picture, consolidation range is still trapping sterling price momentum in nearly 2 months. Therefore, we expect 1.37 level remain a powerful resistance at top of consolidation, before that, barricade be eye on 1.3678. On contrast, first pivot of support is shoulder of “v shape pattern” at 1.3618 and 1.3541 is following behind.

Resistance: 1.3678, 1.37

Support: 1.3618, 1.354, 1.3448


USDJPY (4 Hour Chart)

Yen retreated consecutive from 104 and fell to 103.84, the lowest level since the Asian session. It is moving with a bearish bias, still positive for the day but off highs. A decline in U.S. yields and a correction in shares prices weakened the pair.

For technical perspective, RSI indicator remained above 50 then hold at 53 girds, suggesting a bullish trend further. On the other hands, Moving Average indicator give divergently signal for further movement. Short-term indicator ongoing flat momentum, but long-term indicator hold ascending trend that death cross at current stage. Therefore, we expect yen would still lack of price momentum as mixed guidance from indicators. So, according to price action, first resistance would be 104 level, piling by price densely area, the next strong resistance would be 104.25. On slid way, first resistance would be 103.65, confirmative strong price densely area.

Resistance: 104, 104.25

Support: 103.65, 103.54


XAUUSD (4 Hour Chart)

Gold tepid around 1838 as markets looking forward to Biden inauguration and “American Rescue Plan” ahead. In other words, market is really lack of momentum trigger before release any practical contents of rescue plan. On the other hands, 10 years Treasuries yield move slightly then close at 1.09% without any heralded sign.

For technical perspective, short and long-term SMAVG indicator still tamp down, but short one is getting flat at the moment which giving a sputter market guideline. On RSI side, indicator beneath 50 thresholds then close around 47, suggestion a bearish sign. Therefore, combing contrast suggestion from aforementioned technical indicator, we expect gold would haggle at current stage. On slid way, 1823 level be a strong support from longstanding picture.

Resistance: 1844.27, 1856, 1863.44

Support: 1823.4, 1815.08, 1804.15


Economic Data

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