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Daily market analysis

JUN 17,2020

June 17, 2020

Daily Market Analysis  

 

Market Focus

Stocks rose for a third day as optimism over a recovering U.S. economy overrode concern that coronavirus cases are worsening in locations ranging from Texas to China. Treasury yields rose and the dollar strengthened.

At the same time, U.S. reports showed it retail sales soared by a record 17.7% in May. Still, separate data also showed U.S. industrial production rebounded by less than forecast –15.27% in May after a record slump a month earlier. The S&P 500 climbed 1.9% with energy, health care and materials lending all 11 industry sectors higher in the biggest gain in more than a week.

The Trump administration is preparing a nearly $1 trillion infrastructure proposal as part of its push to spur the economy, according to people familiar with the plan.

 

Key takeaway for Fed’s testimony:

  • Fed chairman said the U.S. economy may be entering a period of significant improvements in employment, but on that will leave the labor market “well short” of the robust levels seen just before the pandemic.
  • The levels of output and employment remain far below their pre-pandemic levels and significant uncertainty remains about the timing and strength of the recovery.
  • Powell said policy makers were in the early stage of evaluating that using yield-curve control.

 

Market Wrap

  • Dow Jones up 2.02%, S&P500 up 1.88 % and Nasdaq up by 1.75 %
  • WTI July slightly up by $0.81 to $37.93, and Brent Oil July rallied by $0.94 to $40.66 while near closing.
  • Dollar Index down by 0.36%.
  • Gold up 0.08 % and sit around $1726.53
  • VIX down 2.12% to 33.7
  • AUDUSD down 0.43% to 0.6889
  • EURUSD down 0.52% to 1.1264
  • GBPUSD down 0.25% to 1.2573
  • NZDUSD down 0.36% to 0.6451
  • USDCAD down 0.23% to 1.3541
  • USDJPY down 0.01% to 107.32

 

Main Pairs Movement

Greenback advance versus most of its G-10 currency peers after Beijing city officials said schools will be shut amid a resurgence in coronavirus cases, stock demand for havens. On the other hands, Fed chairman said significant uncertainty remains about the timing and strength of the recovery.

The yen and the franc also climbed versus most counterparts. The Bank of Japan left its main monetary policy settings untouched and revised the estimated size of its virus response measures, while pledging to do more if needed. Treasury yields rose as traders digested Fed’s comments that the economy may be bottoming.

 

COVID-19 Data (EOD):

Technical Analysis:

 

EUR/USD (H4)

EUR/USD retreated from daily high at 1.134 around, with increasing consolidation pattern in the short-term. So far, we expect it will sink into choppy pattern around range between 1.1204 and 1.14. There is no major eco data in this week, but Brexit news will give it momentum.

 

Resistance: 1.1356, 1.14, 1.149

Support: 1.1230, 1.1204, 1.112

 

XAU/USD (H4)

Gold rose slightly up for the as U.S. Fed statement that give it some hedge purpose for uncertainty economy recovery from the pandemic. Notwithstanding uncertainty surround the market throughout outbreak in China but dwindle fears on shares market performance is driving most on gold. Meanwhile, gold is consolidating between 1680 and 1745 without obviously move in short term.

 

Resistance: 1746, 1754.81, 1766.23

Support: 1665, 1691, 1710

 

USD/JPY (H4)

Although USD has outperformed most of its rivals today with its upbeat Retail Sales data, USDJPY did not show any apparent trend. However, the 4 hour chart candlesticks did show the pair to have long tails and short bodies throughout the day. This is probably because even though the US data has surpassed investors’ expectation, demands for safe-haven assets are still high amid current uncertainty over the global economic outlook. With that being said, we expect the USDJPY pair to fluctuate between 107.210 and 107.650 until the next major event takes place.

 

Resistance: 107.510, 107.655, 107.795

Support: 107.055, 106.860, 106.585

 

Economic Data

Currency

Data Time (TP) Forecast Exposure

(Our side)

GBP

CPI (YoY) (May) 14:00 0.5% -39 m
EUR CPI (YoY) (May) 17:00 0.1%

89 m

USD Building Permit (May) 20:30 1.228M

-205 m

CAD

Core CPI (MoM) (May) 20:30   -19 m
Oil Crude Oil Inventories 22:30 -0.152M

-91 k

 

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