Daily market analysis

JUN 04,2020

June 4, 2020
   

Daily Market Analysis

Market Focus

 

The market remained in risk-on mode on Wednesday, making the USD continue to lose further. S&P 500 is trading at levels that have not been seen since early March 2020, NASDAQ has closed up by 68.36 points, and Dow Jones closed up by 522.565 points.

The DXY remains under the bearish pressure and has broken below the 97.50 region, sinking towards the 97.00 area.

Despite WHO’s concerns regarding the rapid virus outbreak in Central and South America, the risk-on sentiment remains the theme on hopes of a vaccine. Currently, people are expecting to see the economies open up and V-Shape recoveries in the economic data.

 

Market Wrap

  • Dow Jones up03%, S&P500 up by 1.32% and Nasdaq up by 0.71%
  • WTI July decreased by $0.48 to $37.29, and Brent Oil July decreased by $0.13 at $39.44 while near closing.
  • Dollar Index down 0.38%.
  • Gold dropped 1.5% and sit around $1698
  • AUDUSD up 1.45% to 0.6936
  • EURUSD up 0.53% to 1.1236
  • GBPUSD up 0.40% to 1.2591
  • NZDUSD up 1.244% to 0.6430
  • USDCAD drop 0.19% to 1.349
  • USDJPY up 0.19% to 108.905

 

Main Pairs Movement

 

As the selling pressure continues to exert its influence on USD, pairs such as EURUSD, GBPUSD, and USDCAD have all witnessed appreciation today. EURUSD hit a daily high of 1.1251 because the upbeat US data has only encouraged the market sentiments in the equity markets, which in turn, weighed down on the greenback.

GBPUSD, on the other hand, reached 1.2614 but gradually dropped from the high as investors fear the UK and the EU will not come to an agreement on the post-Brexit deal. The Bank of Canada left rates unchanged, indicating an optimistic sentiment was among the policymakers. Additionally, the central bank also announced that it will be reducing the frequency of its term repo operations to once per week, and its program to purchase bankers’ acceptances to bi-weekly operations. With the positive news releasing, the Canadian dollar appreciated further and reached above 1.3500.

Gold lost the 1700 mark on the back of risk appetite, and Crude Oil prices eased from highs despite the fact that OPEC is willing to extend its output cuts.

 

COVID-19 Data (EOD):

Technical Analysis:

XAUUSD (H4)

XAUUSD has lost more than $20.00 dollars on Wednesday and has depreciated beyond 2.5% over the past two days. Currently, hopes that global economic will recover in the second half of the year and a strong US economic data supporting the equity market’s growth have collectively weighed down on the precious metal. We expect the overall risk-on appetite across the globe is likely to keep the safe-haven metal between 1690 and 1700 region.

 

Resistance: 1709.65, 1728.40, 1746.00

Support: 1665.05, 1671.90, 1690.00

 

AUDUSD (H4)

AUDUSD has tested the 0.7000 level in the early trading hours, but the pair retreated afterwards. AUD/USD broke through a fresh 5-month highs as the USD selloff remains unabated. The rally of the AUD is majorly supported by the investors’ confidence in Australia being the first economies to recover from the pandemic. Earlier in the day, Chinese Caixin Service PMI has made an extensive improvement to 55.00 from April’s 50.3 level, boosting investors’ hope that Asian economies would pull Australian economy. We expect the pair to stay choppy and test the 0.700 resistance level but is unlikely to pierce through immediately.

 

Resistance: 0.6955, 0.7000

Support: 0.6680, 0.6770

 

EURUSD (H4)

The euro dollar is likely to announce a 250-euro billion addition to PEPP and a 10-bps cut in the discount rate. Although a headline regarding a rate cut could cause euro to wobble, in the current environment investors are more likely to see further policy action as more reason to plough more money into peripheral assets, which could bring some support to euro.

However, the current bullish market may further in near-term and up-move is further to go. Yet, we remain skeptical at present that witnessed and enduring movement in the direction. The Dec high at 1.1241 could give it some resistance.

 

Resistance: 1.1241, 1.1258

Support: 1.1161, 1.1105, 1.0986

 

Economic Data

Currency

Data Time (TP) Forecast Exposure

(Our side)

GBP

Construction PMI 16:30

29.7

EUR Deposit Facility Rate 19:45 -0.50%

EUR ECB Monetary Policy Statement 19:45

EUR ECB Interest Rate Decision 19:45 0.00%

USD

Initial Jobless Claims 20:30 1,800k
EUR ECB Press Conference 20:30

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