Daily market analysis

JUN 05,2020

June 5, 2020
   

Daily Market Analysis

Market Focus

 

The major indexes in the US started the day off slightly lower on Thursday as the risk rally has finally slowed down on its momentum. The weekly data released earlier in the day revealed that more than1.87 million Americans have applied for unemployment benefits last week, a figure that is worse than the market’s expectation of 1.80 million, which in turn, weighed down on the market sentiment. Additionally, the US international trade deficit in May has increased from $42.3 billion dollars to $49.4 billion from April.

 

Another noticeable fluctuation in the US equity market is that the Energy Index of the S&P500 sectors was down 1.2% during early trading hours today amid uncertainty around the OPEC+ meeting.

 

Market Wrap

  • Dow Jones down02%, S&P500 down by 0.41% and Nasdaq down by 0.77%
  • WTI July decreased by $0.08 to $37.37, and Brent Oil July decreased by $0.55 at $39.99 while near closing.
  • Dollar Index down 0.57%.
  • Gold up 0.94%% and sit around $1714
  • AUDUSD up 0.35% to 0.6943
  • EURUSD up 0.91% to 1.1335
  • GBPUSD up 0.17% to 1.2595
  • NZDUSD up 0.67% to 0.6462
  • USDCAD up 0.02% to 1.3497
  • USDJPY up 0.20% to 109.15

 

Main Pairs Movement

 

Gold printed fresh daily highs after a short-lived correction to $1700 following the beginning of the American session. The precious metal seems to find a firm support above the $1690 region that has become a critical barrier. Furthermore, XAUUSD avoided a consolidation under $1700 and rebounded despite higher US yields and the rally in Wall Street.

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Recent rally on oil prices seems to have stalled this week, with WTI front-month crude oil futures trading sideways around $37 on Thursday after peaking at $38.15 on Wednesday. The positive momentum of the oil has seemed to come to an end with the uncertainty surrounding the OPEC+ meeting to review the production cuts. The negative pressure was further exerted when the US Energy Information Administration on Wednesday revealed an increase in the gasoline and distillate stockpiles.

 

The AUDUSD remained on the defensive through the Asian session on Thursday and has been trading around the 0.6900 mark. GBPUSD trades closer to 1.26, buoyed by USD weakness stemming from a better market mood and by the fact that markets are shrugging off concerns about a no-trade-deal Brexit.

 

COVID-19 Data (EOD):

Technical Analysis:

USDJPY (H4)

The USDJPY pair retook the 109.00 level on Thursday and extended its head-turner role. The rally of USDJPY has rallied to test the resistance around 109.35 while the DXY has dropped to the lowest levels since March 9th. This move can be associated with increasing demand for USD in both industry and financial transactions. We expect the pair to fluctuate in between 108.75 and 109.50 for a bit.

 

Resistance: 109.00, 109.35

Support: 107.75, 107.95, 108.30

 

USDCAD (H4)

USD has further depreciated against its Canadian counterpart for the fourth straight days, reaching fresh three-month lows at 1.3468. Despite the fact that CAD’s demand has been capped with oil prices stalled and Canadian trade balance figures showing downtrend readings, the extensive selling pressure on USD, the USDCAD is still kept around the 1.3500 area. The pair is likely to remain choppy through the remaining week, waiting for OPEC+ meeting on June 9-10.

 

Resistance: 1.3565, 1.3735, 1.3856

Support: 1.3385, 1.3460, 1.3500

 

EURUSD (H4)

EURUSD pair ended the day piercing through 1.1330 region after the ECB announced an additional 600 Euro billion in QE. At the same time, the US employment related data appears to be quite weak ahead of Friday’s Nonfarm Payroll report. The greenback still remained under pressure and thus we expect the pair to persist its positive momentum.

 

Resistance: 1.1370, 1.1490

Support: 1.0986, 1.1100, 1.1190

 

Economic Data

Currency

Data Time (TP) Forecast Exposure

(Our side)

USD

Nonfarm Payroll 20.30 -8,000k

USD

Unemployment Rate 20.30

19.8%

CAD Employment Change 20.30 -500.0k

CAD Ivey PMI 22.00

 

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