Daily market analysis

JUN 12,2020

June 12, 2020
   

Daily Market Analysis

Market Focus

The Dow Jones Industrial Average extended its rout to 7%, with all of its 30 companies dropping. The S&P 500 slumped almost 6%, approaching the 7% threshold that would trigger an exchange-mandated trading pause. Airlines, cruise operators and travel companies that soared in recent weeks bore the brunt of the selling. Treasury 10-year yields fell to as low as 0.65% while the dollar jumped.

While much of the equity selling owed to the frantic pace of the recent rally, sentiment did sour as signs mounted that a possible second wave of the pandemic could be taking hold in some states. U.S. jobless claims remained high, underscoring the longer-term challenges caused by the pandemic. The report came out a day after the Federal Reserve provided a dour outlook for the economy.

 

Market Wrap

  • Dow Jones down 6.9%, S&P500 up down 5.89% and Nasdaq up by 0.28%
  • WTI July down by $4.07 to $35.86, and Brent Oil July up down $2.67 at $38.55 while near closing.
  • Dollar Index up by 0.79%.
  • Gold down 0.63% and sit around $1727
  • AUDUSD down 2.1% to 0.68530
  • EURUSD down 0.7% to 1.129
  • GBPUSD down 0.79% to 1.2605
  • NZDUSD down 1.53% to 0.6429
  • USDCAD up 1.63% to 1.36294
  • USDJPY down 0.81% to 106.851

 

Main Pairs Movement

 

The EURUSD is trading at daily lows and nearing the 1.1300 level as Wall Street’s collapse backed the demand for the safe-haven dollar. Fed’s echoes still taking their toll on financial markets.

A dovish US Federal Reserve undermined the market’s mood. US initial jobless claims for the week ended June 5 are foreseen at 1.55 million, causing USDJPY pair to struggle around 107.00 after hitting a fresh three-week low.

Gold attracted some buying interest near the $1722 pivotal zone and jumped to over one-week tops during the early North American session.

 

COVID-19 Data (EOD):

Technical Analysis:

USDJPY (H4)

A dovish US Federal Reserve undermined the market’s mood. Additionally, US initial jobless claims for the week ended June 5 are foreseen at 1.55 million, causing USDJPY to struggle at 107.00 after a fresh three-week low. Heightened concerns for the second coronavirus outbreak have driven the investors away from the risk assets, which in turn, indicates that the market mood has gradually transferred to a risk-off sentiment. As a result of that, we expect the pair to first find a support at the 106.77, but considering the fact that risk off sentiment has weighed on investors, it is likely that the USDJPY pair to turn south down the road.

 

Resistance:107.4, 107.86

Support: 106.00, 106.40, 106.75

 

USDCAD (H4)

After a couple weeks of trading in the lower areas, USDCAD has finally found its traction and has risen on Thursday. The main reason for this surge is because the general commodities weakness has pushed all the major commodities currencies to lower on Thursday. In particularly, as Oil dropped 8% in the early trading hours, the CAD immediately reacted to the weakened liquid gold, and hence triggered the pair to surge upward. We expect the pair to consolidate around 1.3650 regions and test the next resistance around 1.3688.

 

Resistance: 1.3688, 1.3840, 1.4154.

Support: 1.3327, 1.3385, 1.3475

 

GBPUSD (H4)

In the latest headlines said Brexit negotiations will now intensify with weekly talks throughout July and into early August in the hope of a breakthrough. Meanwhile, UK still suffering from relatively elevated COVID-19 cases and there are fears of the R-rate rising back above 1. UK economy is set to be the hardest hit among the world’s developed countries due to the pandemic.

Resistance: 1.268, 1.2739, 1.2811

Support: 1.25395, 1.2485, 1.23935

 

Economic Data

 

Currency

Data Time (TP) Forecast Exposure

(Our side)

GBP

GDP (MoM) 14.00 -18.7% -47M
GBP GDP (YoY) 14.00 -22.3%

-47M

GBP

Manufacturing Production (MoM) 14.00 -15.8%

-47M

GBP Monthly GDP 3M/3M Change 14.00 -10.0%

-47M

 

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The information provided is of a general nature only and the advice has been prepared without taking account of your objectives, financial situation or needs.