Daily market analysis

JUN 16,2020

June 16, 2020

Daily Market Analysis

Market Focus

The dollar swung at equities’ rhythm this Monday. The greenback benefited from safe-haven demand throughout the first two sessions of the day, amid concerns of a second wave of coronavirus contagions across US states and Chinese cities. However, during the US session, the Fed announced that it would begin buying a broad, diversified portfolio of corporate bonds, which in turn, sends Wall Street main indexes into the green and causes the dollar to turn south.

Despite US Treasury yields finished the day with little changed, trimming early losses when Wall Street recovered, the pandemic concerns still hover in the background.

 

Market Wrap

  • Dow Jones up 0.62%, S&P500 up 0.83 % and Nasdaq up by 1.71 %
  • WTI July slightly up by $0.81 to $37.07, and Brent Oil July rallied by $0.92 to $39.78 while near closing.
  • Dollar Index down by 0.44%.
  • Gold down 0.33 % and sit around $1725.15
  • VIX down 4.68% to 34.4
  • AUDUSD up 0.76% to 0.69192
  • EURUSD up 0.60% to 1.13222
  • GBPUSD up 0.55% to 1.2604
  • NZDUSD up 0.43% to 0.64736
  • USDCAD down 0.06% to 1.35720
  • USDJPY down 0.03% to 107.332

 

Main Pairs Movement

The EUR/USD pair took the 1.1300 level, settling around 1.1315. The GBPUSD pair flirted with 1.2600 but remained below the level, as the UK and the EU confirmed that there would not be an extension to the transition period beyond December 31.

The Canadian dollar strengthened relatively quickly as a flurry of risk-on headlines hit the headlines during US session. The AUD/USD pair is trading near 0.6915, trimming intraday losses and setting at its highest in two days as Wall Street’s recovery offered support. RBA Meeting’s Minute is coming up soon.

Commodity-linked currencies advanced against the greenback, boosted by equities. Gold, on the other hand, closed the day unchanged reverting an early slump. Lastly, crude oil price edged higher, also backed by equities.

 

COVID-19 Data (EOD):

Technical Analysis:

 EUR/USD (H4)

EURUSD has been trading above 1.1250 throughout the day, up from the lows as the market mood improves. With the greenback coming under renewed selling pressure in the second half of the day, the pair gained traction and has risen more than 0.55% on the day. The bullish run is based on news that suggest the Fed will begin buying corporate bonds to support the market’s liquidity. As the EURUSD pair enters a consolidation, we expect the pair to fluctuate between 1.12145 and 1.13625.

 

Resistance: 1.1350, 1.1390, 1.1497

Support: 1.1230, 1.1185

 

XAU/USD (H4)

The XAUUSD went on a sharp recovery after hitting day lows in 1705 and regain around $25. The sudden boost was driven by the weakened USD as market sentiment began to anticipate a brighter future on Monday’s afternoon. Due to the fact that the concerns over new COVID-19 cases discovered in China and in several states in US, the market is likely to go under pressure if economy postponed its reopening. Under this circumstance, we believe the demands for safe-haven metal is going to support XAUUSD above 1705.

 

Resistance: 1746, 1755, 1765

Support: 1665, 1690, 1710

 

GBP/USD (H4)

The pound jumped from session lows against the dollar on Monday as the U.K. and E.U. agreed to intensify post-Brexit talks. PM stocked hopes that an outline could be reached by the end of next month. Sterling rose 0.37% to 1.26 the highest level from session low of 1.245.

 

Resistance: 1.2739, 1.2811

Support: 1.25425, 1.2485, 1.24515

 

Economic Data

Currency

Data Time (TP) Forecast

Exposure

(Our side)

AUD

RBA Meeting Minutes 09.30 29M
JPY BoJ Monetary Policy Statement 12.30

20M

GBP

Average Earnings Index + Bonus 14.00 1.4% -41M

GBP

Claimant Count Change 14.00 400.0K

-41M

EUR German ZEW Economic Sentiment 17.00 60.0

124M

USD

Retail Sales 20.30 5.4% -326M
USD Fed Chair Powell Testifies 22.00

-326M

 

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