Daily market analysis

JUN 23,2020

June 23, 2020

Daily Market Analysis

Market Focus

After the US data in existing home sales was released, which failed to achieve market expectation, the US dollar’s weakness has navigated the global currency markets’ fluctuation on Monday. Additionally, the US equities markets reject coronavirus fears to focus on the positives with the bulls remaining in charge, as a result, the VIX has fallen over 7%. Meanwhile, the S&P 500 closes 0.63% higher, Dow rallied 0.59%, and the Nasdaq raised 2.03%.

Outperforming sector in the S&P 500 focuses on the retail industry as GAP, Footlocker, and Bestbuy all witnessed a surge of 4%. On the other hand, the underperforming sector remains on the traveling industry as American Airlines, Norwegian Cruise Lines, and Royal Caribbean Cruises all dropped by over 6% as the US traveling industry failed to see any relief amid the increasing COVID-19 cases across the US.

 

Market Wrap

  • Dow Jones up 0.59%, S&P500 up 0.65 % and Nasdaq up by 2.03%
  • WTI Aug slightly up by $1. 03 to $40.46, and Brent Oil Aug up by $1.08 to $42.99 while near closing.
  • Dollar Index down by 0.64%
  • Gold rallied 0.61% and sit around $1754.76
  • AUDUSD up 1.09% to 0.6907
  • EURUSD up 0.78% to 1.1260
  • GBPUSD up 1.02% to 1.1.2468
  • NZDUSD up 1.14% to 0.6478
  • USDCAD down 0.61% to 1.3521
  • USDJPY up 0.05% to 106.90

 

Main Pairs Movement

The dollar edged lower this Monday, losing ground, particularly in the US afternoon. Mixed data and coronavirus cases in the country surging at “unacceptable levels,” according to Texas governor, were behind the greenback’s selling pressure.

The EURUSD pair closed the day with gains around 1.1250 as consumer confidence came in better-than-expected. GBPUSD settled around 1.2460, near its daily high, amid broad dollar’s weakness by the end of the day. The USDJPY pair struggled to capitalize on its intraday bounce to the 107.00 mark and has now retreated to the lower end of its daily trading range. USDCAD, on the other hand, started the new week in a calm manner near 1.3600 but lost its traction during the European trading hours.

COVID-19 Data (EOD):

Technical Analysis:

 EUR/USD (H4)

EURUSD surged on Monday as the greenback corrected lower after rising for four consecutive days. The lower US yields weighed down on the greenback when the 10-year yield fell below 0.676.

On the same note, US Existing Home Sales disappoints the market expectation, dropping by about 9.7% in May. Collectively, the overall weakening of the US dollar has boosted its rival, EUR, to gain traction above the 1.2590 short-term resistance. Nonetheless, as the US 10-year yields has witnessed a rapid bounce back since it hit 0.675 and a few critical US data (New Home Sales, Crude Oil Inventories, GDP, and Initial Jobless Claims) still awaits to be released, we expect the pair to enter a consolidation phase in the near-term.

 

Resistance:  1.1270, 1.1300, 1.1355

Support: 1.1172, 1.1143, 1.1107

 

USD/CHF (H4)

USDCHF came under some renewed selling pressure on the first day of a new week. The pair edged lower as the fresh COVID-19 concerns and new cases benefited the safe-haven currency, CHF.

The downtick was driven by a series of factors such as the moderate risk-on appetite across the market and the growing market worries over the second wave of coronavirus infections. After the pair oscillating in the past week, USDCHF is prudently waiting for a break in either direction to determine its next momentum.

 

Resistance: 0.9533, 0.9586, 0.9650

Support: 0.9390, 0.9425, 0.9464

 

XAU/USD (H4)

Gold has been on a strong bullish run since the beginning of Monday and is expected to surpass multi-year tops, above the 1765 region. Driven by the dramatic declines in global bond yields, gold is the most targeted hedge asset during economic shocks and uncertain financial market outlook. After the precious metal once again tested the 1765 region, the rally was immediately corrected and is now trading around 1753. However, with the uncertainty continues to worry the investors, it is inferable that XAUUSD would hold a price range above 1700 in the medium-term.

 

Resistance: 1759.20, 1766.25

Support: 1746.40, 1716,05, 1704.90

 

Economic Data

Currency

Data Time (TP) Forecast

Exposure

(Our side)

EUR

German Manufacturing PMI 15.30 41.5

+124M

GBP

Composite PMI 16.30  

-86M

GBP

Manufacturing PMI 16.30  

-86M

GBP

Services PMI 16.30  

-86M

GBP

BoE Gov Bailey Speaks 16.45  

-86M

BRL

BCB Coporn Meeting Minutes 19.00  

USD New Home Sales 22.00 640K

-474M

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