Daily market analysis

JUN 24,2020

June 24, 2020
   

Market Focus

A little drama took place this morning where White House adviser said the trade deal between China and US was over. US index plunged in a brief moment, but immediately rebounded after President Donald Trump tweeted and clarified “the China Trade Deal is fully intact. Hopefully they will continue to live up to the terms of the Agreement”. Nevertheless, US stocks rose amid Trump’s supportive stance on sending out another round of checks to Americans.

Prime Minister Boris Johnson announced the biggest relaxation of the UK’s coronavirus lockdown. Hotels, Pubs, restaurants, and cinemas will be able to open their doors from July 4th. Business groups cautiously welcomed the move and want more government assistance to help companies safely reopen, said British Chambers of Commerce Director General. Johnson warned the possibility of second wave is not ruled out, and “will not hesitate to apply the brakes and reintroduce restrictions, even at national level, if required.”

 

The German Manufacturing PMI in June printed 44.6, surpassing estimate of 41.5. A figure below 50 is indicative of contraction, however it still comes better than May’s 36.6, a sign of recovery in German manufacturing section.

Market Wrap

  • Dow Jones up 0.59%, S&P500 up 0.65 % and Nasdaq up by 2.03%
  • WTI Aug slightly down $0.31 to $40.37, and Brent Oil Aug down $0.89 to $42.32 near closing.
  • Dollar Index down by 0.35%
  • Gold surged 0.74% and settled around $1767
  • AUDUSD up 0.31% to 0.6929
  • EURUSD up 0.42% to 1.1307
  • GBPUSD up 0.41% to 1.252
  • NZDUSD up 0.21% to 0.6492
  • USDCAD up 0.21% to 1.3550
  • USDJPY down 0.36% to 106.52

 

Main Pairs Movement

Gold returned to the spotlight, finally broke through 1760 handle, settled around $1767. It was hardly surprising to Gold speculators, as uncertainty from COVID-19, trade tensions, negative real rate, and a weakening US dollar remained supportive to the precious metal. COMEX August future was traded around $1781 an ounce as of writing, marked the highest price since 2012.

Dollar Index dropped for a second consecutive day, losing 0.35%, settled around 96.66. Demand for US dollar are less acute, major central banks are opting not to roll over Fed offered swap line from March. Fed started to offer foreign exchange swaps to central banks around the world as they suffered a dollar funding squeeze. But demand for dollar swap flattened near the end of April and witnessed a significant drop in June.

COVID-19 Data (EOD):

Technical Analysis:

 EURUSD (H4)

Euro-dollar regained 1.13 handle on Tuesday, climbed to four-days high. The pair has been kept below 1.1348 for the past two weeks, failed to advance beyond this point has created an early shape of double top.  If it breaches 1.1287 on Wednesday, then a bearish reversal will likely take place.  Though an upward breakout is not ruled out as the greenback remains defensive, any further moves above 1.14 is doubtful.

 

Resistance:  1.1348, 1.14, 1.147

Support: 1.1237, 1.1177, 1.1096

 

XAUUSD (D1)

Gold pierced through $1760, and settled around $1767, daily up 0.74%. The precious metal made a decisive bullish move after wandering around Bollinger average line for 6 days. It closed outside of Bollinger’s upper band, indicating a retreat should be coming soon. However, RSI is well below 70, suggesting there is still plenty room for further gains. Our stance is still bullish on Gold as long as it stays above $1746 support line.

 

Resistance: 1791, 1838

Support: 1746, 1681, 1635

 

USDCAD (H4)

Canadian dollar was the only currency to lost against USD among G-10, up 0.21% to 1.3550. Stabilized crude oil prices continues to underpin the commodity-linked currency. The pair is trapped within a decent downward tunnel, a break below the 1.35 handle would pave the way for it to test 1.3374 again, the lowest price since March.

 

Resistance: 1.3594, 1.3663, 1.3741

Support: 1.3478, 1.3374

 

Economic Data

Currency

Data Time (TP) Forecast Exposure

(Our side)

NZD

RBNZ Interest Rate Decision 10:00

0.25%

 

EUR

German Ifo Business Climate Index (Jun) 16:00

85

 
Oil

Crude Oil Inventories

22:30

0.299M

 

 

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