Daily market analysis

JUN 26,2020

June 26, 2020

Market Focus

US Initial Jobless Claims printed 1.48 million in the week ended June 20. This figure came below forecast of 1.3 million, nonetheless recorded a 13th consecutive weekly declines since April. GDP stayed put at -5% for the first quarter, the lowest reading since June 2009. May’s Core Durable Goods Orders rebounded to 4% from last month’s -8.2%. Market remained quiet on the back of the news, US stocks and bonds barely responded.

International Monetary Fund downgraded its outlook for global economy, the organization expects global GDP to shrink 4.9% this year, previously predicted 3%. Forecast for 2021 also adjusted down to 5.4% compared to 5.8% previously. IMF said its increased pessimism reflected scarring from a larger-than-anticipated supply shock during the earlier lockdown.

 

Main takeaway from ECB Meeting Minutes:

  • Price pressures have weakened, inflation expectations have declined, and growth risks are skewed to the downside.
  • Weak demand is likely to be a much larger problem than supply constraints.
  • Negative side effects had so far been clearly outweighed by the positive effects of asset purchases

 

Market Wrap

Main Pairs Movement

 

Forex trading session on Thursday was relatively mixed. Most majors were trading within a tight range, Aussie and Kiwi were the best performers among G-10, both gained around 20 pips intraday.

 Euro extended its decline from yesterday, lost 33 pips against the greenback. Economic data released on Thursday from the US was mostly ignored by market participants. On the other hand, ECB said some Governing Council members expressed reservations about the size of the PEPP expansion at their meeting this month, reducing funding liquidity prior to a fully recovered economy may impose potential downside risk to Euro Zone.

 

COVID-19 Data (EOD):

Technical Analysis:

 AUDUSD (H4)

Aussie has been capped by SMA50 in the four-hour chart throughout Thursday. The commodity linked currency is forming a triangle that is gradually pushing price into a narrow range, we should be able to see a breakout in the near term. If it fails to surpass resistance of 0.6897, then a bearish breakout should take place, otherwise it could eye for 0.7 handle once again.

 

Resistance: 0.6897, 0.6967, 0.7

Support: 0.6803, 0.6669, 0.6591

 

USDJPY (H4)

USDJPY was extending its recovery from 106 region, and currently sits firmly above 107. It is now entering into a region where it previously struggled to find a direction for a whole week. With the lack of economic impetus on Friday, we could return to a similar undecisive trading session. If it can break SMA100 and SMA200, which should be reachable in the short term, then USDJPY will proceed to test 108.55 resistance; otherwise, it could retrace back to 106.53.

 

Resistance: 107.93, 108.55, 109.2

Support: 107, 106.53, 106

 

EURUSD (H4)

Euro-dollar has fully formed a double-top, then quickly slide downward. We continue to hold our previous view, the shared currency broke 1.1236, and it eyes for 1.1177 support line. US dollar could gain further traction from the current risk-off sentiment. If 1.1177 fails to hold, we could possibly see a big slump towards 1.1096.

 

Resistance: 1.1287, 1.1348, 1.1394

Support: 1.1177, 1.1096, 1.1023

 

Economic Data

Currency

Data Time (TP) Forecast

Exposure

(Our side)

EUR ECB President Lagarde Speaks 15:00  

 

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