Daily market analysis

JUN 30,2020

July 1, 2020
   

Market Focus

 

Total death toll worldwide has surpassed 500,000 and confirmed cases exceeded 10 million. WHO warned that the worst scenario has yet to come. European Union governments is considering extending a travel ban for US residents for at least two weeks. On the other hand, several US states decided to halt plans to reopen restaurants and bars.

 

US Pending Home Sales for May rose to 44.3% from April -21.8%, far outpaced estimated 18.9%. The figure refreshed the highest record in history as mortgage rates fell. Mortgage rates have dropped to the lowest level, helping to stabilize demand in housing industry, which was severely dampened by COVID-19.

Key takeaways from BoE Bailey speech:

  • Current scale of central bank reserves mustn’t become a permanent feature
  • As economies recover, it’s likely that some of the exceptional monetary stimulus will need to be withdrawn, including by reducing reserves.
  • Now expecting 20% fall in GDP in Q1 and Q2 combined vs 27% fall in May scenario.
  • BoE does not have specific triggers for further increases in QE.
  • Slowing of the pace of QE reflects recent signs from the economy and calming of markets since March.

Market Wrap

Main Pairs Movement

 

Cable initially rose 50 pips as Boris Johnson promised to double down on investment on infrastructure, education, and technology. Then, price took a U-turn since Euro session, the pair ended up losing 32 pips. Brexit negotiation is still full of uncertainties, but both sides seem to agree that the deadline to get a deal will not be extended. One official said Monday’s face-to-face meeting have accomplished nothing except negotiate an agenda.

 

Safe-haven Yen and Franc suffered the most against US dollar on Monday, both dropped 0.33%. USDJPY and USDCHF surged during US session where US indices rose simultaneously, suggesting an investing sentiment favored risky assets.

COVID-19 Data (EOD):

Technical Analysis:

 

EURUSD (H4)

Euro-dollar failed to capitalize on its early gain and is kept beneath 1.1287. Price touched Bollinger’s upper band for the first time in a week, and was lingering above the mid-line. The band on the four-hour chart is narrowing, which could be a set-up for upcoming surge or plummet. If it manages to stay above Bollinger mid-line within the white box highlighted above, it could move to take out 1.1287 resistance. Otherwise, bear will regain control.

 

Resistance: 1.1287, 1.1348, 1.1394

Support: 1.1177, 1.1096, 1.1023

USDJPY (H4)

USDJPY successfully conquered SMA100, and it aims to regain 108 handle. It once reached 107.9, the highest price in two weeks. The pair is currently hovering above SMA200, turning the resistance into a support. The bullish breakout was freshly completed on Monday, and there is plenty on the upside. Thus, bull looks to have upper hand over bear.

 

Resistance: 108, 108.55, 109.2

Support: 107.1, 106.5, 106

USDCAD (H4)

USDCAD has been sitting comfortably within Bollinger Band’s upper region, and frequently touch the upper line since last Thursday. The upward channel remains intact with 1.3739 acting as a near resistance, which should be challenged in the near term. If price reversed and touch Bollinger’s lower line, then the pair could trade sideways, but a bearish reversal looks unpromising.

 

Resistance: 1.3739, 1.3865, 1.4033

Support: 1.352, 1.3377

Economic Data

Currency

Data Time (TP) Forecast Exposure

(Our side)

AUD

Manufacturing PMI (June) 09:00 50.4  

GBP

GDP (Q1) 14:00

-2%

 

EUR

CPI (June) 17:00

0.1%

 
CAD GDP (April) 20:30 -13%

USD CB Consumer Confidence (June) 22:00

91.8

 

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