Daily market analysis

JUL 02,2020

July 2, 2020

 Market Focus

 

ISM Manufacturing PMI rose to 52.6 from previous 43.1, beating estimate of 49.5. The printed figure was the highest number recorded in a year. ADP’ private-sector jobs rose by 2.369 million in June, ADP Research Institute vice president said “as the economy slowly continues to recover, we are seeing a significant rebound in industries that once experienced the greatest job losses.”

 

China decided to impose new security laws in Hong Kong after a year of pro-democracy protests. The national security law is aimed at punishing acts of secession, subversion of state power, terrorism and “collusion with foreign and external forces to endanger national security. According to the draft bill, China will establish a new bureau in Hong Kong to analyze the security situation and collect intelligence. US Secretary of State Michael Pompeo said Hong Kong could no longer be considered sufficiently autonomous, and Donald Trump is considering revoking some or all of its special trade privileges.

 

Key highlights of FOMC minutes:

  • Fed officials agreed on need for more analysis for Yield-Curve-Control.
  • Planning on beefing up its forward guidance for interest rates in the coming months.
  • Fiscal policy could potentially represent a big downside risk.
  • Negative interest rates did not appear to be an attractive policy tool.

 

Market Wrap

Main Pairs Movement

 

Dollar weakened across the board, the dollar index dropped 0.23% to 97.15. Most majors were climbing against the greenback prior to US market open. Possible mover could be Biopharmaceutical New Technologies’ announcement on Wednesday that the COVID-19 vaccine that they co-developed with Pfizer triggered a strong immune response in the early stage of human trials, thus triggering risk-on mood.

COVID-19 Data (EOD):

Technical Analysis:

 USDJPY (H4)

USDJPY is hovering above the edge of the upward trending support line, currently trading at 107.46. A clear downward breakout might push price toward 100 SMA and 50 SMA cross. Otherwise, any moves beyond 200 SMA should strengthens the current upward trend. RSI retraces back to 50 midline after briefly touched 70 overbought yesterday.

 

Resistance: 107.93, 108.55, 109

Support: 107.09, 106.53, 106

GBPUSD (H4)

Cable was trapped in the Bollinger’s lower region since last Wednesday, and finally made a bullish reversal during yesterday’s US session. The pair continued to stay within the upper region throughout Wednesday and broke the downward trendline since mid-June. RSI is approaching 70, and price sitting outside of Bollinger upper bound, these combined to favor bear in the near term.

 

Resistance: 1.2536, 1.2627, 1.2753

Support: 1.2427, 1.2363, 1.2268

USDCHF (H4)

USDCHF is capped below SMA100 and SMA50. Price tested 0.9443 three times in the last five trading days, it has yet to make a lower-low on the four-hour chart, if it does then bear will take the driver seat. Looking downward, 0.9391 will be the first resistance line followed by 0.9325.

 

Resistance: 0.9533, 0.9603, 0.9647

Support: 0.9443, 0.9391, 0.9325

Economic Data

Currency

Data Time (TP) Forecast Exposure

(Our side)

USD

Initial Jobless Claims 20:30 1,355 K

USD

Non-Farm Payrolls 20:30

3,000 K

 
USD Unemployment Rate 20:30

12.3%

 

 

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