Daily market analysis

JUL 03,2020

July 3, 2020

Daily Market Analysis

Market Focus

 

The US Nonfarm Payroll report showed that the country has added 4.8 million new jobs in June while the unemployment rate dropped to 11.1%, both much better than anticipated. However, other employment related data such as the Average Hourly Earnings missed market’s expectations. Ahead of the release, equities were up, and data further boosted the market’s optimism.

 

The good news and the upward momentum were short lived as new COVID-19 cases continue to increase in the US with over 51,000 new cases reported. As a result, major cities in New York and California have declared the postponing re-opening of indoor activity.

 

Market Wrap

Main Pairs Movement

 

Wall Street trimmed early gains, with the three major indexes closing the day with only modest gains. US bond yields were marginally higher. Gold bounced back from 1757 and closed the day around 1776. Crude Oils remained within similar levels, with WTI stuck around 40.00 a barrel. Additionally, concerns over COVID-19 and the global economic recovery are weighing down on the USDJPY as the investors began to question the safe haven qualities of the greenback. On the other hand, amid a mixed market sentiment throughout the day, AUDUSD pair experienced a seesawed day with minor gains and losses for a second consecutive day.

COVID-19 Data (EOD):

Technical Analysis:

 XAUUSD (H4)

US Unemployment rate turned out to be much better than market’s expectation (Actual: 11.1%; Forecast: 12.3%), which in turn, initiated a rally across major Wall Street’s indexes. As a result, the safe-haven metal dropped down to 1757. Nevertheless, the gold has surged back from the lows and is currently trading at daily highs, nearing the 1780 range. The bullish momentum remains intact in XAUUSD but is facing strong resistance approaching the 1800 region. A consolidation between 1765 and 1775 seems more likely as the market waits for further data and market sentiment amid the second wave of coronavirus.

 

Resistance: 1800, 1789, 1780

Support: 1760, 1753, 1748

EURUSD (H4)

The EURUSD was rejected at the 1.1300 area earlier today and has retreated towards 1.12300 during the US afternoon trading session. The better than expected US Non-Farm Payrolls have elevated market sentiment on Thursday, weighing down on the demand for the greenback. However, the euro still fails to take advantage of the dollar’s weakness as the unemployment rate across the Euro area continues to tick up. We expect the pair to first find a support around 1.1240 area before rebounding back to the 1.1300 levels.

 

Resistance: 1.13000, 1.13300, 1.13626,

Support: 1.11760, 1.12080, 1.12240

USDCAD (H4)

After hitting above 1.3600 in the early trading hours, the Loonie is unable to gain traction and dropped below 1.35670. The strong US data pushed the greenback higher today, but the pair remains quite flat as oil price has supported CAD to offset the USD strength. Overall, as various US cities are going back under lockdown, the likelihood of the greenback to sustain its strength becomes slim. With that being said, we believe there is still space for the pair to move lower if a new round of selling momentum takes place.

 

Resistance: 1.3623, 1.3673, 1.3720

Support: 1.3560, 1.3524, 1.3485

Economic Data

Currency

Data Time (TP) Forecast Exposure

(Our side)

AUD

Retail Sales (MoM) 09.30

16.3%

+82M

GBP

Composite PMI (Jun) 16.30 47.6

-102M

GBP Services PMI (Jun) 16.30 47.0

-102M

 

Risk Warning:

Trading Forex and CFDs involves significant risk and can result in the loss of your invested capital. You should not invest more than you can afford to lose and should ensure that you fully understand the risks involved. Trading leveraged products may not be suitable for all investors. Before trading, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary. Please read our legal documents and ensure that you fully understand the risks before you make any trading decisions.

The information provided is of a general nature only and the advice has been prepared without taking account of your objectives, financial situation or needs.