Daily market analysis

JUL 07,2020

July 7, 2020
   

Daily Market Analysis

Market Focus

 

US stocks surged, with tech shares pushing Nasdaq Composite to a record high. The DXY continued to fall for a fifth day while US Treasuries dipped. On the same note, the S&P 500 index headed towards its fifth increase as Amazon shares achieved the $3,000 threshold for the first time and Tesla extended its 5-day rally to about 40%. Overall, the dollar’s weakness has been the story of the day as it has officially slid to its weakest level since June 10 with risk-on sentiment diminished the demand for havens and drove equities higher.

 

Global stock markets started the week quite strong with Stoxx Europe 600 Index climbed 1.6% and developing countries’ stocks added 2.5% as a result of the Chinese markets pushing a global equity benchmark toward a one-month high.

 

Market Wrap

Main Pairs Movement

 

GBPUSD is trading higher, reaching 1.25. The overall risk-on market sentiment is boosting Sterling. Even though BOE Gov Bailey reportedly raised the potential option in negative interest rates, the market seems unaffected. The USDCAD, on the other hand, dropped to 1.3518 on Monday, finding support at the lowest level in two weeks, and rebounded back up to 1.3560 to close the day.

Gold rose slightly by about 0.50% on the day, extending its well-performance despite a risk-on market while the demands for the greenback fades away. In terms of black gold, like most commodities, WTI is still struggling to find sustainable demands with the ongoing COVID-19 crisis.

COVID-19 Data (EOD):

Technical Analysis:

 EURUSD (H4)

EURUSD has surged above 1.13 price level, hitting the highest level in nearly two weeks. The sudden surge in the pair is mainly driven by the unexpectedly better ISM Non-Manufacturing PMI number of 57.1 and China’s bullish equity market. Both statistics weighed down on the safe haven dollar as investors regain confidence amid the intensifying coronavirus situation in the US. According to EURUSD’s 4-hour chart, the pair appears to be sitting well above its moving average, which in turn, suggests the pair would retain its bullish momentum in the short term.

 

Resistance: 1.1350, 1.1388, 1.1420

Support: 1.120, 1.1230, 1.1265

 

USDJPY (H4)

Following the weakened DXY, the USDJPY pair has made a slight dip in its price for the day. However, this is an uncommon scenario as USDJPY usually moves higher with the US stock markets. One plausible explanation is that despite the market’s risk-on sentiment, concerns over potential risk of the coronavirus’ outbreak still preserves the upbeat momentum of yen. Under this mixed situation, with yen’s strength, USD’s weakness, and growing equity markets, USDJPY is likely to stay choppy between 107.40 and 107.70 range in the upcoming trading days.

 

Resistance: 107.45, 107.67, 108.18

Support: 106.00, 106.63, 107.05

 

AUDUSD (H4)

AUDUSD is approaching a one-month high at 0.7000 as the global appetite for equities improved. Additionally, the commitment from the Chinese government to uphold the economy has also helped the AUD to gain some traction as well. Looking at the chart, AUDUSD appears to struggle a bit at the resistance around 0.6980. At the same time, the RSI has just pulled away from the overbought zone, which in turn, implies the AUDUSD price is overstretched and a pullback is expected to take place before the pair rise again.

 

Resistance: 0.6985, 0.7015, 0.7060

Support: 0.6800, 0.6855, 0.6900

 

Economic Data

Currency

Data Time (TP) Forecast

Exposure

(Our side)

AUD

RBA Interest Rate Decision 12.30 0.25% +72M

AUD

RBA Rate Statement

12.30  

+72M

USD

JOLTs Job Openings (May) 22.00

4.850M

-539M

CAD Ivey PMI (Jun) 22.00  

-85M

 

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