Daily market analysis

JUL 10,2020

July 10, 2020

Market Focus

 

US equity market turned south on concerns that resurgence in coronavirus cases will lead to second wave of lockdown across US, which is distinct possible as Fauci mentioned on Wednesday ‘any state that is having a serious problem, that state should seriously look at shutting down’. United States reported more than 60,000 new COVID-19 case yesterday, setting a single-day global record. Financial stocks were among the worst performers on the S&P 500 index, pushing the gauge to a one-week low.

US Treasury Secretary Steve Mnuchin said the next coronavirus stimulus legislation can be passed by the end of July. The newly proposed funding targeted broader range of business that were affected by the pandemic, “the vast majority of these loans were hard-working business where the money went to pay employees and they’ll be forgiven” Mnuchin said on CNBC Thursday.

UK Chancellor Rishi Sunak announced 30 billion pounds of tax cut and extra spending, including lump sums for companies retaining furloughed workers and a cut to sales tax in the hospitality sector.

 

Market Wrap

Main Pairs Movement

The safe-haven greenback gained traction amid renewed fear of another pandemic lockdown, most G-10 currencies was put on the back foot against US dollar, while dollar index surged 0.41%. Sterling was barely held off dollar’s attack thanks to Sunak’s fiscal stimulus to help revive UK economy. Lonnie had the worst performance amid falling oil price, partly due to looming uncertainty on meeting July 15, Russian energy minister Alexander Novak said on Thursday that they have not yet made any decisions on possible changes to the OPEC+ oil output cut deal.

US 10-year bond yield fell 8% on Thursday amid risk-off mood across financial market. However, Gold dropped 0.31% as the precious metal is currently becoming expensive to buy, given the rising number of confirmed cases in US, another short squeeze scenario in gold market is not ruled out.

COVID-19 Data (EOD):

Technical Analysis:

 

GBPUSD (H4)

Cable is well suited above the yellow trend line on Thursday but was unable to break 1.2667 resistance, which matches perfectly with 76.4% Fibonacci. Bullish bars from MACD is shrinking and price is pressured down towards 1.2606 support, where trendline meets 61.8% Fibonacci. If this level could fend off bearish attack, it could surge to 1.2753. Otherwise, it could take huge plunge if trendline fails to hold off given the current strong dollar demand.

 

Resistance: 1.2667, 1.2753, 1.2855

Support: 1.2606, 1.253, 1.247

 

USDJPY (H4)

USDJPY is clinging to SMA100 and lacks any firm directional bias. There is an obvious downward wedge pattern shown on the four-hour chart, which usually acts as a sign of rebound. However, MACD suggests price should continue to run south. In this case, SMA100 could help to navigate price momentum, bullish if price moves beyond SMA100 and bearish if price is capped by SMA100.

 

Resistance: 107.93, 108.55, 109.2

Support: 107.08, 106.53, 106

 

AUDUSD (H4)

Aussie continued to cap below 0.6967-0.7 resistance band. The risky currency is looking to break its current upward trendline, if it does so, price will be pulled back to 0.6897, followed by 0.6803. However, if at all the bulls mange to stay positive and conquer 0.7 hurdle, it could run widely toward 0.7121.

 

Resistance: 0.7, 0.7121, 0.7199

Support: 0.6897, 0.6803, 0.6669

 

Economic Data

Currency

Data Time (TP)

Forecast

USD

PPI (June) 20:30 0.4%
CAD Employment Change 20:30

700K

 

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