JUL 27,2020

   

Market Focus

 

Diplomatic tension continued to escalate between China and US, where Beijing ordered the US to shut a consulate in Chengdu in an eye-for-an-eye retaliation. The Chinese Ministry of Foreign Affairs said Friday that the consulate’s closure was a “legitimate and necessary response to the unjustified act by the US.” US equity market suffered from the deteriorating investors’ confidence.

 

Australia will inject another A$20 billion monetary stimulus to help job market as Central Bank president Philip Lowe warned of lingering economic recovery amid the COVID-19 pandemic. The current wage subsidy program will be extended by six months until the end of March 2021.

 

UK Retail Sales jumped by 13.9% in June, the figure came on top of estimated 8%. The upbeat consumption is attributed to the gradual reopening of the economy. Meanwhile, the latest round of negotiations on Brexit ended on Thursday without any significant progress on the post-Brexit trade deal. UK’s chief negotiator David Frost said that they will not be able to strike a deal with the EU by July deadline.

 

Market Wrap

Main Pairs Movement

 

Gold topped $1900 an ounce for the first time since 2011 as China-US geopolitical tension underpins safe-haven assets. A weaker dollar and expectations of rising inflation amid massive liquidity injections from central banks around the world also help the yellow metal to gain intense traction lately. Other risk hedging currencies, such as Swiss Franc and Japanese Yen were also surging against US dollar. The dollar index dropped to the lowest level since September 2018, settled around 94.35 as of writing.

 

Aussie and Kiwi, which act as proxy for China, were put on the back foot against the greenback. Both traded slightly toward the downside, the clash between China and US carries on and prompts fresh risk-off sales of the risky currencies.

 

COVID-19 Data (EOD):

Technical Analysis:

 

EURUSD (D1)

Euro-dollar is on a six-consecutive days rampage, totalling to a gain of 2.21%. The furious roar has breached mutiple resistance lines, and bulls are taking price toward the ceiling of the highlighted trend tunnel in the daily chart. RSI is reaching 78 as of writing, which indicates the pair is overheated, any further ramp ups could be tempting for bidder to exit their current long positions.

 

Resistance: 1.1543, 1.1452, 1.131

Support: 1.171, 1.1816, 1.1920

USDJPY (D1)

USDJPY dropped to its lowest level since March on Friday, settled slightly above 106. A break below from 106 could open the door to wide support range, where the first significant support sits around 104.54, followed by 102.4. MACD has been wandering in sallow region due to the sideway trading since mid-June.

 

Resistance: 107.93, 109.22, 110.16

Support: 104.54, 102.36

USDCHF (Weekly)

Price slipped through 0.9275 key resistance on the weekly chart. The bearish Marubozu candle points to a firm descending trend, and the pair seems very vulnerable to 0.92 handle. RSI hovers around 32, and the last time that USDCHF entered oversold region was dated back in August 2011, thus it would be interesting to see bidders’ reaction as it gets closer to 30. If bidders fail to defend 0.92, Swiss Franc could attack the five-year old horizontal support at 0.9084.

 

Resistance: 0.9275, 0.9537, 0.9737

Support: 0.92, 0.9084, 0.8909

 

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