JUL 31,2020

   

Daily Market Analysis

Market Focus

 

President Donald Trump floated the idea of delaying this year’s US election on Thursday, suggesting “with the Universal Main-In Voting (not Absentee Voting, which is good), 2020 will be the most INACCURATE & FRADULENT Election in history.” Meanwhile, we witnessed what the pandemic could do to US economy, US second-quarter GDP shrank 9% from the first, that is equivalent to an annualized declined of 32.9%. This is the worst figure printed in all time, surpassing the annualized quarterly decline in 1947.

 

German GDP arrives at -10.1%, worse than expected -9%, and is down from previous -2%. However, German unemployment change did come out on top of expectation, printed -18K compared to 43K, and is up from last month’s 68K.

 

Main takeaways from July FOMC statement:

  • Fed is committed to using its full range of tools to support growth amid the “tremendous” hardship from the virus.
  • Recent economic data have gotten worse, the outlook is highly uncertain.
  • Fed will wrap up its review of monetary policy strategy, tools and communication in the near future.
  • Powell calls on fiscal policy makers to provide additional support and says he welcomes Congress working this week toward more aid.

 

Market Wrap

Main Pairs Movement

       

The dollar index has fell to the lowest point since May 2018 after President Donald Trump brought up the idea about postponing November’s US election. The dollar strength tracking index has recorded a six-consecutive week decline, totaling to a decline of 4.6% since mid-June. A mixture of worsening pandemic, China-US geopolitical tension, Fed’s pessimistic stance, and US election uncertainty are attributed to the drop.

 

        British Pound carries on with its rampage, gaining 0.76% against US dollar as of writing. The disappointing GDP figure has hampered the greenback further south, and provide bidding incentive for other currencies such as the Euro and Sterling. On the other hand, UK and Japan are close to a trade deal that would partially replace the free-trade agreement with European Union.

       

COVID-19 Data (EOD):

Technical Analysis:

 

GBPUSD (Daily)

Cable were committed to overcome 1.3 hurdle on Thursday’s session. Upward momentum is still intact despite RSI soared to 80.7, stepped deeply into the overbought region. We might see slight pull back around 1.312 before sterling continue to advance to 100% Fibonacci at 1.32 handle in the daily chart. If price retreats from 1.312, we expect 1.298 to act a reliable support.

 

Resistance: 1.320, 1.3342, 1.3623

Support: 1.2984, 1.2778, 1.2623

USDCHF (Weekly)

USDCHF is sitting on top of its five-year low price, around 0.9084. The safe-haven Swiss Franc further benefitted from a selloff in the US equity market, RSI suggests the pair is oversold. The back-to-back solid bearish marubozu candle indicates that bear could open the door to prices not seen since the Swiss Franc black swan event. If the bearish breakout does happen, the first support the bear encounters will be around 0.8909, followed by 0.8699.

 

Resistance: 0.9275, 0.9537, 0.9737

Support: 0.9084, 0.8909, 0.8699

 

USDCAD (H4)

USDCAD is heading toward 1.3494, where the bears were rejected three times, and is currently turning into a stern resistance. MACD shows bullish signal on the four-hour chart, however the big trend still favors the bear as price is well beneath the two major downward trend lines in the short and medium term. To the downside, price has to break the 1.3377-1.332 support region before it could meet further support at 1.3215.

 

Resistance: 1.3494, 1.3628, 1.3739

Support: 1.3377-1.332, 1.3215, 1.3133

Economic Data

Currency Data Time (TP) Forecast
CNH Manufacturing PMI (July) 09:00 50.7
EUR CPI (July) 17:00 0.2%
CAD GDP (May) 20:30 3.5%

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