Daily market analysis

Aug 4,2020

August 4, 2020

Daily Market Analysis

Market Focus

 

US equity advanced as positive economic data outweighed pandemic pessimism. The White House is concerned about the economic impact of the benefits having expired on Friday, and was said to consider acting on its own to boost unemployment benefits, however it wasn’t immediately clear how Trump administration may be able to act without approval from lawmakers. Nasdaq 100 reached a new record as Apple Inc. and Microsoft Corp. was lifted.

 

The flareups between China and US continues as Trump administration “will announce measures against “a broad array” of Chinese-owned software deemed to post national security risks,” Secretary of State Michael Pompeo said. President Donald Trump told reporters Friday that he plans to ban TikTok from the US, but his decision has not been announced. Meanwhile, Microsoft tries to salvage deal to buy TikTok as the tech giant will continue to engage Trump and the US government.

 

US ISM Manufacturing PMI kicked off the week loaded with critical economic releases ahead. The economic activity in the US manufacturing sector expanded at a strong pace in July, the purchasing manager index improved from 52.6 to 54.2, beating market expectation of 53.6

 

Market Wrap

 

Main Pairs Movement

 

The dollar index strongly rebounded last Friday, and the momentum resumed on Monday. Risk assets have been overbought, and heavily weighed on the dollar in July, traders are probably reversing some of that position as market moves into the traditionally volatile month in August.

 

Gold rose and fell in early week trading session. The previous metal only made marginal new high in the last few sessions, it is looking to consolidate its gain as short-term bidder exits their position.

 

Oil edged below $40 as OPEC+ producers started unwinding output cuts. The organization and its allies will increase production about 1.5 million barrels a day in August. The increase in supply comes as coronavirus cases accelerated worldwide, Marathon Petroleum Corp., the largest American independent oil refiner, said it will hold the current output as demand for fuels is unlikely to hit pre-pandemic levels this year.

       

COVID-19 Data (EOD):

 

 

 

Technical Analysis:

 

EURUSD (H4)

 

Euro-dollar has retreated further south as the US dollar recovered some of its loss, the pair slipped 0.17% as of writing. After peaking to 1.19, price pulled back and constructed a decent head-and-shoulder, which may suggest bearish reversal is on its way, or at least the correction will be deeper. Otherwise, if 1.1793 resistance (the high point of the left shoulder) is beaten, then the head-and-shoulder pattern is broken, and bulls should take back control thereafter. MACD on the four-hour chart favors the bears.

 

Resistance: 1.1793, 1.1896, 1.1996

Support: 1.1712, 1.1651, 1.1601

 

 

 

GBPJPY (Daily)

 

 

 

The symmetrical triangle formed on the GBPJPY daily chart has been broken to the upside, and the pair is on the sixth consecutive win. Short-term bulls are meeting solid resistance around 139.1, and bullish momentum will be boosted if this level is conquered. Technical indicators on the daily chart is mixed, where RSI stood above 70 indicatives of an overheated price, but SMA200 and MACD are supportive to the bulls.

 

Resistance: 139.1, 144.653, 148.27

Support: 135.259, 130.614, 125.388

 

 

 

USDJPY (Daily)

 

        USDJPY rebounded on Monday as March’s horizontal support at 104.54 held off sellers’ attack, gained 0.2% intraday.  However, the greenback is not out of the woods yet, and the pair remains depressed by the purple descending trendline. In order to gain useful momentum, the bulls will have to overcome 106.09, as it is struggling with right now, then stand above the aforementioned trendline. RSI is pulled back from oversold region towards the midpoint of 50. Bearish bars from MACD is shrinking on the daily chart.

 

Resistance: 106.09, 107.93, 109.22

Support: 104.54, 102.36

 

Economic Data

 

Currency Data Time (TP) Forecast
AUD Retail Sales (June) 09:30 2.4%
AUD RBA Interest Rate Decision (Aug) 12:30 0.25%