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Daily Market Analysis

Market Focus

US equity market struggles as investors doubt officials will reach a deal on the newly proposed stimulus package. Negotiations between White House and Congress are said to be on the brink of collapse after Thursday’s meeting.

Following the ‘clean network’ initiative promoted by US government, President Donald Trump moved to ban the Chinese-owned TikTok and WeChat that will be effective 45 days from now. The surprised announcement sent shockwaves through the tech industry as many American companies who rely on the communication app to conduct businesses with China. China officially reacted with caution on Friday and accused US “is using national security as an excuse and using state power to oppress non-American business.”

US Non-Farm Payroll increased by 1.76 million in July, surpassing expected 1.48 million, but a tremendous decline from June’s 4.79 million. The economic data showed the recovery is lingering amid the pandemic.

Market Wrap

Main Pairs Movement

Gold pared some of its weekly gain, but still closed the week up 2.28%. Bullion went as high as $2075 during Friday’s early session, then bulls took a slap in the face and slumped to$2015 after Non-Farm Payroll figure came on top of market expectation. Heavily loaded long position that was built up since mid-July is attributed to the accelerated pull-back as bidders cheer up their handsome profit moving into the weekend.

The US dollar index jumped to 93.48, NFP data was lending support to the greenback. On the downside, Trump is doing all he can to fight with China, bolstering his core support ahead of US election, but his move to ban WeChat and TikTok may backfires and threatened to put ties with China in greater risk. The dollar initially benefited from haven status early in the coronavirus outbreak but the swiss franc has taken that role lately, USDCHF slumped nearly 6% since June.

USDCAD was the biggest winner among its G-10 peers, up 0.63% on Friday. Canada is targeting C\$3.6 retaliatory tariffs, that includes variety of 60 products, in response to President Donald Trump’s new aluminum duty against Canada. Lonnie was previously riding on the backdrop of stabilizing oil price.

COVID-19 Data (EOD):

Technical Analysis:

GBPJPY (Daily)

BPJPY once dropped to the support region highlighted in blue, but price managed to stay above previous lows. The stubborn horizontal resistance of 139.08 has been keeping the bulls from advancing forward in the last six sessions. Nonetheless, long term trendline still favors the bulls, and there is no sight of contestants unless the aforementioned supportive area is breached. Conversely, the bulls will meet its first resistance at 141.3 after 139.08 is defeated.

Resistance: 139.08, 141.26, 144.65

Support: 135.4, 130.8, 127.16

USDJPY (H4)

USDJPY recovered to sub-106 level, daily gained nearly 0.4%.  The pair dipped to 105.3 horizontal support twice within this week’s trading session, but SMA50 on the four-hour chart helped to defend sellers’ attack. The short-term surge is bumping into the dynamic resistance of SMA100, which has been rejecting any upward moves in the past three weeks. The bulls are far from reach since it has to conquer SMA100, resistance of 106.4, and the medium-term descending trendline to gain any meaningful momentums.

Resistance: 106.4, 106.75, 107.4

Support: 105.6, 105.1, 104.6

NZDUSD (H4)

The kiwi erased all its gains from last three days, plunged 1.4% on Friday. The ascending trendline on the four-hour chart has turned into a resistance. Price has hit 0.669 before dropping, which created a lower high, however, the south run was stopped by 0.659 near the closing hours. If it breaches below horizontal support of 0.659, then the risky currency could be constructing a descending tunnel from there. MACD also favors the bears.

Resistance: 0.67, 0.6785, 0.6875

Support: 0.659, 0.652, 0.6447