Daily market analysis

Sep 02,2020

September 2, 2020
   

Daily Market Analysis

Market Focus

U.S. stocks notched fresh records, with tech shares in the lead as investors snapped up work-from-home winners. Zoom Video Communications Inc. led a rally in companies well positioned for stay-at-home orders, while Apple Inc. pulled the S&P 500 Index to a fresh high after August’s blowout gain. The dollar erased losses as data showed U.S. manufacturing expanded last month at the fastest pace since 2018. Treasury yields dipped.

Stocks have churned ever higher as investors anticipate a flood of cash coming into the market, with last week’s announcement from the Federal Reserve that the central bank will maintain an easy-money policy adding fuel to the trade. Meanwhile, Chinese factory data Tuesday signaled rising global demand for exports after the initial shock of the pandemic, a good sign for the world economy. Euro-Area Inflation Turns Negative for First Time Since 2016.

On the other hands, Australia’s official cash rate remains at 0.25 per cent after the RBA board decided to maintain current settings amid the coronavirus recession. The board has decided to boost the bank’s term funding facility, which will allow banks and other institutions more funding.

Oil climbed toward $43 a barrel as the pickup in economic activity in the U.S. and China signaled a pronounced recovery in crude consumption.

 

Market Wrap

 

Main Pairs Movement

The euro dollar rose above $1.2 for the first time in more than two years as the dollar extended its five-month slide. Euro dollar advanced as much as 0.6% on Tuesday to 1.2011, its highest since May 2018, before setting back to around 1.195 as market cite options-related selling around the day’s highs. Meanwhile, investors have been piling into the euro for weeks, with speculators holding a record bullish position in futures. In contrast, DXY once hit the two years low at 91.7 then rebound after fueled by manufacturing.

Consumer prices in the euro area are falling for the first time in four years, which is likely to trouble ECB policy markets. A strong currency generally limits inflation by tamping down import prices. At the same time, ECB Executive member Lane said the euro-dollar rate does matter, even though monetary policy doesn’t target the exchange rate.

A surge in China’s yuan to more than one-year high is testing the central bank’s appetite for currency strength. The yuan jumped as much as 0.56% to 6.81 a dollar, the outperformance level since May 2019, as the dollar traded at a two year low.

 

COVID-19 Data (EOD):

 

Technical Analysis:

XAUUSD(H4)

Gold’s rally fizzled after comex futures climbed back above $2000 an ounce, with the dollar erasing losses and a U.S. report adding signs of a recovery in global manufacturing. High volatility dragged gold testing it 15-MA at $1970.19. at the meantime, RSI indicator neutral market movement is expecting. Geopolitical event and eco data confidence seem a teeter for both side that pose the unclearly manifest of gold market in short term.

Resistance: 2000

Support: 1959.27, 1926

 

USDCAD(H4)

USDCAD is currently trading at 1.3064 as the U.S. trading session after it slipped to lowest level at 1.3 since January. Furthermore, RSI index steeply rebound from over sought area to neutral level at 44. As MA perspective, loonie fell after it hit 15-MA then down a little to 1.306. For short term, we expect that loonie would spiral at low level and optimistic commodities market would propel Canadian economy.

Resistance: 1.3111, 1.3138

Support: 1.3025, 1.3

 

AUDUSD(H4)

Aussie is little changed for second consecutive day and reversed from highest level at 0.741 after RBA unchanged interest rate at 0.25%. RSI index dropped below 70 set around 65 currently. The pair seem solid at range recent high and 0.7342 which is testing the 15-MA and RSI show bullish remain. At the same time, Australia is ahead of GDP figure that would be a good bolster for current exchange rate.

 Resistance: 0.7389

Support: 0.7235, 0.7114

 

Economic Data