Daily market analysis

Sep 29,2020

September 29, 2020
   

Daily Market Analysis

Market Focus

U.S. Stocks jumped after four weeks of declines and European shares added the most in three months amid broad gains for equities. The greenback weakened on Monday. Banks led the S&P500 to its biggest gain in two weeks as investors found buying opportunities after the gauge fell to its lowest since July since last week. More than 10 stocks were higher on the benchmark for every one that fell. HSBC added almost 9% after its biggest shareholder raised its stake.

Signs that U.S. politicians are moving toward new fiscal stimulus has been a boon to stocks in recent days as FED continues to provide liquidity.

According to John Porter, head of equities at Mellon Investments, “the Fed is making it almost impossible for investors to get too bearish; on top of that, the market is getting more comfortable with the realization that Covid is going to stay with us for a while now.

 

Market Wrap

 

Main Pairs Movement

The GBPUSD pair holds on to daily gains but pulled back from an early high of 1.2929. Pound supported by hopes of an EU-UK trade deal and comments from BOE’s Ramsden, who dismissed using negative rates.

The USDJPY pair has spent Monday consolidating near its recent highs, unable to attract investors. Eyes turn to September Tokyo inflation. The USDCAD pair gained nearly 200 pips last week and seems to have gone into a consolidation phase on Monday.

DXY is eroding part of the recent gains and recedes to the initial support around 94.20 on Monday. On the other hand, the price of oil is trading on the bid around $40.45, some 0.95% higher having travelled from a low of $39.80 and scoring the highest levels since the 21st Sep.

 

COVID-19 Data (EOD):

 

Technical Analysis:

XAUUSD (H4)

Gold has moved higher on Monday as a substantial pullback in the greenback kicks in at the start of the week. Looking at the chart, we can see that the yellow metal has gained some support at the 1850 level while breaking the resistance level above 1876. Additionally, from the RSI, we learn that the indicator is showing some bullish divergence pattern. This pattern generally takes place when the RSI waves make a higher low as the price waves made lower lows.

Some key levels to look out for includes resistances around 1883 and 1900. If the safe-haven metals could take out these levels, there is a good chance of the gold extending its price back to the highs.

Resistance: 1883, 1900

Support: 1850, 1813

 

EURUSD(H4)

ECB’s President, Christine Lagarde, interrupted EUR’s recovery after claiming that the policymakers are monitoring FX movements, adding that it’s clear that external value of Euro has an impact on inflation. However, these comments are largely ignored by the markets. With the greenback struggling on Monday to extend its strength from the previous week, the EURUSD pair staged a rebound back from the 1.636 level and rose to a daily high at 1.1675. At the time of writing, EURUSD has retreated modestly back to 1.16670 at the time of writing, up 0.33% on the day. In all, to extend the bullish trend, EURUSD must first penetrate the next resistance level at 1.1684.

Resistance: 1.1684, 1.1715

Support: 1.1636, 1.1613

 

AUDUSD (H4)

AUDUSD advanced on the greenback’s pullback on Monday. At the time of writing, the pair sits around 0.7023, nearing the resistance level of 0.7074 that has been tested multiple times in the past 12 hours. However, due to the lack of any significant Australia’s economic data, it seems that the price action of AUDUSD pair may be left in the hands of market sentiment. Additionally, with the RSI is pushing away from the oversold region but cannot break past 50, we expect a bearish trend may persist. At the same time, if the bulls remain unable to break above the 0.7074 resistance, then a reversal to the downside is likely.

Resistance: 0.7074, 0.7149

Support: 0.7014, 0.6971, 0.6923

 

Economic Data