Daily Market Analysis
Stocks rose and benchmark Treasury yields retreated for a second day amid optimism the economy will continue to benefit from government support.
Technology shares led gains, with the Nasdaq 100 outperforming the benchmark S&P 500. Intel Corp. jumped 7% after the chipmaker named a new chief executive. Treasury received strong demand for a second consecutive day at a government debt sale, helping to send yields down from the highest levels since March.
In Washington, the House of Representatives is voting to impeach President Donald Trump for a second time. A Senate trial for Trump won’t likely get under way before his term ends on Jan. 20.
In Europe, European Central Bank council member Francois Villeroy de Galhau said the ECB will keep an easy stance for as long as needed, and U.S. investors took comfort from remarks by two Federal Reserve officials that pushed back on the possibility of tapering bond purchases anytime soon.
Europe’s Stoxx 600 was flat, with losses in banks and travel shares outweighing M&A announcements. Among the day’s winners, French grocer Carrefour SA rallied after Alimentation Couche-Tard Inc., the convenience-store giant that owns the Circle K chain, said it’s exploring a transaction.
Main Pairs Movement
The greenback held gains as the House of Representatives moved forward with impeachment proceedings while shares and Treasury bonds were firm after Federal Reserve Governor Lael Brainard pushed back against suggestions the central bank could taper its bond buying program later this year. The loonie outperformed amid cross-market flows.
Meanwhile, Treasury yields remained lower after Brainard said bond buying will be needed for “quite some time”. Boston Fed President Eric Rosengren also said the Fed will continue to purchase longer-term assets until economic growth is on a stronger footing.
The Canadian dollar was the only currency higher against the greenback. The greenback remains higher against most of its Group-of-10 peers, with biggest gains vs high-beta Scandinavian and South Pacific pairs.
The common currency pared losses amid demand in the futures market after falling to session lows following news former Prime Minister Matteo Renzi plans to pull his party’s ministers from Italy’s governing coalition.
GBPUSD (4 Hour Chart)
Sterling slid further from daily highest 1.37 level to 1.36 during the American session. It is trimming some of Tuesday’s hover after being unable to toward above momentum amid greenback recovery. Sterling was among the top performers still boosted by yesterday’s comments from BoE governor who was cautions about negative interest rates. On Wednesday, reports about vaccines in the British also offered support to the sterling that printed monthly highs versus the euro before pulling back.
From technical aspect, sterling is correcting lower after approaching a psychological barrier at the 1.37 level. As price action, we expect that 1.36 would be a critical support for bullish aspect. If not hold above that, it would be continuous choppy movement or even slipped further. For RSI aspect, indicator still place above 50 that set 54 as of writing, remained upward suggestion. For Moving Average perspective, short-term propel upward which is testing golden cross with long-term one at current stage. The fly in the ointment that long-term moving average indicator is losing momentum to toward upwind. Therefore, combing all suggestion, we expect sterling price will under pressure further if price tamp down 1.362. On the other hands, price hold above critical support that would give it ascend momentum.
Resistance: 1.3678, 1.3700
Support: 1.362, 1.354, 1.3448
EURUSD 4 Hour Chart)
After euro dollar ebbed down 1.2211, which is a main support, price keep back-and-forth in range 1.2211 and 1.2138. As greenback gain ground, the move came alongside the fall in U.S. yields following a bond auction on Tuesday. Other side, market participants are eyes on ECB Monetary Policy Statement tomorrow. Governing council member comments that the ECB needs the ability to exceed 2% inflation without it triggering monetary policy tightening could serve as a bit of “indirect jawboning” and help to slow the euro’s climb versus greenback.
For technical view, RSI indicator slipped below 50 which suggesting a bearish momentum forward. For Moving Average, both short and long-term indicator are exacerbating at current stage. Although upwind currently, short-term indicator is getting flat lope after lasting drop. Therefore, we are still pessimistic for ascend movement as suggesting above. Nonetheless, if price hold above 1.2138 which is a critical days-long-support, it would give it a consolidate chance.
Resistance: 1.2211, 1.2251
Support: 1.2138, 1.2078
XAUUSD (4 Hour Chart)
Gold had choppy movement all day between first pivot support and resistance after retreated from last recently low. At the meantime, U.S. 10 years Treasuries yield had a 2-day consecutive slipped which gave gold market a coup for short period. Market participant is looking on bond market of negative correlation that might undermine of gold captive whilst yields creepy up.
For RSI aspect, indicator remained bearish momentum suggestion for short term as it stayed 41.2 gird. For Moving Average aspect, short and long-run upend to lower level without flat signal.
Resistance: 1863, 1878, 1900
Support: 1844.56, 1838, 1827
Click here to view today’s important economic data.