Daily market analysis

May 12, 2021

Daily Market Analysis

Market Focus

Energy, financial and industrials shares led U.S. stocks lower as the pullback centered in the technology sector widened while investors remained on edge over the threat of inflation.

The tech-heavy Nasdaq 100 erased a loss of almost 2% to finish little changed as some dip buyers emerged. The benchmark S&P 500 dropped for a second day after setting a record high on Friday. Treasury yields edged up and the dollar traded near the lowest levels of this year.

Debate rages over whether the expected jump in price pressures will be enduring enough to force the Federal Reserve into tightening policy sooner than current guidance suggests. Fed Governor Lael Brainard said policy makers must show continued patience as distortions in the post-pandemic boom sort themselves out while the economy is still far from the central bank’s objectives.

Among the biggest pandemic winners, tech stocks whose valuations often depend on earnings prospects far into the future are now at the center of the inflation debate. That was epitomized in Cathie Wood’s Ark Innovation ETF, which has tumbled about 15% so far this year after surging almost 150% in 2020.

      

Main Pairs Movement:

The dollar erased losses as the stocks fell for a second day. Still, the greenback remained lower against most of its Group-of-10 peers as investors focused on inflation concerns with a report due Wednesday that may show a quickening in price increases in April. The pound extended gains for a third session.

The rise in yields also helped the greenback; U.S. 10-year Treasury yields rose through the 50-DMA level to 1.6289, the highest since May 3. Broad-based gamma demand is appearing ahead of U.S. consumer inflation data Wednesday with traders positioning for a price surge and dollar weakness. The surge in prices of commodities in recent days is also intensifying the debate about inflation and the timing of tapering in central-bank accommodation.

A spike in futures turnover helped drive day’s high; month-end hedging near 1.2150 keeps pair supported; offers anticipated near 1.2200, according to traders. EUR also seeing demand gamma ahead of U.S. CPI data. USD/JPY slid 0.2% to 108.64, Pair seems finds support ahead of 108.34, the May 7 March 10 lows.

        

Technical Analysis:

EURUSD (4 hour Chart)

  

Euro fiber has experienced a struggle to continued gains in earlier momentum that once propel to last day high before retreating to current stage, trading at 1.2147 with 0.15% higher as of writing. From report, “The ground for the euro area recovery is getting firmer and firmer” European Central Bank council member said. For technical aspect, RSI indicator shows 58.7 figures, which suggest a slightly-bullish movement expectation. On average price view, 15-long SMA indicator turn flatter move and 60-long SMA turned upside slope in day market.

We foresee market it pretty optimistic for gain traction in further movement if it can hold above 1.2105 level . On down way, the first immediately support level is eye on 1.2105 level, 1.207 and 1.2 following. On up way, we see 1.215 level will be the first tackle resistance as market tamp down which formed by price cluster area.

Resistance: 1.215, 1.22

Support: 1.2105, 1.207, 1.2

       

GBPUSD (4 Hour Chart)

Sterling is trading higher by 0.17%, trading at 1.4141 as of writing, extended it recently strong movement to the upper stack on relief over the Scottish election results, improved economic forecasts, and lockdown easing estimations. For RSI side, indicator has remained over bought sentiment with 74 figure while market retreat under 1.4155 level. On the other hands, 15 and 60-long SMAs indicator are accelerating it upward slope.

In the day market, sterling slightly move when investor are awaiting of GDP data ahead. At the meantime, chairman of BoE will speak after data release. Therefore, we expect market will impacted by aforemention event with roller coaster move. Nevertheless, we remain the optimistic for upward traction as it seemingly heading to 1.42 level which close to last highest spot after it break through a month-long bottom patter where neckline is on 1.4 level. Since, we see first immediately defend barrier is on 1.4 and 1.396 following.

Resistance: 1.4155, 1.42

Support: 1.3959, 1.4

        

USDCAD (Daily Chart)

Loonie continues to move slightly downside way around 1.21 level which is struggling to aim direction in recently, trading at lower position at 1.2098 as of writing. Meantime, WTI crude oil traveling at higher step with nearly 0.8% in the day, copper also getting higher with 1.7% gains intraday which breach all time peak in history. For RSI side, indicator bounced back from over sought territory to 30 threholds. For moving average side, 15 and 60-long SMAs indicator are remaining it descending movement.

We see price momentum seemingly gird around 1.21 level after it touched down in day market. Moreover, price is forming a cluster area while low bound setting at 1.2079 where we believe is a short-term first support line.

Resistance: 1.2264, 1.238, 1.2491

Support: 1.2079

         

Economic Data

Currency

Data

Time (GMT + 8)

Forecast

GBP

GDP (QoQ) (Q1)

14:00

-1.6%

GBP

GDP (YoY) (Q1)

14:00

-6.1%

GBP

Manufacturing Production (MoM) (Mar)

14:00

1.0%

GBP

BoE Gov Bailey Speaks

17:00

USD

Core CPI (MoM) (Apr)

20:30

0.3%

OIL

Crude Oil Inventories

22:30

-2.817 M