Daily market analysis

September 7, 2021
   

Daily Market Analysis

Market Focus

Global stocks rose for a seventh day and U.S. equity-index futures rallied as investors bet slower hiring in the world’s largest economy may delay a tapering of Federal Reserve stimulus. Aluminum hit a decade high amid political unrest in Guinea.

MSCI Inc.’s gauge of world stocks gained for a fourth day even as U.S. markets were closed for Labor Day. In Europe, the Stoxx Europe 600 Index rose the most in six weeks, led by technology shares. Contracts on the S&P 500 Index climbed 0.2%. Aluminum supplier Norsk Hydro ASA jumped to a 13-year high in Oslo. Gold bounced between losses and a gain of 1.9%.

The latest U.S. jobs report threw traders’ calculations awry after they braced for an announcement of tapering at the Fed’s September meeting. The world’s largest economy added only 235,000 jobs in August — the smallest gain in seven months — boosting chances of a delay in that announcement.

“Expectations of a delay in Fed tapering as well as a new administration in Japan is supporting equity markets and we expect this to continue,” said Sebastien Galy, senior macro strategist at Nordea Investment Funds. “Buy-on-dip is as robust as ever, taking negative news such as U.S. nonfarm payrolls as good news which is typical of an advanced carry trade.”

Aluminum hit the highest in over a decade as political unrest in Guinea fueled concerns over supply of the raw material needed to make the metal. A unit of the military seized power and suspended the constitution, raising the possibility of disruption to bauxite shipment from the key global supplier.

  

Main Pairs Movement:

After slumping to a three-week low last Friday, the US dollar rebounded back on the first day of new trading week. The strong selling pressure on US dollar last Friday was caused by disappointing Nonfarm Payrolls data, as the report missed the market expectation of 750,000 by a wide margin. The DXY index is at 92.222 as of writing, rising 0.11% on a daily basis. Trading conditions remain thin due to the Labor Day holiday in the US. But concerns about slowing global growth supported the safe-haven currency, therefore, lifted the greenback up to post a moderate comeback.

EUR/USD and GBP/USD both declined on Monday amid stronger US dollar across the board, trading at 1.1868 and 1.3834, respectively. EUR/USD was trading lower on Monday, once falling under 1.1860 level and posted a 0.08% loss on the day as of writing. The European Central Bank will release its interest rate decision on Thursday.

USD/JPY advanced today, as the pair gained positive traction first, then steadily hovering around 109.8 level during American session. The pair is trading at 109.84 and posted a 0.014% gain on the day as of writing.

Gold slipped on Monday, as the raising demand of US dollar weighed on the metal throughout the day. Gold’s movement seems to be a correction of last Friday’s upsurge. The precious metal is now trading at 1822.94, losing 0.17% on a daily basis. WTI Crude Oil, in a similar way, dropped more than 0.4% on Monday.

  

Technical Analysis:

GBPUSD (4-hour Chart)

The GBP/USD pair declined on the first day of a new trading week, dropping below 1.3820 level at one time. The pair was surrounded by selling pressure and failed to bounce back during American trading hours. The cable was last seen trading at 1.3828, losing 0.25% on the day as of writing. The bearish movement witnessed in GBP/USD is result from the raising demand of US dollar. Meanwhile, looming Brexit concerns between the UK and the European Union over the Northern Ireland protocol also weighed on the British Pound. For technical aspect, RSI indicator 55 figures as of writing, suggesting tepid bull-movement ahead. But the MACD indicator shows a negative histogram and a death cross, which indicates a bearish signal.

In conclusion, we think market will be bearish as long as the 1.3892 resistance line holds. As for the Bollinger Bands, price is falling from the upper band and crossing above the moving average, as a result, the lower band becomes the loss target.

Resistance: 1.3892, 1.3958

Support: 1.3767, 1.3731, 1.3680, 1.3602

  

USDCAD (4- Hour Chart)

The USD/CAD pair was trading higher on Monday, then failed to climb higher during European session. The pair is trading at 1.2530 at the time of writing, posting a 0.05% gain on a daily basis. Following last two week’s slip, USD/CAD rebounds slightly amid stronger US dollar and the selling pressure witnessed in crude oil prices. For technical aspect, RSI indicator 39 figures as of writing, suggesting bear-movement ahead. For the Bollinger Bands, the price is now sitting between the lower band and the moving average, which also indicates a bear market.

In conclusion, we think market will be bearish as the pair is heading to retest the 1.2494 support, a break below that level will open the door for additional near-term losses. And the next support is at 1.2453. On top of that, the Bank of Canada will announce its interest rate decision on Wednesday, as the market expect BoC to raise rates in the second half of 2022 when inflation consistently hit 2%.

Resistance: 1.2559, 1.2638, 1.2708

Support: 1.2494, 1.2453, 1.2422

  

AUDUSD (4- Hour Chart)

The AUD/USD pair retreated on Monday and tooked a hit in early trade during Asian trading hours. It has been hovering around 0.7435 since then. The raising demand of US dollar and concerns about Delta cases are both putting pressure on AUD/USD. Victoria and New South Wales remain under lockdowns as Covid cases continue to rise. At the time of writing, the pair is trading at 0.7433, losing 0.22% on the day. For technical aspect, RSI indicator 66 figures as of writing, suggesting that the market is near the overbought zone, investors should note for possible selling signals. The MACD also falls below the signal line, which means the pair is likely to experience downward momentum.

In conclusion, we think market will be bearish as long as the 0.7478 resistance line holds. For Bollinger Bands, the pair is now falling from the upper band after touching it, which indicates a bear market. Furthermore, Reserve Bank of Australia will release its interest rate decision on Tuesday, the focus will be whether the RBA delays its tapering plans due to Covid-19 epidemic.

Resistance: 0.7478, 0.7534

Support: 0.7395, 0.7356, 0.7285

  

Economic Data

Currency

Data

Time (GMT + 8)

Forecast

AUD

RBA Interest Rate Decision

(Sep)

12:30

0.10%

AUD

RBA Rate Statement

12:30

 

EUR

German ZEW

Economic Sentiment

(Sep)

17:00

30.0