Daily market analysis

September 17, 2021

Daily Market Analysis

Market Focus

US stock declined on Thursday after swinging between gains and losses. Expiration of options and futures will be on Friday, which usually result in high volume and volatility. After seven months of gains, equity market has been choppier mid-way through September, but some market strategists believe that this is actually quite normal from a historical seasonal standpoint.

The benchmarks, S&P 500 and Dow Jones both dropped on Thursday. S&P 500 was down 0.2% on a daily basis, the index edged lower a day after it posted its biggest gain since August on Wednesday. The material and energy sectors are the worst performing among all groups, dropped 1.09% and 1.06%, respectively. The NASDAQ, on the contrary, finished in positive territory for a second day.

On top of that, US Core Retail Sales data was released on Thursday, retail sales rose 0.7% last month, boosted by back-to-school shopping and child tax credit payments. The data unexpectedly increased in August, easing some concerns about a sharp slowdown in economic growth. The news has bolstered investor expectations for next week’s policy meeting and how soon the US central bank will start to taper stimulus. However, the weekly jobless claims increased to 332K, higher than what market had expected. Therefore, market fluctuated as investors digested the impact of mixed economic data. Market focus now shifts to next week’s FOMC meeting.

In Asia, stock market was surrounded by selling pressure, as the debt crisis at China Evergrande Group keep fermenting. Furthermore, casino stocks in Macau extended their losses amid the government’s tightening regulations on casino firms.

 

 

Main Pairs Movement:

The U.S. core retail sales figures for August was due earlier today and the news quickly sent shockwaves across foreign exchange markets. August retail sales increase by 1.8%, month over month, excluding car sales. The robust August spending figures went against fears of the Delta variant hampering economic recovery and provides a much-needed boost of confidence in the course of the U.S. economy. Majority consumer spending, in August, shifted from the service industry to furniture, groceries, hardware, and online purchases.

Most currencies dropped against the dollar as demand for the Greenback soared. Cable trended lower and dropped through our previously estimated support level of 1.3801. USD/CAD gained as demand for the dollar soared, but the pair is still consolidating between 1.2589 and 1.268 with no clear down or up trend. AUD/USD, also, fell through our previously estimated support level of 0.731 as the dollar gained strength.

  

Technical Analysis:

GBPUSD (4-hour Chart)

Cable traded higher during the European trading session as the U.K. cabinet reshuffle passed smoothly; however, as the robust U.S. retail figures and American trading hours arrived, the dollar gained strength and started to drag Cable down. Cable tumbled, as much as, 0.53% at the beginning of the American trading session. The strong dollar brought Cable beneath our previously estimated support level of 1.3801 and the pair is trading at 1.378, as of writing. Speculators will be eyeing next week’s FOMC meeting as FED bond tapering is seemingly imminent.

For technical aspect, GBP/USD reversed yesterday’s upward trend amid a resurgent of dollar demand due to healthy August retail sales figures. Cable has broken through our previously estimated support level and is continuing to trend downwards, as of writing. Nearest support for the pair sit at 1.3755; however, the U.K retail sales figures for the month of August are due tomorrow and could provide some upward momentum for bulls and the pound if figures return better than estimated results. RSI is, currently, sitting at 37.74, suggesting some under buying in the market. Cable has broken ground below the 50, 100, and 200 day SMA; furthermore, the pair is edging close to the lower bound of the bollinger bands.

Resistance: 1.3905, 1.3937, 1.3958

Support: 1.3755, 1.368, 1.3604

  

USDCAD (4- Hour Chart)

USD/CAD trended downwards at the beginning of the trading day, but quickly recovered from the session low of around 1.26 and gained more than 0.5% once the American trading session began. Strong dollar demand has brought the pair to challenge our estimated resistance level of 1.2708 and help the pair regain all of the lost ground since Monday. Speculators, however, should still be mindful that the loonie is highly dependent on the global export and commodity prices, thus indications of international economic slow down could drag the loonie lower still and propel USD/CAD to higher levels. The Canadian federal election will take place next Monday, and polls are showing a slight favor to Justin Tredeau’s Liberal party.

For technical aspect, USD/CAD is still contained by our previous resistance estimates, but the pair is edging closer to the 1.27 price level. RSI is currently sitting at a marginally over-baught level of 55. USD/CAD has reached the upper bounds of the bollinger bands after today’s dollar rally, and the pair is currently trading above the 50, 100, and 200 day SMA.

Resistance: 1.2708, 1.2834, 1.2912

Support: 1.2589, 1.252, 1.2494

  

AUDUSD (4- Hour Chart)

The Audtralian Bereau of Statistics revealed that the unemployment rate fell to 4% in August, compared to 4.6% in July; however, the decline in the unemployment rate is attributed to the lowered participation rate in August. Despite a better unemployment rate in August, the lowered participation rate raised concerns and bearish sentiment for the Aussie dollar. AUD/USD began the day trending lower, and, once the U.S. retail sales figures were released, the pair trended even lower and broke through our previously estimated support level of 0.731; however, as of writing, AUD/USD has successfully defended the 0.7285 support level and the pair is beginning to stable around that price level.

For technical aspect, RSI indicates 55.38, suggesting neutral buying sentiment. AUD/USD successfully defended our previously estimated support level of 0.7285, but the pair dropped through the 0.731 support level. Currently, the pair trades at the lower bound of the Bolliner bands, and the pair is trading below the 50, 100, and 200 day SMA.

Resistance: 0.7379, 0.7468

Support: 0.7285, 0.7222, 0.7117

  

Economic Data

Currency

Data

Time (GMT + 8)

Forecast

USD

TIC Net Long-Term Transactions (Jul)

04:00

GBP

Core Retail Sales (MoM)

14:00

0.8%

GBP

Core Retail Sales (YoY)

14:00

2.5%

GBP

Retail Sales (MoM)

14:00

0.5%

GBP

Retail Sales (YoY)

14:00

2.7%

EUR

Core CPI (YoY) (Aug)

17:00

1.6%

EUR

CPI (MoM) (Aug)

17:00

0.4%

EUR

CPI (YoY) (Aug)

17:00

3.0%

       

USD

Michigan Consumer

Sentiment (Sep)

22:00

72