Daily market analysis

October 26, 2021

Market Focus

US markets started this week with outperformance as major tech companies’ earnings on deck. The Dow Jones Industrial Averages closed at record highs while the Nasdaq rose 0.9% on Monday. The S&P 500 also traded at record highs, boosted by a 12% surge in Tesla’s share as it hit $1 trillion market capitalization for the first time.

一張含有 文字 的圖片

自動產生的描述

The electric carmaker, Tesla, hit a $1 trillion market cap on Monday after Hertz decided to buy 100,000 vehicles. After the news of the deal, it brought up the price of Tesla to $1,045, a new record high.

China has the political momentum to get a ball rolling on property. Last weekend, the Chinese state Council was authorized to conduct a test in unspecified regions for five years. The purpose of the test attempts to limit speculation in China’s property market. Since real estate and related sectors account for at least 25% GDP, tapped taxes will significantly bring major revenues to Chinese government.

  

Main Pairs Movement:

Gold price advanced above $1,800 on Monday despite risk- on market sentiment. Demand for gold was underpinned as the market was cautious ahead of the inflation issue. Gold price will eye on several economic releases later this week.

EURUSD traded in a tight range as the markets took a high alert ahead of the ECB meeting this week. At the end of the day, EURUSD traded at 1.16065, 0.33% lower.

USDJPY remained strong near 113.70 despite slightly weaker US 10- year yield, trading lower at 1.63%, which undermined the demand for the US dollar. USDJPY traded slightly higher as Janet Yellen commented on inflation and Fed’s tapering schedule.

  

Technical Analysis:

USDJPY (Daily Chart)

The USD/JPY pair posts some demand at the start of the week and seems to have stalled its recent corrective pullback from multi-year tops for now. The pair held on to its modest intraday gains, around the 113.65-75 region through the mid-European session, albeit once jumped to the daily high ay 113.92 at the Wall Street opening, it soon fell back to the tight range that it previously settled.

With a light economic calendar, the revived risk-on mood weighed on the safe-haven Japanese yen and may be seen as the major factor that underpinned the rally of the USD/JPY pair. Bulls need to wait until Thursday’s US GDP reports for further clues to support the US dollar demand and assisted the pair to defend the lower end of a short-term ascending channel.

On the technical front, the daily MACD histogram is still at the bullish side, plus the RSI indicator has just dropped below the overbought territory, leaving rooms for the pair to the upside. The first resistance for the pair may appear at 113.75, followed by the yearly peak 114.70.

Resistance: 113.75, 114.70

Support: 112.90, 111.13, 109.28

  

EURAUD (Daily Chart)

The EUR/AUD cross plummeted on the first day of the week, losing most of its gains from last Thursday and Friday’s rally, and now trading at 1.5495, where the season lows sit. The pair began its downward ride in the early European session, recovered some loss during the American opening, but then continue its negative trajectory afterward.

The cross’s weakness may derive from the AUD’s appreciation amid the broader positive market mood. Investors now shift their focus toward the Australian inflation figures due on Wednesday, and looming ECB meeting on Thursday is also well-anticipated.

On the technical aspect, the MACD histogram remains in the bearish territory, suggesting the selling stream of the cross may proceed. However, the RSI indicator shows 30.22 at the moment, just one step ahead of the oversold region, indicating a short-term correction may occur before the cross takes a nosedive. On the downside, the May’s low 1.5420 would be a strong support against the bears, followed by 1.5250, the yearly low.

Resistance: 1.5616, 1.5776, 1.5910

Support: 1.5420, 1.5250

  

USDCAD (Daily Chart)

Loonie continued its gains on Friday amid the broader greenback strength. The pair made its first attempt to breakthrough the 1.2400 threshold, but failed as the risk-on market mood limited the strength of the safe-haven USD. However, as the Fed’s taper schedule looms, a breach of that level may just be a matter of course.

The strong US dollar across the board has kept on being the major driver for the rise of the Loonie pair. Powell’s hawkish comment is still fueling greenback’s demand despite the elevating prices of the commodities. Looking ahead, Bank of Canada’s rate meetings and the US GDP report are on the table. Investors seem reluctant to place significant bets ahead of the crucial releases.

On the technical front, the daily MACD histogram is almost going to form a golden cross at the moment. The price actions are still hovering around the 61.8% Fibonacci. As above mentioned, some catalysts may be required to breakthrough this awkward situation.

Resistance: 1.2478, 1.2727, 1.2949

Support: 1.2229, 1.2007

  

Economic Data

Currency

Data

Time (GMT + 8)

Forecast

USD

CB Consumer Confidence (Oct)

22:00

108.3

USD

  New Home Sales (Sep)

22:00

760K