Daily market analysis

October 29, 2021

Market Focus

U.S. equity markets bounced back strongly on Thursday as upbeat economic data and stellar corporate earnings results boosted market sentiment. The S&P 500 gained 1% to close at another record high of 4596.42. The Nasdaq gained 1.4% to close at 15448.12, and the Dow gained 0.7% to close at 35730.48. Since earnings season began, 82% of the companies that make up the S&P 500 has been able to report earnings that beat analyst estimates.

The U.S. GDP grew by 2% ,quarter over quarter, marking the weakest quarter of growth since mid-2020. A surge in COVID cases and the supply chain crunch both hindered the growth over the past quarter. On the other hand, initial jobless claims figure hit a fresh pandemic low at 281,000.

The 10 year treasury yield increased slightly to settle at 1.578% and the 30 year treasury yield increased slightly as well to settle at 1.979%.

Facebook’s CEO, Mark Zuckerberg, has announced that, beginning on December 1st, Facebook will be rebranded as Meta Platforms Inc and will be switching the ticker FB to MVRS. The new parent company will be devoted to creating a more immersive experience of the world wide web by combining virtual reality and building a virtual world where all media sources can be combined and utilized.

 

Main Pairs Movement:

The Greenback declined sharply at the onset of Q3 GDP data release. The U.S. recorded a 2% growth in GBP, quarter over quarter, weaker than analyst estimates. Despite record low jobless claim figures, the Dollar continued to dive as the DXY hit the intraday low of around $93.

The Japanese Yen weakened as BoJ’s Haruhike Kuroda reiterates the central bank’s dovish monetary policy, despite inflation rising to a 13 year high in the month of September. The Euro traded higher against the Greenback, mainly due to the Dollar’s weakness as the ECB left monetary policy unchanged. The Sterling traded lower against the Dollar as well due to across the board Dollar weakness.

  

Technical Analysis:

USDJPY (4- Hour Chart)

USDJPY hangs near two week lows, trading around 113.41 as the time of writing. After Bank of Japan’s Haruhiko Kuroda’s comment on the outlook of Japan’s GDP and inflation, the currency pair witnesses some selling pressure. From the technical perspective, USDJPY remains depressed, hovering near the lower bound of Bollinger band and trading in the descending trend. However, the immediate support level at 113.38 would be a possible turning point as the RSI indicator has nearly reached the oversold territory, currently at 36.6 mark, giving the pair rooms to rebound; at the same time, the MACD is nearly flat, indicating a possible direction change from sell to buy.

Resistance: 114.70

Support: 113.38, 112.57, 111.91

  

EURUSD (4- Hour Chart)

EURUSD trades monthly highs above 1.1680 as the US dollar sell- off picks up steam. The US dollar loses strength, having a hard time finding demand after ECB’s cautious tone on European inflation outlook. From the technical aspect, the 4- hour chart outlook for EURUSD provides a mildly bullish stance since mid- October. Today’s bullish move has breached the monthly highs, providing some supports to bulls. At the same time, the pair has recovered above its 20 Simple Moving Average, indicating a neutral- to- bullish trend. At the moment, the pair is heading to its next immediate resistance at 1.1697, where would be an obstacle to overcome as the RSI has nearly reached the overbought condition and the currency pair has traded above the upper band of Bolliger band. If EURUSD can successfully breached the resistance level, then it will head toward the next level at 1.175; on the contrary, if the pair fails to penetrate the level, it will possibly consolidate for an adjustment.

Resistance: 1.1697, 1.1750, 1.1180

Support: 1.1631, 1.1524

  

GBPUSD (4- Hour Chart)

GBPUSD extends, trading around 1.3800 region, as the US dollar loses traction after the disappointing Q3 GDP data. From the technical perspective, despite the recent recovery, the currency pair remains downside, trading in the descending trend. However, the pair still has potential to move further north as the RSI is only in the 59 level, having plenty of rooms to extend further. The short- term bulls are supported as the pair has traded above the 20 Simple Moving Average as the time of writing. To the upside, if the pair can break the next immediate resistance at 1.3801, then the bullish momentum would have a chance to bring the pair further toward 1.3835.

Resistance: 1.3801, 1.3835

Support: 1.3735, 1.3673, 1.3623

  

Economic Data

Currency

Data

Time (GMT + 8)

Forecast

AUD

Retail Sales (MoM) (Sep)

08:30

0.2%

EUR

German GDP (QoQ) (Q3)

16:00

2.2%

EUR

CPI (YoY) (Oct)

17:00

3.7%

CAD

GDP (MoM) (Aug)

20:30

0.7%