Daily market analysis

June 7, 2022

US markets moved slightly higher on Monday as investors tried to rebound from a losing week. The Nasdaq Composite rose 0.40% while the S&P 500 was up 0.31%: the Dow Jones Industrial Average was once up as high as 300 points, but gave up some of its gains following the benchmark 10- year treasury yield pushed above 3%, finishing with 0.1% at the end of the day. One of the major boosts from the equities markets was the news that Beijing, China rolled back some Covid- related restrictions; at the same time, Chinese regulators are in the process to wrap up their investigations into the ride-hailing giant Didi.

The UK Prime Minister Boris Johnson faced a vote of confidence on Monday. Johnson’s leadership has been wracked and doubted by several controversies, the biggest of which has been the party gate scandal when Johnson and other officials broke its Covid lockdown restriction. Despite Boris Johnson eventually surviving the vote, 211 lawmakers voted in favour of Johnson and 148 lawmakers voted against him, the call of growing discontent has truly impacted Johnson’s public standing.

Main Pairs Movement

Gold was down 0.48% on Monday as the US dollar was feeling the pull of gravity, which kept the downside in the precious metal. To add, most of the European markets were on a holiday, gold’s downside mainly came from the pressure of the US dollar.

USD/JPY portrayed a new high, above 131.00, as Japan’s easing monetary policy continued to weaken the Japanese Yen. On the flip side, the Fed Vice-Chair Lael Brainard and Cleveland Fed President Mester repeated the statements which suggested higher odds favouring raising interest rates.

AUD/USD hovered around 0.7200 as markets awaited RBA policy on early Tuesday, and was down 0.21% at the end of the day.

Crude oil prices edged lower on Monday, buoyed by Saudi Arabia possibly raising its oil prices in July, but a higher output from OPEC+ weighed on the downside of oil prices. WTI was down 0.51%, trading at 117.689 at the end of the day.


Technical Analysis

EURUSD (4-Hour Chart)

The Euro fared worse against the U.S. Dollar on the first trading day of the week. Market participants demanded the U.S. Greenback, which rose more than 0.3% after the American trading session began. The shared currency continues to trend upwards in the long term, but significant economic headwinds and a slow to react central bank pose long term upside limits to the EURUSD pair. Market participants will be focused on Thursday as the ECB is set t announce its monetary policy statement.

On the technical side, the resistance at 1.07614 remains unchallenged while support levels at 1.0695 and 1.06816 sit firm. RSI for the pair sits at 53.34, as of writing. On the four hour chart, EURUSD currently trades below its 50 day SMA, but above its 100 and 200 day SMA.

Resistance: 1.07614, 1.07864

Support: 1.0695, 1.06816

GBPUSD (4-Hour Chart)

The British Pound traded lower against the dollar on the first trading day of the week. Dollar demand surged as the U.S. 10 year treasury yield soared past 3%. Despite an upward equities market, market participants rotated into the U.S. Greenback to take advantage of rising yields. On the 7th, the U.K. is set for a vote of no confidence for prime minister Borris Johnson.

On the technical side, resistance for Cable sits firmly at the 1.25691 and 1.26539 price region, while the support level at 1.24539 remains intact. RSI for the pair sits at 47.27, as of writing. On the four hour chart, Cable currently trades below its 50 days SMA but above its 100 and 200 day SMA.

Resistance: 1.25691, 1.26539

Support: 1.24539

USDJPY (4-Hour Chart)

The U.S. Greenback surged against the Japanese Yen on the first trading day of the week. Broad-based demand for the Dollar resulted from the surging U.S. 10 year treasury yield. The better than expected job report from last Friday provided much tailwind for the U.S. Dollar. The BoJ remains its long term easy money stance to prop up its export friendly economy; on the other hand, the Fed is set to raise at least 100 basis points more by the end of the year. Interest rate differentials between the two countries continue to favour Dollar bulls.

On the technical side, USDJPY reached its historical high on the first trading day of the week and is continuing higher into the American trading session. The support level for USDJPY sits at 129.795 and 126.738, while resistance levels have yet to form. RSI for the pair sits at 52.99, as of writing. On the four hour chart, USDJPY currently trades well above its 50, 100, and 200 days SMA.

Resistance: 133

Support: 129.795, 129.738

Economic Data

CurrencyDataTime (GMT + 8)Forecast
AUDRBA Interest Rate Decision (Jun)12:300.6%
AUDRBA Rate Statement12:30
GBPComposite PMI (May)16:3051.8
GBPServices PMI (May)16:3051.8
CADIvey PMI (May)22:00