Daily market analysis

June 8, 2022

US equities edged higher despite the retail giant, Target issuing a warning about its current quarter’s profits, pressuring the broader retail sector. The Dow Jones Industrial Average was up 0.8%. The S&P 500 rose 0.95% while the Nasdaq Composite climbed 0.94%. The three major indices opened solidly lower but turned positive as the day progressed following the decline of bond yields. Major retailers have delivered their mixed earning reports, adding some volatility to the equities market. The mixed reports signalled the potential recession or a rapid change in consumer spending.

A widely followed Federal Reserve member has started indicating that the US economy could be headed for a second successive quarter of negative growth, meeting a rule-of-thumb definition for a so-called recession. According to Fed’s GDPNow tracker, it shows an annualized gain of 0.9% for the second quarter, down from an estimated 1.3%.

Following Apple’s WWDC22, Apple is turning into a fintech company, not just focusing on devices and software, but now shifting to a new payment system. Apple announced several new features for its wallet at its developer’s conference on Monday, directly competing with other fintech companies, including PayPal and Affirm.

Main Pairs Movement

USD/JPY continued to edge higher toward 133.00, climbing a third consecutive day. The Japanese Yen stayed offered despite Japan’s GDP being better than expected. The divergence of the monetary policies between the Fed and the BOJ remained weighing on the currency pair.

WTI extended its consolidation toward the 118.00 level amid concerns about the oil supply. At the same time, oil prices witnessed a strong upside movement to the expectation of a demand recovery in China. On the supply side, the American Petroleum Institute has agreed to increase the supply by 1.845 million barrels, but it seemed to do minimal impact on the oil prices as the boost of the oil supply was still far to offset the supply gap from Russia.

AUD/USD climbed 0.54% on Tuesday following the monetary decision from RBA, lifting the rate by 0.50%, higher than expected. The RBA pointed out that inflation in Australia has surged significantly, and the RBA was needed to tackle the inflationary pressure by being more aggressive on the rates.

Technical Analysis

EURUSD (4-Hour Chart)

EURUSD fell from the start of the trading day, but the pair was able to pair losses once the American trading session began. A weaker Dollar and an overall risk-averse sentiment aided the Euro to end its third consecutive losing day against the U.S. Greenback. The ECB is set to convene on Thursday and announce its monetary policy decision.

On the technical side, EURUSD has been trading around a tight range between 1.06384 and 1.07864 for the past couple of weeks. The pair’s near-term support levels remain at 1.0695 and 1.06816, while resistance levels at 1.07864 stand firm. RSI for the pair sits at 53.46, as of writing. On the four hour chart, EURUSD is trading 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 surged as the U.S. Greenback lost demand. Britain’s Prime Minister Borris Johnson survived the vote of no confidence, by a small margin. U.K.’s services PMI printed 53.4 for May, marking the largest one-month decline for the year; furthermore, as the U.S. 10 year treasury yield retreated below 3%, the Pound gained further traction.

On the technical side, GBPUSD has broken through our previously estimated resistance level at 1.25691, but the 1.26539 resistance level remains unchallenged. The support level at 1.24539 remains firm. RSI for Cable sits at 58.46, as of writing. On the four hour chart, Cable currently trades above its 50, 100, and 200 days SMA.

Resistance: 1.25691, 1.26539

Support: 1.24539

USDJPY (4-Hour Chart)

USDJPY stalled out as the pair neared the 133 price region. Broad-based dollar weakness allowed the Japanese Yen some breathing room on Tuesday’s trading; however, the downside for the Japanese Yen still seems abundant, due to the BoJ’s easy policy stance. On the economic docket, Japan is set to release its quarterly GDP early in the Asia trading session on the 8th.

On the technical side, USDJPY has met its near term resistance at the 133 price region, while the near term support level at 130 sits firmly. RSI for the pair is indicating 77.16, as of writing. On the four hour chart, USDJPY is currently trading above its 50, 100, and 200 days SMA.

Resistance: 133

Support: 130

Economic Data

CurrencyDataTime (GMT + 8)Forecast
USDEIA Short Term Energy Outlook00:00
JPYGDP (Q1)07:50-0.3%
INRInterest Rate Decision12:304.8%
GBPConstruction PMI (May)16:3056.6
USDCrude Oil Inventories22:30-1.8M