Daily market analysis

JUN 08,2020

June 8, 2020

GOLD

Gold experienced some aggressive selling in response to upbeat Nonfarm Payroll report. Surging US bond yields and stronger USD contributed to the bearish momentum on Gold. The Gold rally on Thursday failed to extend further and has lost more than $40 dollars on Friday, bottoming at 1670/oz.

The US employment data came in much better than the market’s expectation, and thus triggered more gains in Wall Street, weighing down on the demands for safe-haven assets. Non-farm payroll was initially expected to decline by eight million was shocked by a 2.5 million increase in May.

Nonetheless, June has been packed with risk-on sentiments throughout the first week of June, as a result, Gold’s price has not been able to demonstrate any strong positive momentum. The weekly high Gold’s price appeared on Monday and Tuesday at 1745, afterward, the Gold’s price has experienced a few extensive drops. As the time of writing, the gold is hovering around the support at 1681.

GBPUSD

Sterling reach second-best performance since hideous loss since March, gained 2.6% in week. for intuitive, weak greenback motivate by risk on from market and safe-haven demand was dwindling even more was leader indicator, PMI, showed more optimistic signal after pandemic control.

on the other hands, “We are close to reaching the limits of what we can achieve through the format of remote formal round of talks on U.K.’s future relationship with E.U.” U.K. Chief Negotiator says on Friday statement. Yet, E.U.’s negotiator said there was no significant progress was made in this week’s talks with the U.K. over the two sides’ future relationship. Both sides’ negotiator called on their political leader to break the deadlocked.

Other political concern with China that U.K. PM was criticism of Beijing’s planned imposition of security law on HK. U.K. also took steps to exclude Huawei from its 5G mobile networks by lining up potential replacements, another moves likely to anger Beijing. Notwithstanding few concerns was amid U.K. market but shrugged off by strong Sterling.

Next week, we still looking for Brexit talk’s impact to its own currency and Friday’s manufacturing production data will whether support that binge sterling.

EURUSD

The Euro continues to rally this week; the pair has remained bullish for eight days in-a-row, and it has broken its resistance level of 1.1183 from last week. The EUR/USD exchange rate jumps to a new high of 1.1362 on Friday after the ECB unveils a huge stimulus package of injecting additional $676 billion USD into eurozone economy. With no doubt, it is essentially a positive sign for European market. In the meanwhile, the ECB also agrees to extend the pandemic emergency purchase program (PEPP), supporting the financial recovery in eurozone.

On the contrary in the U.S., six consecutive days protests following George Floyd’s death are spreading like the wildfire. At the same time, the situation of coronavirus does not show a sign of slowdown. As a result, the USD is under a heavy pressure. Looking at the U.S. Dollar index, the index is losing approximately 0.14% at 97.17, and it is currently facing immediate contention at 97.09, which is the lowest point since January 2020.

Looking forward to next week, the U.S. will publish its May employment figures; it is expected to have an unemployment rate of over 19.8% in May. That is being said, with all the negative conditions adding up, we can anticipate the EUR/USD pair to advance, and the next possible bullish target is over the 1.13644 price zone, the highest level this week.

AUDUSD

AUDUSD is on an upward trend, and it is constantly making higher highs and higher lows every day. Such a strong performance, Aussie has exceeded its previous monthly high. On Monday, optimistic Manufacturing PMI data from China showed that the industry is continuing to expand, which helped the appreciation of the Aussie start the first step in this week. Besides, despite the Reserve Bank of Australia’s unchanged interest rate, Governor Philip Lowe raised the hope of a positive statement, which also pushed the Australian dollar to expand its upward trend.

On the other hand, after the European Central Bank announced its monetary policy, the exchange rate of the euro against the dollar rose sharply, which seems to be the main reason for the weakening of the dollar. In addition to the upbeat data, hopes for economic recovery and expectations for further stimulus measures have also propelled the market’s risk sentiment, which in turn offset concerns over US-China tensions and weighed on the USD’s safe-haven demand. Besides, the weak ISM manufacturing PMI and the recent riots rage also brought downward pressure on the US dollar.

Based on the technical analysis, we believe that the Aussie pair may continue advancing during the upcoming week. The upside resistance is seen at 0.7050 in the near-term and the downside support is aligned at 0.6937.

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