Daily Market Analysis

Market Focus

The dollar swung at equities’ rhythm this Monday. The greenback benefited from safe-haven demand throughout the first two sessions of the day, amid concerns of a second wave of coronavirus contagions across US states and Chinese cities. However, during the US session, the Fed announced that it would begin buying a broad, diversified portfolio of corporate bonds, which in turn, sends Wall Street main indexes into the green and causes the dollar to turn south.

Despite US Treasury yields finished the day with little changed, trimming early losses when Wall Street recovered, the pandemic concerns still hover in the background.

Market Wrap

• Dow Jones up 0.62%, S&P500 up 0.83 % and Nasdaq up by 1.71 %
• WTI July slightly up by $0.81 to $37.07, and Brent Oil July rallied by $0.92 to $39.78 while near closing.
• Dollar Index down by 0.44%.
• Gold down 0.33 % and sit around $1725.15
• VIX down 4.68% to 34.4
• AUDUSD up 0.76% to 0.69192
• EURUSD up 0.60% to 1.13222
• GBPUSD up 0.55% to 1.2604
• NZDUSD up 0.43% to 0.64736
• USDCAD down 0.06% to 1.35720
• USDJPY down 0.03% to 107.332

Main Pairs Movement

The EUR/USD pair took the 1.1300 level, settling around 1.1315. The GBPUSD pair flirted with 1.2600 but remained below the level, as the UK and the EU confirmed that there would not be an extension to the transition period beyond December 31.

The Canadian dollar strengthened relatively quickly as a flurry of risk-on headlines hit the headlines during US session. The AUD/USD pair is trading near 0.6915, trimming intraday losses and setting at its highest in two days as Wall Street’s recovery offered support. RBA Meeting’s Minute is coming up soon.

Commodity-linked currencies advanced against the greenback, boosted by equities. Gold, on the other hand, closed the day unchanged reverting an early slump. Lastly, crude oil price edged higher, also backed by equities.

COVID-19 Data (EOD):

Technical Analysis:

 EUR/USD (H4)

EURUSD has been trading above 1.1250 throughout the day, up from the lows as the market mood improves. With the greenback coming under renewed selling pressure in the second half of the day, the pair gained traction and has risen more than 0.55% on the day. The bullish run is based on news that suggest the Fed will begin buying corporate bonds to support the market’s liquidity. As the EURUSD pair enters a consolidation, we expect the pair to fluctuate between 1.12145 and 1.13625.

Resistance: 1.1350, 1.1390, 1.1497

Support: 1.1230, 1.1185

XAU/USD (H4)

The XAUUSD went on a sharp recovery after hitting day lows in 1705 and regain around $25. The sudden boost was driven by the weakened USD as market sentiment began to anticipate a brighter future on Monday’s afternoon. Due to the fact that the concerns over new COVID-19 cases discovered in China and in several states in US, the market is likely to go under pressure if economy postponed its reopening. Under this circumstance, we believe the demands for safe-haven metal is going to support XAUUSD above 1705.

Resistance: 1746, 1755, 1765

Support: 1665, 1690, 1710

GBP/USD (H4)

The pound jumped from session lows against the dollar on Monday as the U.K. and E.U. agreed to intensify post-Brexit talks. PM stocked hopes that an outline could be reached by the end of next month. Sterling rose 0.37% to 1.26 the highest level from session low of 1.245.

Resistance: 1.2739, 1.2811

Support: 1.25425, 1.2485, 1.24515

Economic Data

Risk Warning:

Trading Forex and CFDs involves significant risk and can result in the loss of your invested capital. You should not invest more than you can afford to lose and should ensure that you fully understand the risks involved. Trading leveraged products may not be suitable for all investors. Before trading, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary. Please read our legal documents and ensure that you fully understand the risks before you make any trading decisions.

The information provided is of a general nature only and the advice has been prepared without taking account of your objectives, financial situation or needs.

GOLD

Gold markets went on a rally during the week, wiping out the loss from the previous week. However, the market entered a phase of consolidation since Wednesday and has been going up and down between 1723 and 1745 for the remaining of the week. As a market that is quite volatile, the current gold’s fluctuation is enabling short-term traders to make a profit for themselves if they trade back and forth in the market. However, in the long-term, the current rally and consolidation is likely to extend upward.

Considering the fact that there are still plenty of macroeconomic reasons and data that can increase demands for the safe-haven metal, gold’s price will enter a bullish run. For example, with the concerns over the virus, the central banks around the world continue to devalue the paper currencies that they back, which would send gold price higher in the future.

A few upcoming indicators we should be aware of include intensified geopolitical relationships, economy re-openings, and vaccine developments. Although some analysts expect the gold to move towards the 1800 region, we believe the gold is going stay fluctuating unless a major risk averse event kicks in.

GBPUSD

GBPUSD started the week off strong by breaking above 1.2750 level momentarily but went downhill ever since. The sharp decline makes this week’s GBPUSD candlesticks look like an upside-down V. Although there appears to be a strong support at 1.25395, the strong plummet has penetrated the first layer of support on Friday, aiming towards the next support level at 1.24780.

We have witnessed a sharp turn of event in the US equity markets in the last two days of the week as markets begin to see a lot volatility and selling pressure when news regarding a second wave of pandemic have broken out. Therefore, due to the fact that the fluctuating market has concerned most of the investors, USD is currently more favored, which in turn, drags down GBPUSD.

There has yet to be a strong indicator that is driving the market besides the consistent threats posted by the virus outbreak; hence, it is unlikely to predict what the GBPUSD would perform down the road. However, if the pair breaks above the highs, it could be a continued impulsive move to the upside. And if the pair moves to the downside, it is likely that some sort of risk-off sentiment or event has taken place.

EURUSD

The EUR/USD pair continued to gain traction, and it rose to a weekly high of 1.14225 this week; however, the pair reversed the direction after testing 1.1402, plummeting toward 1.1250.

As ECB announced the stimulus plan and promised to avoid credit risks and defaults, the EUR/USD pair extended its last week’s bullish trend. Meanwhile, the majority of European countries seem to have a better handle on COVID-19 than the U.S. does; coronavirus cases and deaths remain depressed in Europe, thus being one of the factors to favor the Euro dollar.

Following the U.S. Federal Reserve Monterey policy announcement this week, the Fed decided to maintain the current rates until 2022, sounding the alarm of continuously weak economy. As a result, the three major U.S. stock indexes fell more than 5% on Thursday, the biggest one- day drop since March. At the same time, as the situation of COVID-19 does not seem to ease up in the U.S., the fear of a second COVID-19 wave can potentially hamper the U.S. economy. Consequently, all those factors drag the USD down.

Nonetheless, due to the risk-averse market environment, investors seek safety in the safe- haven greenback, driving the USD higher against the Euro later this week. Despite of losing the strength, investors prioritize the USD as the safety of principal over the Euro as the possibility of a higher return. As a result, the EUR/USD is down 1.56% to 1.12418 on Friday.

Moving ahead, Eurozone Industrial Production Data for the month of April is due to release; the data will essentially play a key role in determining the strength of the Euro next week.

AUDUSD

Aussie tried to regain 0.7 handle throughout this week, but failed to achieve so. Risk-on mood dominated trading earlier this week, demand for safe-haven dollar is being unwind. Market shrugged off astonishing upbeat Non-Farm Payroll figures, partially due to the data misclassification, May’s NFP was being overstated.

The Antipodean currency touched 0.7058, the highest price in 6 months, right after Fed decided to leave interest rate unchanged near zero. Powell promised to hold current interest rate until 2022, and expressed his pessimistic outlook on American labor market. Despite all the dovish comments from Federal Reserve, yet, it is too premature for Aussie to advance beyond 0.7 amid concerns of second wave of COVID-19 infection.

Risk appetite turned sour as market did not like Powell’s message of prolonging low interest rate. US stock market registered for the largest decline since March 12^th, and hopes for a sharp V-shaped economic recovery are fading. Commodity currencies like Australian dollar was particularly vulnerable, furiously plunged 2.04% during Thursday’s trading session.

Moving forward, RBA will release June meeting minutes next Tuesday, followed by Employment Change on Thursday and Retail Sales on Friday.

Risk Warning:

Trading Forex and CFDs involves significant risk and can result in the loss of your invested capital. You should not invest more than you can afford to lose and should ensure that you fully understand the risks involved. Trading leveraged products may not be suitable for all investors. Before trading, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary. Please read our legal documents and ensure that you fully understand the risks before you make any trading decisions.

The information provided is of a general nature only and the advice has been prepared without taking account of your objectives, financial situation or needs.

Daily Market Analysis

Market Focus

The Dow Jones Industrial Average extended its rout to 7%, with all of its 30 companies dropping. The S&P 500 slumped almost 6%, approaching the 7% threshold that would trigger an exchange-mandated trading pause. Airlines, cruise operators and travel companies that soared in recent weeks bore the brunt of the selling. Treasury 10-year yields fell to as low as 0.65% while the dollar jumped.

While much of the equity selling owed to the frantic pace of the recent rally, sentiment did sour as signs mounted that a possible second wave of the pandemic could be taking hold in some states. U.S. jobless claims remained high, underscoring the longer-term challenges caused by the pandemic. The report came out a day after the Federal Reserve provided a dour outlook for the economy.

Market Wrap

• Dow Jones down 6.9%, S&P500 up down 5.89% and Nasdaq up by 0.28%
• WTI July down by $4.07 to $35.86, and Brent Oil July up down $2.67 at $38.55 while near closing.
• Dollar Index up by 0.79%.
• Gold down 0.63% and sit around $1727
• AUDUSD down 2.1% to 0.68530
• EURUSD down 0.7% to 1.129
• GBPUSD down 0.79% to 1.2605
• NZDUSD down 1.53% to 0.6429
• USDCAD up 1.63% to 1.36294
• USDJPY down 0.81% to 106.851

Main Pairs Movement

The EURUSD is trading at daily lows and nearing the 1.1300 level as Wall Street’s collapse backed the demand for the safe-haven dollar. Fed’s echoes still taking their toll on financial markets.

A dovish US Federal Reserve undermined the market’s mood. US initial jobless claims for the week ended June 5 are foreseen at 1.55 million, causing USDJPY pair to struggle around 107.00 after hitting a fresh three-week low.

Gold attracted some buying interest near the $1722 pivotal zone and jumped to over one-week tops during the early North American session.

COVID-19 Data (EOD):

Technical Analysis:

USDJPY (H4)

A dovish US Federal Reserve undermined the market’s mood. Additionally, US initial jobless claims for the week ended June 5 are foreseen at 1.55 million, causing USDJPY to struggle at 107.00 after a fresh three-week low. Heightened concerns for the second coronavirus outbreak have driven the investors away from the risk assets, which in turn, indicates that the market mood has gradually transferred to a risk-off sentiment. As a result of that, we expect the pair to first find a support at the 106.77, but considering the fact that risk off sentiment has weighed on investors, it is likely that the USDJPY pair to turn south down the road.

Resistance:107.4, 107.86

Support: 106.00, 106.40, 106.75

USDCAD (H4)

After a couple weeks of trading in the lower areas, USDCAD has finally found its traction and has risen on Thursday. The main reason for this surge is because the general commodities weakness has pushed all the major commodities currencies to lower on Thursday. In particularly, as Oil dropped 8% in the early trading hours, the CAD immediately reacted to the weakened liquid gold, and hence triggered the pair to surge upward. We expect the pair to consolidate around 1.3650 regions and test the next resistance around 1.3688.

Resistance: 1.3688, 1.3840, 1.4154.

Support: 1.3327, 1.3385, 1.3475

GBPUSD (H4)

In the latest headlines said Brexit negotiations will now intensify with weekly talks throughout July and into early August in the hope of a breakthrough. Meanwhile, UK still suffering from relatively elevated COVID-19 cases and there are fears of the R-rate rising back above 1. UK economy is set to be the hardest hit among the world’s developed countries due to the pandemic.

Resistance: 1.268, 1.2739, 1.2811

Support: 1.25395, 1.2485, 1.23935

Economic Data

Risk Warning:

Trading Forex and CFDs involves significant risk and can result in the loss of your invested capital. You should not invest more than you can afford to lose and should ensure that you fully understand the risks involved. Trading leveraged products may not be suitable for all investors. Before trading, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary. Please read our legal documents and ensure that you fully understand the risks before you make any trading decisions.

The information provided is of a general nature only and the advice has been prepared without taking account of your objectives, financial situation or needs.

Daily Market Analysis

Market Focus

The S&P 500 Index more than 1% and touched its highest level since late February at 3,233 points. With investors looking to books their profits ahead of Wednesday’s FOMC announcements, the index is undergoing a technical correction and has lost around 0.40% on the day. Wall Street ended the day mixed and not far from its daily openings. The greenback attempted a recovery as equities fell but resumed its decline in the American session.

What to expect from the announcement of FOMC meeting?

As the FOMC meeting will end its two-day meeting on Wednesday and will announce its decision on monetary policy. It is expected that the Fed is going to proclaim a more dovish statements than what the market participants consider at the moment. According to CIBC analyst, financial conditions in the US are close to their pre-COVID levels, assisted by rising equity prices and a softening USD. The ‘mini tantrum’ seen in long-end yields recently is a development that warrants caution in this regard, though [they] believe it is a bit too premature for the FOMC to implement anything [on Wednesday].”

Market Wrap

• Dow Jones down 1.09%, S&P500 up down 0.78 % and Nasdaq up by 0.11%
• WTI July decreased by $0.75 to $38.94, and Brent Oil July decreased by $0.38 at $41.18 while near closing.
• Dollar Index down by 0.32%.
• Gold rallied 0.97% and sit around $1715
• AUDUSD down 0.87% to 0.69610
• EURUSD up 0.4% to 1.1340
• GBPUSD up 0.03% to 1.2723
• NZDUSD down 0.72% to 0.6511
• USDCAD up 0.21% to 1.3413
• USDJPY down 0.65% to 107.720

Main Pairs Movement

The EURUSD pair trades near its multi-month high at 1.1384, while the GBPUSD pair hovers around 1.2730 little changed from Monday’s closing levels. The Japanese yen was the strongest, led by falling equities and government bond yields. USDJPY trades near a daily low of 107.61 as US Treasury yields edged lower for a second consecutive day.

Gold also benefited from the worsening mood, advancing for a second consecutive day, although holding within familiar levels. Crude oil prices seesawed between gains and losses but finished the day unchanged, with WTI just below $39.00 a barrel.

COVID-19 Data (EOD):

Technical Analysis:

USD/CHF (H4)

The demand for Safe-haven assets has dropped USDCHF to the 0.9500 regions. The Swiss Franc is one of the key outperformers today with USDCHF falling about 0.77% and AUDCHF plummeting 1.54%. This is an intriguing movement because the risk assets are currently trading near all-time highs in the US. We expect the pair to bounce back according to the pair’s previous performance when nearing the 0.9500.

Resistance: 0.9540, 0.9585, 0.9650

Support: 0.9500, 0.9430, 0.9390

EURUSD (H4)

The EURUSD pair spent the first half of the day below 1.1300 but gained traction during the American trading hours. The gain is based on the strong selling pressure on the greenback that was initiated by the sharp fall in the US Treasury Bond yields. However, since the macroeconomic data released by Eurostat indicated the EU economy is undergoing a contraction of 3.6% on a quarterly basis, we expect the pair to consolidate around the 1.330 regions.

Resistance: 1.1495, 1.1388

Support:  1.1252, 1.1186

XAUUSD (H4)

The gold seems back to risk-off mode couple days ago even U.S. share market outperformance since hideous slipped from March. To be honestly, U.S. stall in short term that equities tumbled, and the World Bank projected a dire outlook for the global economy this year. The world bank said the global economy this year will contract the most since world war II and emerging nations’ output will shrink for the first time in at least six decades due to pandemic.

Resistance: 1720.42, 1728.4, 1745.98

Support: 1709.67, 1671.97, 1665.05

Economic Data

Risk Warning:

Trading Forex and CFDs involves significant risk and can result in the loss of your invested capital. You should not invest more than you can afford to lose and should ensure that you fully understand the risks involved. Trading leveraged products may not be suitable for all investors. Before trading, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary. Please read our legal documents and ensure that you fully understand the risks before you make any trading decisions.

The information provided is of a general nature only and the advice has been prepared without taking account of your objectives, financial situation or needs.

Daily Market Analysis

Market Focus

The torrid rally in U.S. stocks pushed the S&P500 into the green for the year as easing lockdowns bolstered economic optimism. A jump to a 15-week high on Monday extended the benchmark’s surge from its March low to almost 45%.

On the day record-keepers declared the U.S. is in recession. Fed expanded its main Street Lending Program, which it said will be open for eligible lenders soon, allowing more companies to participate and lessening the burden on banks that create the loan

The euro lagged peers amid falling European bond yields as ECB president asked for quick adoption of the EU recovery fund. Chairman of ECB signaled her institution is willing to play a more active role in responding to a critical ruling by Germany’s constitutional court over its monetary policy.

Market Wrap

• Dow Jones rose 1.69%, S&P500 up by 1.2 % and Nasdaq rallied by 10.78%
• WTI July decreased by $1.36 to $38.19, and Brent Oil July decreased by $1.5 at $40.8 while near closing.
• Dollar Index fell by 0.23%.
• Gold rallied 0.8% and sit around $1698.53
• AUDUSD up 0.74% to 0.7021
• EURUSD up 0.02% to 1.1294
• GBPUSD up 0.44% to 1.2724
• NZDUSD up 0.81% to 0.65600
• USDCAD down 0.3% to 1.3382
• USDJPY down 1.06% to 108.43

Main Pairs Movement

Greenback fell for an eighth session, it longest losing streak in more than nine years, as U.S. shares extended their advance amid corporate deal making, a slowing virus count, improving economic data and expectations for ongoing Fed accommodation. Trading volumes were generally muted ahead of Wednesday’s FOMC meeting.

Kiwi dollar rose as much as 0.8% that reach late January at .06540 which is highest level, as the nation move to end social distancing requirements after reporting zero active cases of Covid-19.

COVID-19 Data (EOD):

Technical Analysis:

GBPUSD (H4)

GBPUSD has continued its nearly 2 week rally and traded highs of 1.2725. Other than Brexit and the lockdown in the U.K., pound traders should also look at any implications for sterling from what could be the biggest healthcare deal on record.

According to CFTC data, speculative traders are turning their attention back to Brexit from the coronavirus, and their mood is souring by the day. Speculative net sterling positions bets have reached the most since November, while Cititgroup’s FX Pain index for the currency is lowest since 2018.

Resistance: 1.27295, 1.28325

Support: 1.2660, 1.26240, 1.25045

 USDCAD (H4)

Loonie appreciated amid broader greenback weakness and before a report slated to show domestic housing starts climbed at a slower pace in May that beat expectation. it down 0.2% and fell 2.6% last week in third straight weekly decline. Meanwhile, WTI dropped -0.9% to 39.19 per barrel. OPEC and its allies agreed to extend output curbs by an additional month, but Saudi Arabia signaled it would not continue with another and deeper curbs after June.

Resistance: 1.3533, 1.374, 1.3835

Support: 1.3385, 1.3327, 1.3273

USDJPY (H4)

Although USDJPY went on a rally on Friday, hitting the highest level in two months around 110.00, the pair dropped drastically on Monday. The pullback seems exacerbated, but it could continue. Although there lacked any obvious fundamental catalyst that drive this downfall, last Friday’s blockbuster US monthly jobs report might be the reason why there is a renewed selling pressure on the USD/JPY pair. We expect the pair to stay along the support level at around 107.270 regions.

Resistance: 108.907, 109.240, 109.755

Support: 107.138, 107.945, 108.270

Economic Data

Risk Warning:

Trading Forex and CFDs involves significant risk and can result in the loss of your invested capital. You should not invest more than you can afford to lose and should ensure that you fully understand the risks involved. Trading leveraged products may not be suitable for all investors. Before trading, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary. Please read our legal documents and ensure that you fully understand the risks before you make any trading decisions.

The information provided is of a general nature only and the advice has been prepared without taking account of your objectives, financial situation or needs.

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.

Risk Warning:

Trading Forex and CFDs involves significant risk and can result in the loss of your invested capital. You should not invest more than you can afford to lose and should ensure that you fully understand the risks involved. Trading leveraged products may not be suitable for all investors. Before trading, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary. Please read our legal documents and ensure that you fully understand the risks before you make any trading decisions.

The information provided is of a general nature only and the advice has been prepared without taking account of your objectives, financial situation or needs.

Daily Market Analysis

Market Focus

The major indexes in the US started the day off slightly lower on Thursday as the risk rally has finally slowed down on its momentum. The weekly data released earlier in the day revealed that more than1.87 million Americans have applied for unemployment benefits last week, a figure that is worse than the market’s expectation of 1.80 million, which in turn, weighed down on the market sentiment. Additionally, the US international trade deficit in May has increased from $42.3 billion dollars to $49.4 billion from April.

Another noticeable fluctuation in the US equity market is that the Energy Index of the S&P500 sectors was down 1.2% during early trading hours today amid uncertainty around the OPEC+ meeting.

Market Wrap

• Dow Jones down02%, S&P500 down by 0.41% and Nasdaq down by 0.77%
• WTI July decreased by $0.08 to $37.37, and Brent Oil July decreased by $0.55 at $39.99 while near closing.
• Dollar Index down 0.57%.
• Gold up 0.94%% and sit around $1714
• AUDUSD up 0.35% to 0.6943
• EURUSD up 0.91% to 1.1335
• GBPUSD up 0.17% to 1.2595
• NZDUSD up 0.67% to 0.6462
• USDCAD up 0.02% to 1.3497
• USDJPY up 0.20% to 109.15

Main Pairs Movement

Gold printed fresh daily highs after a short-lived correction to $1700 following the beginning of the American session. The precious metal seems to find a firm support above the $1690 region that has become a critical barrier. Furthermore, XAUUSD avoided a consolidation under $1700 and rebounded despite higher US yields and the rally in Wall Street.

.

Recent rally on oil prices seems to have stalled this week, with WTI front-month crude oil futures trading sideways around $37 on Thursday after peaking at $38.15 on Wednesday. The positive momentum of the oil has seemed to come to an end with the uncertainty surrounding the OPEC+ meeting to review the production cuts. The negative pressure was further exerted when the US Energy Information Administration on Wednesday revealed an increase in the gasoline and distillate stockpiles.

The AUDUSD remained on the defensive through the Asian session on Thursday and has been trading around the 0.6900 mark. GBPUSD trades closer to 1.26, buoyed by USD weakness stemming from a better market mood and by the fact that markets are shrugging off concerns about a no-trade-deal Brexit.

COVID-19 Data (EOD):

Technical Analysis:

USDJPY (H4)

The USDJPY pair retook the 109.00 level on Thursday and extended its head-turner role. The rally of USDJPY has rallied to test the resistance around 109.35 while the DXY has dropped to the lowest levels since March 9^th. This move can be associated with increasing demand for USD in both industry and financial transactions. We expect the pair to fluctuate in between 108.75 and 109.50 for a bit.

Resistance: 109.00, 109.35

Support: 107.75, 107.95, 108.30

USDCAD (H4)

USD has further depreciated against its Canadian counterpart for the fourth straight days, reaching fresh three-month lows at 1.3468. Despite the fact that CAD’s demand has been capped with oil prices stalled and Canadian trade balance figures showing downtrend readings, the extensive selling pressure on USD, the USDCAD is still kept around the 1.3500 area. The pair is likely to remain choppy through the remaining week, waiting for OPEC+ meeting on June 9-10.

Resistance: 1.3565, 1.3735, 1.3856

Support: 1.3385, 1.3460, 1.3500

EURUSD (H4)

EURUSD pair ended the day piercing through 1.1330 region after the ECB announced an additional 600 Euro billion in QE. At the same time, the US employment related data appears to be quite weak ahead of Friday’s Nonfarm Payroll report. The greenback still remained under pressure and thus we expect the pair to persist its positive momentum.

Resistance: 1.1370, 1.1490

Support: 1.0986, 1.1100, 1.1190

Economic Data

Risk Warning:

Trading Forex and CFDs involves significant risk and can result in the loss of your invested capital. You should not invest more than you can afford to lose and should ensure that you fully understand the risks involved. Trading leveraged products may not be suitable for all investors. Before trading, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary. Please read our legal documents and ensure that you fully understand the risks before you make any trading decisions.

The information provided is of a general nature only and the advice has been prepared without taking account of your objectives, financial situation or needs.

Daily Market Analysis

Market Focus

The market remained in risk-on mode on Wednesday, making the USD continue to lose further. S&P 500 is trading at levels that have not been seen since early March 2020, NASDAQ has closed up by 68.36 points, and Dow Jones closed up by 522.565 points.

The DXY remains under the bearish pressure and has broken below the 97.50 region, sinking towards the 97.00 area.

Despite WHO’s concerns regarding the rapid virus outbreak in Central and South America, the risk-on sentiment remains the theme on hopes of a vaccine. Currently, people are expecting to see the economies open up and V-Shape recoveries in the economic data.

Market Wrap

• Dow Jones up03%, S&P500 up by 1.32% and Nasdaq up by 0.71%
• WTI July decreased by $0.48 to $37.29, and Brent Oil July decreased by $0.13 at $39.44 while near closing.
• Dollar Index down 0.38%.
• Gold dropped 1.5% and sit around $1698
• AUDUSD up 1.45% to 0.6936
• EURUSD up 0.53% to 1.1236
• GBPUSD up 0.40% to 1.2591
• NZDUSD up 1.244% to 0.6430
• USDCAD drop 0.19% to 1.349
• USDJPY up 0.19% to 108.905

Main Pairs Movement

As the selling pressure continues to exert its influence on USD, pairs such as EURUSD, GBPUSD, and USDCAD have all witnessed appreciation today. EURUSD hit a daily high of 1.1251 because the upbeat US data has only encouraged the market sentiments in the equity markets, which in turn, weighed down on the greenback.

GBPUSD, on the other hand, reached 1.2614 but gradually dropped from the high as investors fear the UK and the EU will not come to an agreement on the post-Brexit deal. The Bank of Canada left rates unchanged, indicating an optimistic sentiment was among the policymakers. Additionally, the central bank also announced that it will be reducing the frequency of its term repo operations to once per week, and its program to purchase bankers’ acceptances to bi-weekly operations. With the positive news releasing, the Canadian dollar appreciated further and reached above 1.3500.

Gold lost the 1700 mark on the back of risk appetite, and Crude Oil prices eased from highs despite the fact that OPEC is willing to extend its output cuts.

COVID-19 Data (EOD):

Technical Analysis:

XAUUSD (H4)

XAUUSD has lost more than $20.00 dollars on Wednesday and has depreciated beyond 2.5% over the past two days. Currently, hopes that global economic will recover in the second half of the year and a strong US economic data supporting the equity market’s growth have collectively weighed down on the precious metal. We expect the overall risk-on appetite across the globe is likely to keep the safe-haven metal between 1690 and 1700 region.

Resistance: 1709.65, 1728.40, 1746.00

Support: 1665.05, 1671.90, 1690.00

AUDUSD (H4)

AUDUSD has tested the 0.7000 level in the early trading hours, but the pair retreated afterwards. AUD/USD broke through a fresh 5-month highs as the USD selloff remains unabated. The rally of the AUD is majorly supported by the investors’ confidence in Australia being the first economies to recover from the pandemic. Earlier in the day, Chinese Caixin Service PMI has made an extensive improvement to 55.00 from April’s 50.3 level, boosting investors’ hope that Asian economies would pull Australian economy. We expect the pair to stay choppy and test the 0.700 resistance level but is unlikely to pierce through immediately.

Resistance: 0.6955, 0.7000

Support: 0.6680, 0.6770

EURUSD (H4)

The euro dollar is likely to announce a 250-euro billion addition to PEPP and a 10-bps cut in the discount rate. Although a headline regarding a rate cut could cause euro to wobble, in the current environment investors are more likely to see further policy action as more reason to plough more money into peripheral assets, which could bring some support to euro.

However, the current bullish market may further in near-term and up-move is further to go. Yet, we remain skeptical at present that witnessed and enduring movement in the direction. The Dec high at 1.1241 could give it some resistance.

Resistance: 1.1241, 1.1258

Support: 1.1161, 1.1105, 1.0986

Economic Data

Risk Warning:

Trading Forex and CFDs involves significant risk and can result in the loss of your invested capital. You should not invest more than you can afford to lose and should ensure that you fully understand the risks involved. Trading leveraged products may not be suitable for all investors. Before trading, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary. Please read our legal documents and ensure that you fully understand the risks before you make any trading decisions.

The information provided is of a general nature only and the advice has been prepared without taking account of your objectives, financial situation or needs.

Daily Position Report

Market Focus

U.S. stocks rose alongside equities in Europe and Asia amid new bouts of stimulus and positive economic signal as coronavirus lockdowns ease. Dollar slumped for a fourth consecutive day.

Stock are hovering near their highest in three months as businesses reopen around the world and manufacturing gauges show economies stabilizing following coronavirus shutdowns. That is despite a slew of risks still on the horizon, including tense U.S.-China relations that may jeopardize a hard-won trade deal.

At the same time, violent demonstrations across U.S. cities over the killing by police, are not yet seen as a major drag on the economy and corporate profits.

Market Wrap

• Dow Jones up05%, S&P500 up by 0.82% and Nasdaq down by 0.12%
• WTI July increased by $1.37 to $36.81, and Brent Oil July up $1.25 at $39.57 while near closing.
• Dollar Index down 0.22%.
• Gold dropped 0.9% and sit around $1728
• AUDUSD up 1.46% to 0.68832
• EURUSD up 0.36% to 1.1174
• GBPUSD up 0.60% to 1.254
• NZDUSD up 1.12 % to 0.6350
• USDCAD drop 0.59% to 1.35155
• USDJPY up 0.92% to 108.696

Main Pairs Movement

Greenback and havens pair declined as risk premium from the pandemic continued unwind, pushing some higher beta currencies into overbought territory as investors focused on reopening and constructive economic data. So far, dollar contained a very large safe-haven premium that was inconsistent with the improvement condition in economic environment, risk appetite and low volatility. U.S. 10 years Treasuries was higher to 0.68%.

For RBA, it kept its interest rate and yield objective unchanged as an abatement of the health crisis allows and economy to begin reopening.

Key takeaways from RBA rate statement:

• The Central bank sharply tapered bond buying in May as financial markets calmed and Covid-19 infection dwindled.
• However, the outlook, including the nature and speed of the expected recovery, remains highly uncertain and the pandemic is likely to have long-lasting effects on the economy.
• In April, total hours worked declined by an unprecedented 9% and more than 600k people lost their jobs. Notwithstanding these developments, it is possible that the depth of downturn will less then earlier expectations. And there are signs that hours worked stabilized in early May, after earlier very sharp decline.

COVID-19 Data (EOD):

Technical Analysis:

EURUSD (H4)

EURUSD reached it highest level since March against the dollar, with Germany reportedly lining up a second stimulus package of as much as 100 billion euros. This comes ahead of the ECB’s decision Thursday, when policy makers are expected to boost a relief fund made to combat the virus fallout. Some market participants are expecting the ECB to increase its PEPP asset purchases.

Resistance: 1.1145, 1.1163, 1.1180

Support: 1.1030, 1.0986, 1.1066

USDCAD (H4)

Loonie had another consecutive drop to the lowest since March 9 at 1.348, support is widely expected at 1.3465. A large number of puts struck at 1.35 expire on Friday according to DTCC data.

Loonie like other commodities-linked peers that outperformed is driven by unwinding of pandemic fears and is taking account of a optimistic retaliatory consumption demand while economies gradually boost. At the same time, oil remained upwind giving prospect to CAD as well.

Resistance: 1.4006, 1.3856, 1.3735

Support: 1.35, 1.3465, 1.3385

USDJPY (H4)

USDJPY has clinched a multi-week high beyond 108.500 today. The move took place despite a decline of demand for the greenback. The overall risk-on appetite across the market has fueled the investors to take on riskier assets and neglect the Japanese Yen (a safe-haven currency). Moreover, optimism about the economy recovery not only boosted the US equity market and offset the ongoing social unrest in America, but it also further weighted down on the JPY. We expect the pair to stay above the immediate support of 108.30 and continue to test the 108.75 resistance.

Resistance: 108.750, 109.035, 109.240

Support: 108.30, 107.900, 107.750

Economic Data

Currency

Risk Warning:

Trading Forex and CFDs involves significant risk and can result in the loss of your invested capital. You should not invest more than you can afford to lose and should ensure that you fully understand the risks involved. Trading leveraged products may not be suitable for all investors. Before trading, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary. Please read our legal documents and ensure that you fully understand the risks before you make any trading decisions.

The information provided is of a general nature only and the advice has been prepared without taking account of your objectives, financial situation or needs.