Daily Market Analysis

Market Focus

U.S. markets drift slightly higher as investors assess economic reports and a resurgence of coronavirus cases in Europe. Economic data from most of euro- area seem to worsen than expected, except the U.K. Europe is grappling with a resurgence of pandemic infections, with little appetite amid top officials to resort to stringent restrictions that help control the spread out earlier this year. The slowdown of the economic recovery marks up the dollar and the U.S. Treasuries. In the meanwhile, public eyes are focusing on two companies, Apple Inc., and Tesla Inc. After becoming the first $2 trillion in value earlier this week, Apple Inc. continues to hit a record intraday high, solidifying its market capitalization at more than $2 million. At the same time, Tesla Inc. extends gains to hit a fresh record intraday high, rallying above $2000 per share for the first time ever and bringing its year to date advance to more than 370%. Those performances are exceptionally impressive.

British economy recovers faster than expected in August according to stellar economic reports. But British economy still faces a long way to recover after shrinking by a record of 20% during pandemic periods. At the same time, U.K.’s Purchasing Managers Index indicates that the business activities have jumped to a seven- year high, showing a decline in business confidence and an increase in planning to shed jobs opportunities. Other than that, British market will focus on the progress in talks for a trade deal with the European Union when the Brexit transition is completed.

Main Pairs Movement

The Canadian dollar falls a little against the dollar as the U.S. has favorable economic data, but the pair loses its traction amid profit- taking before the weekend. The Canadian retail sales have picked up in June and July as the economy begins to reopen from pandemic lockdowns. In the meanwhile, WTI crude is down 1.3% at around $42.28 per barrel, resulting in a depreciation in the Canadian dollar. The USDCAD is currently trading at 1.31915, having 0.04% in average as of writing.

The EURUSD pair drops further around the level of 1.1751, which is the lowest level in the past two weeks as of writing. The dollar is the top performer today after the release of the U.S. PMI and Home Sales report that both are better than expectations. Oppositely, the euro is fading as escalating COVID-19 cases and weak European area growth weigh on the common currency. As a result, investors are expecting the downturn of the euro.

COVID-19 Data (EOD):

Technical Analysis:

EURUSD(H4)

After challenging the resistance level at 1.1879, the EURUSD pair turns into a bearish momentum. From one perspective, the pair is in a short position because It breaks through the uptrend line; however, from another perspective, the pair is under consolidation between 1.1879 and 1.1708. If it eventually breaks through 1.1708, then it suggests a short position. The technical view of ongoing RSI indicator suggests that the pair is neither oversold nor overbought. That being said, it is recommended to wait and see the pair’s further direction.

Resistance: 1.1879, 1.1929

Support: 1.1708, 1.1425

GBPUSD(H4)

Sterling fell to the 1.30895 after released statistics in British continued to improve. Retail sales for July rose 3.6% that beat 2% forecast. Multiple PMI indicator also torrid and upbeat the optimistic forecast, Service and Composite boost over 60. On the other hands, Brexit negotiations tension had ratchet up that impact on the pound this week. No deal progress can be expected, and market is pricing for the further risks.

Resistance: 1.327, 1.3338

Support: 1.3007, 1.2746, 1.2256

AUDUSD(H4)

The AUDUSD pair failed to test its resistance at 0.7209, heading into a consolidation range between 0.7209 and 0.7114. The indicators suggest the trend to remain the same; now, the pair is waiting for attempts to overcome the lower limit of 0.7114. It is expected to see AUDUSD to weaken due to the strength of the dollar. With the dollar gathering strength after the release of the U.S. data, the AUDUSD will be likely to lose its traction.

Resistance: 0.7209, 0.7236

Support: 0.7114