March 8, 2021

Daily Position Report

 Market Focus

In the beginning of the US trading hour, a selloff continued in some of the world’s largest tech companies brought down the whole equity markets while Treasury yields surged to near 1.6. However, big turnaround for all three major indices as dop buyers emerged, fueling an afternoon rebound in mega- cap technology shares. Today’s dramatic turnaround in equity markets, resulted from more stable Treasury yields after hitting 1.6%.

Treasury yields hit a one- year high today after the US economic reports, while a key part of the curve signaled wagers that the Fed will potentially raise interest rates as early as late next year. The benchmark 10- year yield rose as much as to 1.6% as a good Nonfarm payrolls data reinforced the perspective that the economy is heading to a rebound. However, the 5- year yield was the part of the curve that led the day’s losses, reflecting medium- term expectations for the Fed policy, rose along with bets on a sooner- than- expected tightening by the Fed.

China’s national legislature opened its annual session today. China’s government set a conservative economic growth target for the year, shifting the focus to longer- term challenges, such as reducing technological dependence on the US. The growth target is more moderate, setting at above 6%, which is well below the forecasts, while the budget deficit expected to reduce to 3.2% of GDP. In contrast to the US, where the US government is pushing a new stimulus plan, China is targeting on a normalize policy under a bounced back economy. The information shown below are China’s economic rebound and outline.

Market Wrap

Main Pairs Movement

EUR/USD fell toward 1.19 level after a robust US Nonfarm Payrolls data. The pair extended its negative stance after the US economy created 379k jobs in February, crushing estimates for a 182k increase. With the view on the economy heading to a rebound, the US dollar boosted. Moreover, with the surge in the US bond yields, also lifted the strength of the US dollar, pushing the EUR/USD pair downward.

WTI surged to $66 for the first time since 2019. Oil prices continued to take advantages from the afterglow of the bullish OPEC+ meeting on Thursday. OPEC+ has announced that they would be holding output largely steady. Markets have expected that OPEC+ to decide to bring back online as much as 1M barrels daily in supply, suggesting a bullish outcome.

Gold swung as markets weigh falling stocks market against gain in jobs. Gold has plummeted more than 10% this year amid the expectation of the economic rebound. Gold has suffered from the seventh time in eight sessions, slumping near $1700 after the Fed refrained from pushing back against the recent rise in US bond yields. On the other hand, the recent negative trend on Gold can also be seen from ETF investors’ holding. ETF backed by the metal have been seen protracted outflows in recent days, sending the holding levels to the lowest since June 2020. That being said, gold’s bullish wager is reduced.

Technical Analysis:

EURUSD (Daily Chart)

EUR/USD extends loss toward 1.1900 level in response to the US Nonfarm Payrolls. On the daily chart, the pair remains bearish as it continues to stay in the ascedning channel and the 50 and 100- SMA. The pair is looking to extend further south as the RSI indicator has not reached the oversought condition while the pair has successfully broken through the support level at 1.1945, heading toward the next support at 1.1695. For the upside, a rise to 1.20 will potentially open a path for a bearish to bullish trend.

Resistance: 1.1945, 1.2349

Support: 1.1695, 1.1492, 1.1290

GBPUSD (Four- Hour Chart)

In the near- term, GBP/USD suffers from the downside momentum, and continues to fall below the 100 and 50- SMA. Additionally, the bearish momentum is expected to continue as the RSI indicator is still above 30, which is outside the oversold sitiuation. In the next trading days, the price fluctuation is expected to fall in the range of 1.3851- 1.3748. In the bigger picture, the outlook for GBP/USD stays cautiously bullish even though it is deeping now as it is still in the monthly ascending channel.

Resistance: 1.3851, 1.4000, 1.4180

Support: 1.3748

XAUUSD (Daily Chart)

After dropping below $1700, gold is staging a rebound amid profit taking ahead of the weekend. In the near- term, gold is due to a pullback as the RSI indicator has reached an oversold condition and the MACD is getting weaker, implying a bearish- to- bullish trend; moreover, the pair has reached the lower band of Bollinger Band, also suggesting a retreat. However, in the big picture on the daily chart, gold remains bearish trend as it stays in the 6- month descending trend and it is located below the 50 SMA. To the downside, if gold fails to rebound, and breaks below the descending channel; it will confirm the accelerated downside pressure toward the next support at $1687.34.

Resistance: 1754.90, 1796.69, 1830.47

Support: 1687.34

Economic Data