June 7, 2021

Daily Market Analysis

Market Focus

US equities advanced albeit disappointing Non-Farm Payroll data. Technology shares led the gains on Friday with the Nasdaq 100 index up 1.8%. Meanwhile S&P 500 and Dow Jones Industrial Average climbed 0.9% and 0.5% respectively. Traders struggle to find clues on the Fed’s next moves amid soft jobs data. The 10-year US Treasury yields fell to 1.56%.

The G-7 group is reaching a deal to implement a minimum corporate tax of 15% in international negotiations. Finance ministers are due to meet in London this weekend. The discussion includes topics like how to divide levies on multinational tech giants such as Facebook Inc. and Amazon.com Inc. French Finance Minister Bruno Le Maire said on Friday that “clearly 15% is only a starting point, and if it is higher, it is better to have a level of rate that is higher than 15%.”

Bitcoin slipped as much as 9% after Elon Musk’s tweet implied about ‘breaking up’ with Bitcoin. The decline dented the leading crypto’s recovery from $33,500, dragged down other coins as well. Speculators are puzzled to Musk’s motives for sending out these tweets, especially when his missives are contradicting to each other.

Main Pairs Movement:

The dollar index dropped 0.4% after Friday’s Non-farm Payroll came lower than expected. The world´s largest economy gained only 559,000 jobs in May, below 664,000 expected. Concerns of sooner than expected tapering have been eased given the underperformance in jobs market. However, it does not imply inflation is slowing down in the US. In fact, the month-on-month average weekly earnings grew at 0.5%, more than doubled from forecast. Given the shortage in labour, employers are left with no choice but to offer higher pay to attract workers. In the long term, growth in wage should push inflation higher, but when inflation is running hot by stimulus injection, we wonder where this number may land as more people are returning to the workforce.

USDCAD dipped 0.25% despite disappointing Net Change in Employment in Canada. Labour market weakened for a second month, lost 68,000 jobs in May amid a third wave of COVID-19 virus spread. However, drags in the macro figure were offset by rallying oil price, which is one of Canada’s major exports. WTI and Brent crude oil futures continue to make new highs, gained 0.83% and 0.45% respectively.

Technical Analysis:

XAUUSD (Daily Chart)

With the help of downbeat NFP data, Gold recovered more than half of yesterday’s slump. Early in the day, downward pressure managed to drive price to contest a rather steep ascending trendline, which could be interpreted as a validation to current bullish trend. Worth to note that daily RSI is cooled off by yesterday’s plunge, helping to alleviate some of the friction to move price further north, For now, gold buyers will keep the rein until it hits much tougher resistances like $1960 and $2000.

Resistance: 1960, 2000

Support: 1854, 1822, 1790

USDJPY (Daily Chart)

After two days of disruptive data releases from the US, USDJPY is back to its previous downward trajectory. Price is about to kiss the five-month ascending trendline, which survived multiple breakouts attempts since April, but will be under stressed as the 10-year US treasury yield failed to put a solid footing above 1.6%. A breakdown from this dynamic support line could open doors to further downside gain, and bearish reversal would be more convincing if we see USDJPY making a lower-low around 108.62. In the south, bears could revisit support at 107.9 in the near term, followed by distant 106.72.

Resistance: 109.7, 111, 112.1

Support: 107.9, 106.7

GBPUSD (Weekly Chart)

Cable is still trapped within a consolidation zone between 1.411 and 1.424, and it has gone absolutely nowhere in the past three weeks. In the weekly chart, GBPUSD looks to snap its four-consecutive win and marks a third rejection from 2018’s high of 1.424 in recent weeks. More importantly, the construction a Doji pattern could signal a potential correction in this pair. Looking to the downside, the immediate support sits around 1.41, followed by a big psychological level at 1.4.

Resistance: 1.42, 1.437, 1.464

Support: 1.41, 1.4, 1.382

Economic Data