June 8, 2021

Daily Market Analysis

Market Focus

US equity market was mixed as investors remain clueless about Fed’ upcoming move given last Friday’s Non-Farm Payroll data miss. The S&P 500 and Dow Jones Industrial Average closed in the red, down 0.08% and 0.36% respectively. On the other hand, the Nasdaq 100 climbed 0.23% as Biogen Inc. soared on its Alzheimer’s drug approval. Real Estate shares led the gains within S&P 500, while Industrials and Materials performed the worst.

The G-7 nations struck a deal on Saturday to push for a minimum 15% corporate tax. The accord requires large companies to pay more in countries where they operate rather than just where they’re headquartered. “It gives tech companies much more certainty, which is as valuable as lower tax rates, now companies can model out how the tax is going to impact them. It’s much harder to respond to patchwork of digital taxes and tit-for-tat trade disputes,” commented Andrew Silverman, government analyst at Bloomberg.

A report from home financing giant Fannie Mae showed Americans’ record-low willingness to buy home. The percentage of consumers believes now it is a good time to purchase a house dropped to 35% in May, the lowest since Fannie Mae began the survey a decade ago. Although jobs market is improving in the US, consumers fear that rising house prices may not be affordable to them in the near term.

The amount of cash parked at the Federal Reserve’s reverse repo facility is at record high of $486.1 billion on Monday. The money lend to the US central bank are earning 0% interest rate. This reveals commercial banks are in a dire situation by holding a ton of cash, but little investment options.

Main Pairs Movement:

The macroeconomic calendar had little to offer today. Investors are waiting for first-tier events to be out later this week, including the release of US CPI figures and the European Central Bank (ECB) statement on monetary policy.

The dollar index is falling for the second day in a row. Market participants seem continue to digest the NFP disappointment. The Treasury Bond yield is still lingering below 1.6%, while the Dow Jones dropped around 0.4%.

EURUSD has increased 0.52% since last Friday, while GBPUSD levitates few pips below the 1.42 figure. The Japanese pair approaches the 109 level, and commodity-linked currencies like AUDUSD and NZDUSD remain their uptrend, both gained around accumulated 1% in the past two trading days.

Gold once touched $1900 soon after the end of the North America Session, and then declined due to the lack of buying power.

Loonie pair closed positive due to the decrease in oil prices, both WTI and Brent fell at the start of the week.

Technical Analysis:

USDCAD (Daily Chart)

Loonie has consolidated between the 1.20 to 1.215 interval for 3 consecutive weeks. After the disappointing NFP data, the pair lost nearly half of its gain from the previous day last Friday, and the dimming hope of rebound seemed shattered. The MACD histogram shows a bullish trend ongoing, while RSI suggests that USDCAD faces a selling pressure. Amid the mixed market sentiment, maybe the BoC Rate Statement on Wednesday will provide investors a better view of the pair’s future movement.

Resistance: 1.215, 1.225, 1.237

Support: 1.20, 1.192

XAUUSD (Daily Chart)

XAUUSD has fully recovered from its steep decline last Thursday, traded at $1899.57 as of writing. Benefit from the lower Treasury yield and absence of U.S. tapering policies, gold may keep its bullish momentum in the short run. Also, the RSI indicator is holding above 60, suggesting that the buyers still have the upper hand. The first resistance for the pair may appear at $1930, followed by $1960, the yearly high; for the downside, the latest floor $1860 may be supportive, then $1809 if breached.

Resistance: 1930, 1960

Support: 1860, 1809, 1756

USDCHF (Daily Chart)

Just boosted by the upbeat ADP research report last Thursday, USDCHF then experienced a severe decline the next day after the released NFP data failed to catch up. As swissy was again unable to break the 38.2% Fibonacci resistance, bears are likely to prevail in the short run. The pair now trades below 0.9, as well as the RSI indicator fell below 50. The instant support for swissy may appear at 0.8926, where 23.6% Fibonacci lies, and for the worse cases, the yearly low 0.8758 was its last barricade against further depreciation.

Resistance: 0.9031, 0.9115, 0.92

Support: 0.8926, 0.8758

Economic Data