June 15, 2021

Daily Market Analysis

Market Focus

US stocks market was mixed as investors were adjusting positions to Thursday’s Federal Reserve meeting. Tech shares were gaining traction, with the Nasdaq 100 up nearly 1%, they also helped the S&P 500 to close in the green. Meanwhile, Financials dropped as JPMorgan Chase CEO Jamie Dimon suggested Wall Street’s trading prosperity in the pandemic era may fade away.

US President Joe Biden entered his first international summit looking for a breakthrough on vaccine pledges for developing countries, and a unity action to counter China’s economic might. US officials said the G-7 group is now a united ally to fight against China on issues such as forced labor and human rights abuses, and to stand up to an alternative to China’s Belt and Road plan to counter Chinese influence abroad.

US consumers expectation for inflation rose to 3.6% over the medium term, refreshed an eight year high in May, according to the Federal Reserve Bank of New York survey. “Notably, medium-term inflation expectations have increase at a slower pace than short-term inflation expectations over the past few months, and the difference between one- and three-year-ahead median inflation expectations marks a series high,” officials from New York Fed said in a press release.

Main Pairs Movement:

Gold plunged as much as 1.7% during the first day of the week. Money managers are paring their long positions in the futures market ahead of Thursday’s FOMC meeting. Judging from market reaction to last week’s CPI figures, investors seemed to believe current inflation spike is temporary and will ease over the second half of 2021. Of course, the Fed will factor in market reaction when considering how they should play the script. With market participants are more in line with the central bank proposed transitory inflation theory, we are unlikely to see any big surprise on Thursday. That being said, the Fed would still be guiding the market to where they desired by giving out little hints in FOMC statement, or adjusting their portfolio holdings (small enough to not cause any ripples across stocks and bond market while sending a signal).

Cable is on the back against US greenback amid lockdown extensions, dipped 0.05%. British Prime Minister Boris Johnson announced on Monday that reopening will be postponed to July 19th. Though the negative headline is much expected, it still keeps the pressure on the Sterling compared to other G-7 currencies.

Technical Analysis:

EURUSD (Daily Chart)

EURUSD exits from consolidation mode and enters a bearish trend. Price failed to reclaim 1.22 in last week, we have seen five rejections from 1.22 before it turns south. Market is perhaps pricing in a more dovish ECB than its US counterpart given Christine Lagarde’s speech on EU’s forthcoming larger spending. We do not rule out potential price recoveries or sideway trading prior to Thursday’s FOMC meeting. If the Fed’s message is affimative then the bears should not have too many troubles at taking out 1.21 horizontal support, which would open doors to 1.2 and 1.195.

Resistance: 1.22, 1.235

Support: 1.21, 1.204, 1.195 

XAUUSD (Daily Chart)

XAUUSD finally made a decisive breakout, and it was in favor of the sellers this time. Price penetrated the 2-month ascending trendline, along with its DMA20 support line. However, it quickly bounced off upon touching 38.2% Fibonacci level at $1846. Today’s move indicates bearish reversal, which makes sense when considering investors are gradually buying into Fed’s rhetoric of transitory inflation. With market expecting the Fed to maintain easy monetary policies and not initial the taper talk during June’s meeting or even during the whole summer, Gold is likely to suffer until another impetus shows up. On the downside, $1815 will be the next key level to watch for.

Resistance: 1894, 1959, 2000

Support: 1846, 1822, 1790

USDJPY (Daily Chart)

USDJPY is building on last Friday’s goodish rebound, climbed 0.35% on Monday. This pair is well fitted within its ascending channel and managed to regain 110 handle. Now there is a solid breakout to the upside, the buying bias will be here to stay until meeting yearly high of 110.8. On a larger timeframe, USDJPY stills shows a bullish trend after April’s pullback is proved to be temporary. Further in the north, stern resistance sits around 112 and 113.8.

Resistance: 110.8, 112, 113.8

Support: 108.7, 107.9, 106.7

Economic Data