July 1, 2021

Daily Market Analysis

Market Focus

Stocks were mixed on Wednesday, with the S&P 500 gaining for a fifth straight session to end the day at yet another record closing high. Dow Jones surged 0.61% to 34502, but Nasdaq declined 0.17% due to the poor performance of its main components. Look back on the first half of 2021, S&P 500 has increased by about 14.4%, Nasdaq by 12.5%, and Dow Jones by 12.7%.

Some of the biggest names in the hedge fund industry are wading deeper into crypto. Steve Cohen’s Point72 Asset Management is seeking to hire a head of cryptocurrencies, while the family office of billionaire George Soros has started trading Bitcoin, according to people familiar with the matter. Spokespeople for the firms declined to comment.

The moves, which were both reported earlier by the TheStreet.com, come as a growing number of marquee hedge funds have begun to dabble in digital assets. Point72 rival Millennium Management has been active in crypto-related futures and exchange-traded funds, while Brevan Howard Asset Management and macro trader Paul Tudor Jones have begun investing in crypto. In March, hedge fund manager Dan Loeb said he was doing a “deep dive” into crypto.

“We are exploring opportunities around blockchain technology and its transformative and disruptive capabilities,” Point72 said in a May letter to investors seen by Bloomberg. “We would be remiss to ignore a now $2 trillion crypto currency market.”

In a March interview with Bloomberg Television’s Erik Schatzker, Dawn Fitzpatrick, who oversees Soros Fund Management, said that Bitcoin was interesting and that the firm had been making investments into crypto infrastructure, such as exchanges, asset managers and custodians.

“There’s a real fear of debasing fiat currencies” that’s driving demand for crypto, Fitzpatrick said in the interview. “Bitcoin, I don’t think it’s a currency — I think it’s a commodity” that is easily stored and transferable, with a finite supply. She declined to say whether she owned any Bitcoin.

Main Pairs Movement:

The US dollar index appreciated to the highest level yet since it took off from 90.441 following the Federal Reserve’s surprise hawkish hold on 16 June. Printing a high of 92.448, DXY traded at its best level since 8 April earlier this year.

A mix of strong US data, delta covid flows, hawkish Fed speakers, and anticipation of a healthy Nonfarm Payrolls report on Friday helped the greenback maintain its strong narrative in financial markets on Wednesday. Fed’s Robert Kaplan reaffirmed his hawkish stance and said, ”I’d want to taper sooner than the end of the year.”

The euro pair extended its losses sub-1.1900 to test the June lows in the 1.1840 price zone. Aussie fell further to break the 0.7500 level to score a fresh low of 0.7492, while the loonie pair continued to test bearish commitments through 1.2400 again in the New York session to print a high of 1.2421, recovering from the London sell-off.

Cable settled around 1.3830 and remains undermined by Brexit jitters related to the Northern Ireland Protocol. Sterling is also facing uncertainty over the spread of the Delta variant of COVID-19 in the UK. Earlier this month forced the government to delay full reopening.

Gold recovered from the fresh two-month lows in the $1,750s and tallied a gain of over 0.5% on the day, printing a high of $1,774.45 before ending by the closing bell near $1,770. WTI crude oil price rose from near the day’s lows of $72.84 on a big draw on US inventories ahead of the highly anticipated OPEC+ meeting with a spot near to $73.51 by the close of play on Wall Street. Meanwhile, Brent’s price moved roughly along with the WTI’s, closed the day at $74.64.

Technical Analysis:

USDJPY (4- Hour Chart)

USDJPY climbs to daily highs above 110.70 level during the American session amid better- than- expected ADP data. After spending the majority of the week in a narrow range, the pair regains traction today, reaching as high as 111.09 as the time of writing. On the 4- hour chart, the intraday bias turns bullish as the pair trades within the ascending channel and it has reached the top of the ascending trend line, signalling that a bullish momentum has been resumed. Additionally, the pair has officially traded above the 20 and the 50 simple moving averages, suggesting a bullish mode. From the technical indicator, the RSI has not reached the overbought territory, meaning that the pair still has rooms to extend further north before an adjustment. To the upside, if the pair ends up breaching its resistance of 111.12, then it will open up an acelerated path for bulls.

Resistance: 111.12

Support: 110.51, 110.14, 109.84

EURUSD (4- Hour Chart)

EURUSD declines below 1.1900 after the US ADP jobs figures have come with 692K, beating the estimates. From the technical aspect, EURUSD remains bearish, attempting to contest its current resistance at 1.1837 as the time of writing. A successful break of the resistance at 1.1837 will lead the pair to the next level at 1.1704, which is the lowest since April. On the support side, if the pair can sustain and settle above 1.1837, it will give a chance to move toward 1.1919. In the short- run, bears are expected to pause a bit as the RSI reading has reached below 30, an oversold territory, which gives the pair an opportunity to bounce back. However, in a bigger outlook, the pair remains under pressured.

Resistance: 1.1919, 1.1985, 1.2052

Support: 1.1837, 1.1704

GBPUSD (4- Hour Chart)

GBPUSD slides toward 1.3800 level as the US dollar edges higher on US upbeat ADP data. From the technical perspective, the intraday bias of the pair remains bearish as it trades well below the 50 and 100 simple moving averages. The RSI has not yet reached the oversold territory, giving bears more rooms to decline further and heading toward its immediate support of 1.3787. To the downside, a successful test of the support at 1.3787 will open the path to the next support at11111. On the upside, if the pair can recover above 1.3896, then it will head to challenge the nexxt resistance at 1.3963 and 1.4017.

Resistance: 1.3896, 1.3963, 1.4017, 1.4072

Support: 1.3787

Economic Data