July 9, 2021

Daily Market Analysis

Market Focus

US equities retreated from all-time highs as the spread of delta variants weighed down on risk appetite. The S&P 500 index suffered the most, down 0.86%. Meanwhile, the Nasdaq 100 and Dow Jones Industrial Average index dropped 0.6% and 0.75% respectively. Cyclical sectors such as industrial and material had the worst performance within S&P 500 index on Thursday. The 10-year US treasury yield lost another 3 basis points, settled at 1.294%.

Pfizer Inc. will procced to request US emergency authorization after third dose vaccine data has showed significant improvement in protection against Covid-19. Study report from the company suggests a third dose of its existing vaccine is safe and can raise neutralizing antibody levels by 5 to 10-fold compared with the original vaccine.

The Tokyo Olympics Committee announced domestic spectators will be banned in events held in Tokyo prefecture. The difficult decision was made as Japanese Prime Minister Yoshihide Suga declared another extension of emergency lockdown to August 22. More than half of the 43 Olympic events, including the opening ceremony on July 23, are set to take place in Tokyo.

Main Pairs Movement:

Volatility spiked within the forex space on Thursday amid risk-off mood. The two safe-haven Japanese Yen and Swiss Fran were gaining traction, climbed 0.79% and 1.17% respectively. Recent resurgence in coronavirus cases revived the concerns of economic slowdown in the near term, thus prompted investors to seek protection. This also weighed down on commodity linked currencies such as the Aussie, the Kiwi and the Loonie.

The Euro was another currency that outperformed the US dollar on Thursday. The upbeat move was driven by higher expectation of inflation from the ECB. The central bank raised its inflation goal and signaled inflation can temporarily run above 2% target.

Gold reached as high as $1819, but gains were trimmed during US trading session, ended the day where it started. If equities market continue to decline in the next few days, we may see demand pick up in this precious metal.

Technical Analysis:

XAUUSD (Daily Chart)

After reaching the weekly high at 1818 price level, gold bounces back to 1797 during the American session amid the plummet of the US stock market. From the technical aspect, the short- term trend continues to be upward on the daily chart, re- confirming its bullish move after standing above the 20 simple moving averages around 1796. Moreover, the MACD has leaned positively upward, lending supports to the bulls; at the same time, the RSI has not reached the overbought territory, signalling that there are still rooms for the bullish momentum to move further. On the upside, a break of the current resistance at 1825 will bring gold to challenge 1860 afterward. To the downside, if current support level at 1796 can’t hold, then it will open a bearish path toward 1768.

Resistance: 1825, 1860

Support: 1768, 1733, 1676

EURUSD (4- Hour Chart)

EURUSD holds near 1.1830 after the ECB strategy announcement. From the technical perspective, EURUSD manages to advance above the bearsih trend line and above the 50 simple moving averages, heading north within positive levels. The dominant trend for the pair shifts to bullish even though the momentum is still downside in a bigger outlook. Short term bullish momentum is supported by a positive MACD and the RSI of 51 readings. To the upside, the pair is looking to move toward 1.1919 level; on the other hand, if the current support pivot at 1.1837 can’t hold, falling below the level and the trend line will confirm a reverse from bullish to bearish.

Resistance: 1.1919, 1.1985

Support: 1.1837, 1.1704

GBPUSD (4- Hour Chart)

GBPUSD remains under pressure below 1.3800 amid the dollar’s strength and the pandemic concerns. On the 4- hour time frame, the pound continues to behave weaker against the greenback. Bearish trend dominates as the pair still trades within the descending channel. From the technical indicators, even though the RSI is neutral at this point, the MACD extends its negative move, suggesting that GBPUSD is declining. The bearish momentum will be re- confirmed if the pair drops below 1.3733, where the previous lowest leg and the lower bound of the decending channel. If a break of 1.3733 level happens, then it will open an accelerating path toward the support at 1.3675.

Resistance: 1.38, 1.3926, 1.4007

Support: 1.3675

Economic Data