JUL 17,2020

July 17, 2020

Daily Market Analysis

Market Focus

Technology shares pushed U.S. stocks lower for the first time in three days after investors rotated out of this year’s top performers. Treasuries gained with American initial jobless claims posting their smallest weekly decline since March. The tech-heavy Nasdaq 100’s 0.7% decline was among the largest of major U.S. benchmarks, with Microsoft Corp. and Apple Inc. leading the losses. The information technology was the biggest decliner in the S&P 500, which had gained more than 2% in the past two days. Netflix Inc., in particular, slumped in late trading after the streaming service reported fewer subscriber additions than forecast.

On the other hand, the Stoxx Europe 600 Index tracked Asian shares lower as Chinese retail sales in June came in softer than expected, even as the economy returned to growth last quarter. The euro was little changed after the European Central Bank kept its emergency monetary stimulus program unchanged.

In conclusion, the economic data equity markets’ performance from the US and China served as essential reminders of the long road ahead to a full global recovery is quashing optimism seen earlier in the week spurred by progress in developing a coronavirus vaccine.

Market Wrap

Main Pairs Movement

The EURUSD pair settled around 1.1380 near daily lows, after an uneventful ECB and mixed US data. Stubbornly high unemployment levels and pandemic concerns weigh on the sentiment. The AUDUSD pair has been unable to advance despite upbeat local and Chinese data, as the American dollar benefited from the risk-off mood at the end of the day. AUDUSD at 0.6970. The Loonie moved sideways in a tight range near 1.3500 during the first half of the day before gaining traction during the American session.

The DXY, on the other hand, is trading on a positive note above the 96.00 mark following the opening bell in Wall Street on Thursday. US Retail Sales and Philly Fed index all come out above estimates.

COVID-19 Data (EOD):

Technical Analysis:

 USDJPY (H4)

Bouncing back from Wednesday’s loss, USDJPY clings onto some modest daily gains above 107 during the US sessions as it penetrated the 107.25 resistance level. Looking at the pair’s performance from last week, we can see that the pair has been zig zagging between 106.63 and 107.40 and has yet to find a strong momentum in either direction. However, by observing at the indicators, we can see that the RSI is entering the positive overbought area, which in turn, suggests a pullback might take place before any trend is formed. Since there is no relevant data await to be released on Friday, the risk sentiment and US equity market’s performance will play a significant role in directing the pair’s movement for the rest of the week.

Resistance: 107.25, 107.60, 107.95

Support: 106, 106.40, 106.65

GBPUSD (H4)

Cable is trading 0.30% lower on Thursday as the pair has retreated from its early gains at 1.2626 to 1.2550. Although the UK employment data came in better than markets’ expectation, the information still fell short to boost sterling. Nevertheless, we believe the pair is about to enter an upbeat momentum because in the 4-hour chart, we can see that the RSI has dropped below the 50 area, suggesting that more space has been cleared for the pair to climb back to the oversold area. On top of that, with an ascending triangle forming, it further proves that the price for the pair should appreciate in the medium term.

Resistance: 1.2632, 1.2682, 1.2751

Support: 1.2517, 1.2470, 1.2342

XAUUSD (H4)

Gold prices have dipped down below the psychological support of $1800 after the precious metal has been consolidating between $1810 and $1800 over the past two days. The strong dollar demand is one of the main reasons that weighs down on the Gold’s price. Currently, the markets seem to overlook the intensifying coronavirus outbreak across the US and has switched their attention towards the US-China relationship. However, noting that Covid-19 pandemic is still going to impact the world’s economy in the long run, we expect the buying power and risk-management demands for the precious metal would continue to push the Gold’s price back above the 1800 level if the pair ever retreats back to the 1795 or lower 1790 region.

Resistance: 1800, 1807.22, 1818.12

Support: 1791.31, 1777.27, 1766.01

Economic Data