Daily Market Analysis

Market Focus

US stocks advanced to the highest since February as investors were confidence on potential virus vaccine development. On the other hand, former Fed Chairs Yellen and Bernanke were not so optimistic on US economy and commented “the unknown depth and duration of the recession means downside risks are building.” Bankruptcies are among those risks, and they may be just getting started. Meanwhile, talks on the new stimulus package will start at the White House today between Senate Majority Leader Mitch McConnell, Treasury Secretary Steven Mnuchin, and others.

The European Union moved closer to a deal on a massive 750 billion euros economic stimulus package after four holdouts indicated they were ready to compromise on a key provision. The Frugal Four (Netherland, Austria, Demand and Sweden) were satisfied with 390 billion euros grant, and the rest 360 billion euros come as low-interest loans. The EU leaders are due to meet again today to discuss the overall size of the fund and the mechanisms for controlling its spending.

UK Foreign Secretary Dominic Raab signaled possible suspension of its extradition treaty with Hong Kong. The move would mark a further diplomatic escalation after UK sanctioned Huawei. China’s ambassador to London has threatened the UK with retaliation and accused it of bowing to US pressure by banning Huawei, and commented “I think the UK should have its own independent foreign policy rather than dance to the tune of the Americans.”

Market Wrap

The safe-haven greenback continued to struggle to find demand against its riskier counterpart, the US Dollar index was down 0.19% as of writing, the first time in four months the dollar tracking index settled below 96. Various drug makers around the world were spurring up equity market, whereas US drug companies such as Pfizer and AstraZeneca have been producing positive results in the early trials of their coronavirus vaccines.

Sterling surged against US dollar as Synairgen, a British drug company, reported yet another positive results for the coronavirus. While a full examination of its treatment is still awaited, the announcement already prompted Cable to raise 0.79% as of writing. The pair seemed to shrug off escalating geopolitical tension between UK and China, nonetheless, the looming issue will come back to haunt Cable eventually.

COVID-19 Data (EOD):

Technical Analysis:

EURUSD (H4)

Euro has the upper hand over US dollar and managed to establish a higher high on the four-hour chart. It is now reaching a critical point as the ascending symmetrical triangle is narrowing price into the corner. If sellers successfully defend the yearly high of 1.147, price will likely fall back to the green support region, which ranges from 1.1389 to 1.1369. Conversely, if bulls are bold enough to conquer 1.147 in the short term, next big aim would be 1.544.

Resistance: 1.147, 1.1544, 1.1601

Support: 1.1389-1.1369, 1.1334

GBPUSD (H4)

Cable broke through the symmetrical triangle outlined in the four-hour chart. Bulls are once again facing stern resistance at 76.4% Fibonacci, where it was rejected three times in a month. The decisive spikes during US trading session have very short lower wicks, which could be a sign that bulls have managed to gather enough power to overtake 1.2662 horizontal resistance. Some follow through buying has the potential to lift Sterling to test the four months high at 1.2784.

Resistance: 1.2662, 1.2784, 1.2855

Support: 1.2587, 1.2526, 1.2466

XAUUSD (H4)

Gold’ positive move seemed rather unaffected by the risk-on mood in the equity market. The value preserving metal bounced back from $1795, and is currently clinging to $1818 horizontal resistance. Economic docket remains relative light, and global fundamentals are mixed, thus Gold bidders are still waiting for a significant motive to push price higher. Nonetheless, bullish run will likely to resume from a technical perspective. MACD on the four-hour chart continues to eke out the bulls.

Resistance: 1818, 1836

Support: 1786, 1762, 1742

Economic Data