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Aug 6,2020

August 6, 2020

Daily Market Analysis

Market Focus

 

US and European equity edged higher amid encouraging news on the vaccine front. Novavax joins the ranks of AstraZeneca Plc, Moderna Inc., Pfizer Inc. and BioNTech SE which has all reported Phase 1 results for the COVID-19 vaccine. The S&P 500 Index headed for a fourth consecutive rise.

 

The White House and the Congress are working towards a deal by the end of this week on another stimulus package. Uncertainty over the size and pace of government spending has made it tough to predict the outlook over the coming months. Meanwhile, US Treasury department expanded its plans for borrowing at longer maturities in the coming months, and will sell a record $112 billion of securities at next week’s so-called quarterly refunding of maturing Treasuries.

 

ISM Non-Manufacturing PMI in July rose to 57.1 from June’s 57.1, beating market expectation of 55. On the other hand, ADP Payroll slowed sharply in July, printed 167K compared to previous 4,314 K. The diminishing gains in payrolls is consistent with other economic data that shows the labor market is hitting bottleneck after rebounds in the months of reopening.

 

Market Wrap

 

Main Pairs Movement

        Gold continues to make historical highs, soared as high as $2055 during US session. Bullion is up almost 35% this year, while the US 10-year treasury yield plunged 71%. Increasing geopolitical tension and depreciating US dollar is setting the stage for Gold to ramp up higher. US and Chinese officials plan to assess the trade accord, namely the phase-one deal, around Aug 15. President Donald Trump has said repeatedly in recent weeks that the deal is not as important to him as before due to China’s fault on spreading the virus.

 

The dollar index offered bias is extending on Wednesday, pricing around 92.9 as of writing. Previous bounce appears to exhaust ahead of 94, investors are keeping the bearish stance on the buck amid US-China jitters, spread of pandemic, and a very dovish Fed.

   

COVID-19 Data (EOD):

 

Technical Analysis:

GBPUSD (Daily)

Cable gained 0.28% on Wednesday after traded in an indecisive manner seen from the last 3 Doji candles in the daily chart. Price once dipped to 1.2984 support, then quickly bounced back in yesterday’s session. That being said, bidders’ strength is outweighing sellers, and upward momentum should be carrying price towards 100% Fibonacci at 1.32. Then, we should wait to see whether speculators are willing to exit their long or push it further to the yearly high at 1.3342.

Resistance: 1.32, 1.3342, 1.3623

Support: 1.2984, 1.2778, 1.2623

 

USDCHF (Weekly)

USDCHF is still struggling with May 2015 lowest point around 0.9084. Price once dipped to 0.905 handle, and the downtick was exclusively sponsored by the heavily offered tone surround the US dollar. Intraday trading was dominated by sellers, and the bears look to extend their hand into sub-0.905 territory. RSI slipped beneath 30, and MACD indicates more selling is yet to come.

Resistance: 0.9275, 0.9537, 0.9737

Support: 0.905, 0.8909, 0.87

 

AUDUSD(H4)

Aussie is still within the decent ascending tunnel, gained 0.44% on Wednesday. The run-up has made its trip beyond 0.72 handle, and bulls remain optimistic. ADP Non-farm did little to hamper the bullish mood, and positive pharmaceutical news keeps the risky currency underpinned. RSI retreated back to neutral zone, and MACD turns bullish on the four-hour chart.

Resistance: 0.7272, 0.736, 0.7457

Support: 0.7121, 0.702, 0.6967

 

Economic Data