Daily Market Analysis

Market Focus

US equity market was mixed as stimulus negotiations linger. The White House and the Treasury is $1 trillion away from reaching a deal, “we have made clear to the administration that we are willing to come down $1 trillion if they will come up $1 trillion. We are willing to resume negotiations once they start to take this process seriously.” House speaker Nancy Pelosi said Wednesday. Meanwhile, Treasury Secretary Steven Mnuchin accused it was Pelosi who refused to compromise, and commented that “Congress could pass a relief plan of ‘a little more than $1 trillion’ and deal with any additional stimulus that’s needed later.”

The United Arab Emirates has confirmed that Israel has agreed on halting its plans to annex Palestinian territories, a potentially historic breakthrough that President Donald Trump said will facilitate peace in the Mideast. “The UAE and Israel agreed to cooperation and setting a roadmap towards establishing a bilateral relationship.” Said Abu Dhabi Crown Price Mohamed Bin Zayed says.

US Jobless Claims fell below 1 million for the first time since this year’s pandemic began, suggesting the US stimulus package is effectively helping to heal its economic wound amid a slowdown in coronavirus infections.

Market Wrap

Main Pairs Movement

Euro and the sterling had an upper hand over US dollar amid signs that faster US inflation is consuming the greenback’s real yield. The lack of interest in the US long-bond auction has caused the spread between the 5-year and 30-year bond yield to rise to the highest level in more than a month. The Treasury sold $26 billion worth of 30-year bonds at a high yield of 1.406% and awarded 20.72% of bids at high. The 10-year Treasury surged to its highest level since mid-June, up 5% as of writing.

Aussie ignores upbeat employment data, declined 0.29% near closing hours. Australians gained 114.7K new jobs position in July, declined from June’s 210.8K, but still came on top of market expectation of 40K. Aussie outperforms Kiwi, AUDNZD climbed 0.3% as RBNZ indicates it would prefer a weaker currency, the antipodeans pair is on a ten-days winning streak.

Gold experienced yet another volatile day, surged 1.97%. The precious metal is gaining traction amid weaker tone surrounding the US Treasury bond yield, and the deadlock stimulus negotiation.

COVID-19 Data (EOD):

Technical Analysis:

USDJPY (Daily)

USDJPY finally made a breakthrough from its medium term descending trendline, though the pair was little changed on Thursday. Price looked pass 106.1 resistance, and is clinging to DMA50 as speculators wait to find trade incentives from Friday’s US Retail Sales or progress in stimulus talks. That being said, the bulls should find acceptence above DMA50 after escaping from the shorter period downtrend highlighted in purple, and try to contest July’s highest point around 107.9. RSI remains netural, while MACD is bullish on the daily chart.

Resistance: 107.9, 109.2, 110.2

Support: 106.1, 104.5, 102.4

USDCAD (H4)

USDCAD was extending its slide, and touched the lowest level since February, closed the day down 0.17%. The previous rebound looks faint and the bears took the chance to plunge price toward 1.3215. MACD is reinforcing the bearish bias, and some follow-through should take price further down to 1.3125. Conversely, any attempted recovery will find stern resistance at 1.3342.

Resistance: 1.3342, 1.3494, 1.3628

Support: 1.3215, 1.3125, 1.3035

EURUSD (Daily)

Euro-dollar pared half of its gain on Thursday, still up 0.25%. The pair could be undergoing a bearish head-and-shoulder pattern on the daily chart as price closed below left shoulder’s high. Traders will be closely watching the formation, if price settled above the head, then it is likely the upward momentum will carry price toward 1.19 horizontal resistance, and possibly 1.2078.

Resistance: 1.192, 1.2078, 1.2203

Support: 1.171, 1.1543, 1.1378

Economic Data