Daily market analysis

JUN 19,2020

June 19, 2020

Daily Market Analysis

Market Focus

U.S. shares resumed fluctuating going into the close of trading with investors weighing the latest economic data and reports about fresh outbreaks of the coronavirus. Elsewhere, the Stoxx Europe 600 declined.

BOE’s Rate Decision:

  • the BoE expanded its bond-buying program to counter the coronavirus slump but kept some of its powder dry should the labor market worsen more than expected.
  • Policy makers voted to boost quantitative easing by 100 billion pounds.
  • While central bank holding the benchmark interest rate at a record-low 0.1%.

However, the central bank surprised investors by saying it will slow its purchases because stress in financial markets has eased, while reserving the option to accelerate them up again if needed. Bond fell, sending the yield on 30-year securities up 10 basis points.

 

Market Wrap

  • Dow Jones down 0.15%, S&P500 up 0.06 % and Nasdaq up by 0.30 %
  • WTI July slightly down by $0.88 to $38.84, and Brent Oil July up by $0.8 to $41.51 while near closing.
  • Dollar Index up by 0.27%
  • Gold down 0.23 % and sit around $1722.93
  • AUDUSD down 0.47% to 0.6852
  • EURUSD down 0.35% to 1.12050
  • GBPUSD down 1.05% to 1.1.2424
  • NZDUSD down 0.43% to 0.6429
  • USDCAD up 0.26% to 1.36
  • USDJPY down 0.04% to 106.97

 

Main Pairs Movement

The dollar advanced the most in a week as U.S. initial jobless claims exceeded 1.5 million vs est. 1.29 million for a 13th week, reflecting the challenge of ramping up economic growth. The yen led gains among G10 currency peers amid renewed demand for havens following reports about fresh outbreaks of the coronavirus. On the other hands, greenback also supported amid concerns of a resurgence of the coronavirus in the U.S. nation reopens.

Pound drop 1% after BoE rate decision which was widely predicted should keep the lid on government borrowing costs as the Treasuries ramps up bond sales to finance a massive support package to save jobs and keep businesses afloat.

The Swiss National Bank kept interest rates on hold and said aggressive foreign exchange interventions remain its main toll for pushing back against the appreciation in the franc.

 

COVID-19 Data (EOD):

Technical Analysis:

 GBP/USD (H4)

Sterling had a short-term boost from BoE’s announcement this Thursday, but quickly changed course and fell to its lowest level and breakthrough a critical price around 1.2475 since June 1st. U.K. will publish Sector Net Borrowing and Retail Sales for the same month, expect jump from bottom at -18.1% to 5.7%.

 

Resistance: 1.2474, 1.2571, 1.2619

Support: 1.2395, 1.2375, 1.2326

 

AUD/USD (H4)

AUD was hit hard by its poor local employment data along with increasing new coronavirus cases, which ultimately create a dismal market mood in AUD today. As of writing, the pair has dropped 0.49% on the day to area below 0.6851. In second half of the day, the risk-off sentiment and the heavy selling pressure surrounding major European currencies further boost up the greenback, as a result, the pair closed the day sitting at the support along 0.68460 region. We believe the bullish run of the USD might not overwhelm the market for long as increasing concerns around the second wave of the pandemic is breaking out in the US, hence, AUDUSD should be able to retreat in the following day.

 

Resistance: 0.69045, 0.69499, 0.70245

Support: 0.67830, 0.68055, 0.68410

 

USD/JPY (H4)

The yen hit a low of 106.67 on Thursday but after a late buying spree in the U.S. stock markets the pair is now testing 107.00. the main support on the chart for 4 hours is around 12nd June low at the 106.57 area. That seems the solid support after selling from 109.

 

Resistance: 107.14, 107.44, 107.79

Support: 106.58, 106.29, 105.96

 

Economic Data

Currency

Data Time (TP) Forecast
AUD Retail Sales (MoM) 09:30

GBP

Retail Sales (MoM) (May) 14:00 5.7%

CAD

Core Retail Sales (MoM) (Apr) 20:30

-13.5%

USD Fed Chair Powell Speaks 01:00 (6/20)

 

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