Daily Market Analysis

Market Focus

U.S. stocks market gained some traction as dip buyers emerged after the market selloff, tempering concern over remarks from Federal Reserve officials that pointed to a slow economic recovery. Most groups in the S&P500 advanced, with retailers and tech companies among the biggest gainers. The Nasdaq 100 notched a back-to-back rally, while the Dow Jones Industrial Average underperformed amid a drop in banks.

Nonetheless, American stocks are still heading toward their first monthly slide since March as concerns over Congress not reaching any agreements on another fiscal stimulus package are growing. At the same time, an increase in global virus cases has hinted a possible second round of lockdowns across nations might take place soon. For instance, the British Prime Minister Boris Johnson recently announced new restrictions that are likely to last for another six-month, stating that the country is at a perilous turning point for the virus and that people should try to work from home if possible.

Market Wrap

Main Pairs Movement

The greenback has been made a fresh daily high, breaking up from consolidation in the DXY to test the 94 area as risk appetite take a turn for the worst in the last full week of the trading month. Additionally, the Fed reiterated its low-for-longer stance without providing further stimulus, making the U.S. equities investors less committed to risky investments, and in turn, has helped the USD to regain its safe haven bid.

GBPUSD bears stay on top, taking the pair down in the largest monthly percentage drop since March, Brexit, Covid-19 cases, negative rate sentiment, and risk-off environment playing in the hands of the bears.

After spending the first half of the day moving sideways near 104.50 area, the USDJPY pair gained traction in the U.S. session and advanced to a daily high of 105.07 before re-entering to a consolidation phase.

COVID-19 Data (EOD):

Technical Analysis:

EURUSD(H4)

In the EURUSD 4 hour chart, we see that the pair has fallen below the 1.1745 level and bottomed around 1.1689. The reason for this slide is that the second wave of coronavirus in Europe is beginning to take its toll on the shared currency. At the same time, fears of the slower growth hit EUR ahead of Markit preliminary PMIs estimates this Wednesday. Furthermore, as the SMAVG 15 crosses below SMAVG 60, the selloff of the EURUSD seems reasonable. However, with the pair’s RSI moving towards the 30 threshold, it appears that EURUSD may be entering the oversold area soon.

Resistance: 1.1766, 1.1745

Support: 1.1689, 1.1635

USDCAD (H4)

The Loonie pair preserved its bullish momentum after gaining more than 100 pips on Monday and touched its highest level since August 12^th at 1.3349 Tuesday. Essentially, with the U.S. Dollar Index, which gained 0.6% on Monday, continued to extend its rally and rose above 94 for the first time since late July, the Loonie bulls pretty much dominate the pair’s price movement today. But, as the market sentiment turned positive on Tuesday, WTI bounced back from Monday’s plummet intensively, edging towards $40 a barrel, the bullish trend of the pair was offset slightly and retreated back to the 1.3300 area. Looking ahead, USD’s Fed Chair Powell’s testification and crude oil inventories data are going to be significant determinants for the USDCAD’s near-term movement.

Resistance: 1.3350, 1.3388

Support: 1.3280, 1.3238

AUDUSD (H4)

The Australian dollar came under strong selling pressure amid resurgent demand for its American rival. Despite the recovery in market sentiment, the bulls of AUDUSD remains unable to fight off the strengthened USD. By looking at the pair’s RSI, we can see that the pair has gradually decline towards the 30 threshold, suggesting the pair could be entering the oversold region in the near-term. On the downside, a strong support at 0.7155, which is a price level that was once a resistance level, we expect the pair will bounce back from this price level until any further bearish news exacerbates the downward momentum.

Resistance: 0.7227, 0.7266

Support: 0.7155, 0.7136, 0.7092

Economic Data