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Daily technical analysis-Ongoing fears of new lockdowns across Europe

 EUR/USD Current level - 1.1794

The depreciation of the common European currency against the dollar came to a halt slightly below the support zone of 1.1773 and, at the time of writing the analysis, the pair is headed towards a test of the resistance level of 1.1805. The short-term forecast is for the pair to enter into a consolidation phase within the range between 1.1773-1.1849 before either the buyers or the sellers take control. A spike in volatility is expected around the announcement of the European Central Bank interest rate decision (11:45 GMT) and during the press conference following the announcement (12:30 GMT).

USD/JPY Current level -  110.14

During yesterday's trading session, the dollar managed to partially recover against the yen, but the test of the resistance level of 110.30 was unsuccessful and the short-term expectations are for the pair to trade in a consolidation phase above the support level of 109.72. The main resistance level remains the aforementioned level of 110.30.

GBP/USD Current level - 1.3703

The pound found support at the level of 1.3570 and stopped depreciating against the dollar. At the time of writing, the pair is found in a corrective phase, which is expected to be limited by the resistance level of 1.3800. The most likely scenario, after the corrective phase ends, is for the pair to retest the support level of 1.3570.

DAX Current level - 15464

The German index continues to recover after the huge sell-off at the start of the week. Yesterday, the DAX30 breached the resistance level of 15358 and, at the time of writing, is headed towards a test of the resistance level of 15464. The expectations are for the index to continue recovering, but considering the ongoing fears of new lockdowns across Europe spurred by the new "Delta” variant of the virus, new sell-offs, as well as increased volatility, are possible.

US30 Current level -  34839

The U.S. blue-chip index is headed towards a test of the resistance level of 34846 and, if the test proves to be successful, it is possible that the psychological level of 35000 will be reached. Similar to the German index, the US30 could face strong sell-offs because of the fears stemming from the new "Delta” variant of COVID-19. During today's trading session, investors' attention will be focused on the initial jobless claims data (12:30 GMT).

Disclaimer

This information has been prepared for information only and does not constitute an offer or commitment. This information does not constitute investment advice as defined by the rules of the FCA.

U.S Stock Market-Wall Street's main indexes fell

Wall Street's main indexes fell on Friday, with growth and value stocks falling as investors turned risk-averse towards the end of the week, while gains in defensive parts of the market kept declines at bay. Markets have largely cheered a steady recovery in the labor market this year, but concerns about higher inflation due to a faster-than-expected rebound have hurt sentiment, with investors oscillating between "value" and tech-heavy "growth" names in the past few sessions. Economy-sensitive S&P 500 energy, financials and industrials led declines among the 11 major sector indexes by afternoon trading. The energy sector is down over 6% so far for the week. Technology stocks also fell on Friday, while defensive utilities, consumer staples and real estate gained. Real estate also hit a record. Investors are more concerned right now about missing the upside of this market than they are about a sell-off. In the near term, all they're really doing is shifting between stocks and not taking money out of the overall market.

Dow Jones Industrial Average

The Dow Jones Industrial Average lost 0.86%. The biggest gainers of the session on the Dow Jones Industrial Average were Procter & Gamble Company, which rose 0.98% or 1.37 points to trade at 140.53 at the close. The Travelers Companies Inc. added 0.52% or 0.81 points to end at 156.39 and Amgen Inc. was up 0.51% or 1.27 points to 247.90 in late trade. The biggest losers included Dow Inc., which lost 3.09% or 1.91 points to trade at 60.00 in late trade. Chevron Corp declined 2.65% or 2.68 points to end at 98.62 and Walt Disney Company shed 2.64% or 4.87 points to 179.28.

NASDAQ 100

 The NASDAQ index declined 0.80%. The top performers on the NASDAQ Composite were Red Cat Holdings Inc. which rose 41.35% to 7.110, China SXT Pharmaceuticals Inc. which was up 39.33% to settle at 2.0900 and GX Acquisition Corp which gained 26.93% to close at 10.18. The worst performers were Bit Brother Ltd which was down 48.00% to 1.0400 in late trade, FibroGen Inc. which lost 42.27% to settle at 14.34 and American Outdoor Brands Inc. which was down 21.93% to 28.05 at the close.

Oil

Oil prices recouped some losses today but were still down after OPEC+ overcame internal divisions and agreed to boost output, which sparked concerns about a crude surplus as COVID-19 infections continue to rise in many countries. U.S oil was down 66 cents, or 0.9%, at $71.15 a barrel, having slipped to $70.64 earlier. OPEC+ ministers agreed on Sunday to increase oil supply from August to cool prices that earlier this month climbed to the highest in around 2-1/2 years as the global economy recovers from the COVID-19 pandemic. The group, which includes members of the OPEC and allies such as Russia, agreed on new production shares from May 2022. Oil prices may continue to gyrate in the coming weeks. The group last year cut output by a record 10 million barrels per day (BPD) amid evaporation in demand the pandemic developed, prompting a collapse in prices with U.S oil at one point falling into negative territory. It has gradually brought back some supply, leaving it with a reduction of around 5.8 million BPD.

Precious and Base Metals

Gold prices edged higher today, lifted by a retreat in U.S. Treasury yields and concerns that a surge in coronavirus cases could dampen global economic recovery, though an uptick in the dollar limited the safe-haven metal’s appeal. Spot gold was up 0.1% at $1,812.06 per ounce, after falling 1% in the previous session. U.S gold futures were steady at $1,815.10. Covid-driven risk aversion is driving Asian markets today after a weak finish on Wall Street on Friday. Gold is used as a safe investment during times of political and financial uncertainty. Some short-covering is providing modest support to gold, but it not displaying any clear momentum in either direction. Sentiment in wider financial markets remained weak as investor risk appetite was soured by growing inflationary pressures and a relentless surge in coronavirus cases. Many countries, particularly in Asia, are struggling to curb the highly contagious Delta variant of the coronavirus and have been forced into taking lockdown measures. Benchmark 10-year Treasury yields held near more than one-week low, reducing the opportunity cost of holding non-interest-bearing gold. However, safe-haven gains for the U.S dollar limited gold’s appeal, as the dollar index strengthened 0.1% and edged towards a three-month high against its rivals. Negative real yields appear to be driving gold prices in the face of a stronger USD. We expect the U.S. dollar to weaken as other central banks hike rates. On the technical front, spot gold may break a support at $1,813 per ounce and fall towards $1,789, following its failure to break a resistance at $1,833. Elsewhere, silver fell 0.7% to $25.49 per ounce, palladium rose 0.4% to $2,641.68, and platinum eased 0.1% to $1,101.15. Copper prices fell today as the dollar hovered near its highest levels in months, making greenback-priced metals more expensive and less appealing to holders of other currencies

Traditional Agricultures

Wheat futures rose as much as 2% today to hit a two-month high, as adverse weather in several major exporters stoked concerns about global supplies. Corn also climbed up to 2%, drawing support from the hot, dry weather in the United States, while soybeans firmed 1.5%.

Disclaimer

This information has been prepared for information only and does not constitute an offer or commitment. This information does not constitute investment advice as defined by the rules of the FCA.

FOREX-Delta coronavirus variant made investors nervous

The dollar sat near its highest levels in months today as the spread of the Delta coronavirus variant made investors nervous about the global recovery and sent money into safety. The risk-sensitive Australian dollar fell to its weakest against the greenback since December early in the Asia session and hit a five-month low against the safe-haven yen. The dollar also rose broadly against Asian currencies. Daily infections have been surging from the United States and Europe to Asia and the global seven-day average of new cases each day is over half a million for the first time since May. Traders are holding their breath as England lifts most social curbs. The Aussie was last down 0.2% at $0.7381 and the New Zealand dollar also fell 0.2% to $0.6986. The yen, which rose broadly, was up 0.2% at 109.90 per dollar and up by about the same margin at 129.69 per euro. The market is really trading on the uncertainty in the air around COVID. That is the dominant factor, though adding a surprise fall in U.S consumer sentiment had also unsettled investors. The U.S. dollar index held at 92.729, not far from last week's three-month top of 92.832. The euro fetched $1.1801, just a touch away from last week's three-month low of $1.1772. The week's data calendar is fairly bare until Friday, when global purchasing managers' index figures are published, with policy and virus response expected in focus in the meantime as lockdowns tighten and expand in Asia. There is an outside chance China's benchmark loan prime rate is lowered on Tuesday and the European Central Bank, which meets on Thursday, has flagged a guidance tweak. Sterling, meanwhile, teetered at $1.3755, its lowest in more than a week, as hopes ride on so-called "Freedom day" with England betting its rush to vaccinate the population will mean people are less likely to fall seriously ill with COVID-19. Relaxed rules have already been greeted by a mixture of nerves and excitement by London clubbers in the wee hours, but the day also begins with epidemiologists skeptical and the prime minister, finance minister and health minister themselves isolating as cases spread. The UK's 'freedom day' today has some worried it could have a similar experience. Cryptocurrencies were steady in morning trade, with bitcoin holding near strong support at $31.590. Elsewhere the dollar continued its march higher on Asia's emerging market currencies. Nearly half of Australia's population of 25 million has been confined to their homes with Sydney, the country's largest city, in a five-week lockdown, and all of Victoria state under stay-at-home rules, after the fast-moving Delta strain triggered the country's worst outbreak for this year.

Euro

The single currency fell as Eurozone inflation slowed in June after a steady acceleration in the first months of 2021, official data confirmed on Friday, while the bloc's trade surplus shrank in May due to a decline of exports. European Union's statistics office Eurostat said consumer prices in the 19-country single-currency bloc rose 1.9% in June on the year. Overall, the EUR/USD traded with a low of 1.1823 and a high of 1.1880 before closing the day around 1.1877 in the New York session.

Yen

The Japanese Yen steadied today as the spread of the Delta coronavirus variant made investors nervous about the global recovery and sent money into safety. Daily infections have been surging from the United States and Europe to Asia and the global seven-day average of new cases each day is over half a million for the first time since May. Overall, the USD/JPY traded with a low of 109.71 and a high of 110.24 before closing the day around 110.10 in the U.S session.

British Pound

The British Pound slipped against the dollar, and headed for its worst week in a month, as investors sought safety in the greenback amid concerns over rising COVID-19 cases globally. Solid U.S data and a shift in interest rate expectations after the Federal Reserve in June flagged sooner-than-expected hikes in 2023 have lent support to the greenback in recent weeks. Overall, the GBP/USD traded with a low of 1.3754 and a high of 1.3898 before closing the day at 1.3897 in the New York session.

Canadian Dollar

The Canadian Dollar fell to near a three-month low hurt by dismal economic data and weakness in oil prices. Canada’s scorching hot housing market is starting to cool, as buyers shift their focus from getting more space to getting back to normal after the COVID-19 pandemic, and the fear of missing out in the market fades into a prevailing sense of “wait and see.” Overall, USD/CAD traded with a low of 1.2440 and a high of 1.2554 before closing the day at 1.2441 in the New York session.

Australian Dollar

The Australian Dollar today hit its lowest level against the greenback for 2021 as COVID-19 lockdowns that have restricted the mobility of almost half of the country's population were extended to stop the spread of Delta variant. Simultaneous lockdowns in Australia's two largest cities, Sydney and Melbourne, which account for the bulk of the country's economic output and employment, hurt investor sentiment. Overall, AUD/USD traded with a low of 0.7408 and a high of 0.7485 before closing the day at 0.7421 in the New York session.

Euro-Yen

EUR/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also issuing a bearish stance. The Relative Strength Index is above 35 and lies below the neutral zone. In general, the pair has gained 0.63%.

Sterling-Yen

Currently, GBP/JPY is trading below 14 and above 50, 100 days moving average. Fast stochastic is issuing a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 41 reading and lies below the neutral zone. On the whole, the pair has gained 1.15%.

Aussie-Yen

Currently, the cross is trading below 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 36 reading and lies below the neutral region. In general, the pair has gained 1.15%.

Euro-Sterling

This cross is currently trading below 14, 50 and 100 days moving average. Fast stochastic is indicating a bearish tone and MACD is issuing a bullish signal. The Relative Strength Index is above 44 and lies below the neutral region. Overall, the pair has lost 0.54%.

Sterling-Swiss

This cross is trading above 14 and below 50, 100 days moving average. Fast stochastic is issuing a bullish stance and MACD is also indicating a bullish tone. The Relative Strength Index is above 46 and lies below the neutral region. In general, the pair has gained 0.67%.

Disclaimer

This information has been prepared for information only and does not constitute an offer or commitment. This information does not constitute investment advice as defined by the rules of the FCA.

Trading Week Ahead-Tapering Talks Continue

This week's focus remained on US inflation as the USD continues to find a base maintaining buyer demand. The Fed testimony on day two was a highlight this week, and Fed Powell took a grilling from senators over high inflation, as well as the Fed’s current monetary policy. Powell reiterated the view that higher inflation looked to be transitory, but he acknowledged that price pressures were well above the central bank’s target.

Inflation and employment growth are both important factors to when the Fed will tighten the current easy monetary policy. “We’ve said that we would begin to reduce our asset purchases when we feel that the economy has achieved substantial further progress measured from last December,” Powell said Thursday. “We’re in active consideration of that now.”

Rate increases look to be forming a floor for the USD and could be a reason there’s lower short interest. Adding to inflationary worries was last Friday’s better than expected US retail sales data. The figures were strong, retail sales increasing to 0.6%, well above the -0.4% expected and the previous -1.3% figure. This goes back to the price pressures, the PPI another factor as it came in above expectations last week, hitting 1.0%. With government spending and now price pressures expanding, could this dial-up earlier rate rise expectations?

The USDCAD and USDCHF posted solid weeks. Risk majors declined with the AUD and EUR both hitting new weekly lows while the GBP spent most of the week range-bound. The Bank of England was accused of being addicted to printing money late last week by its peers. Inflation is also an issue in the UK, and the focus remains around when the central bank could start tapering its current bond-buying. The head of the BoE commented that he won’t be rushed into rate rise decisions.

Staying with rates, Westpac sees a possible 3x 25 point rate rises from the RBNZ in 2021. NZ CPI surprised this week, hitting 1.3%, well above the 0.7% expected.

Melbourne is back in another lockdown, has this affected Gold?

Delta Covid variant continued to develop last week, with infection rates continuing to skyrocket. Australia saw a second major city move back into lockdown. Is this the factor holding gold up? Gold ignored the USD last week, continuing to trade above the 1820 level. Oil was not as favored as it moved lower. Chinese GDP missed the mark but still came in at 7.9%

U.S. indexes bucked off the Fed as the Nasdaq and SP500 hit new records. The Nasdaq stubbled off highs on Thursday. European indexes finished mainly lower last week, as did the Nikkei.

This week, the European Central Bank’s monetary policy meeting could be seen as the critical event of the week. The focus will be on the ECB monetary policy and its own stimulus program. With the UK talking reductions, could we see anything like this from the ECB? Flash data rounds out the week. German services and manufacturing PMI data the high impact highlighted. But we also have EU, French, UK, and US data due.

US stocks indexes remain a focus, with prices remaining around all-time highs. Has inflation been discounted? It’s a hot topic, but for now, buyers seem to be liking the temporary comments and the message that the stimulus will continue until otherwise.

Lastly, Bitcoin might not be all over the headline atm, but we are keeping a close eye on the weekly chart as the price continues to test support seen from 31,700 to 32,000. If a new move lower set off, could this be 2018 all over again?

Disclaimer

This information has been prepared for information only and does not constitute an offer or commitment. This information does not constitute investment advice as defined by the rules of the FCA.

Daily Market View-U.S Stock Market-U.S stock indexes fell yesterday as a rally in growth stocks ran out of steam

U.S stock indexes fell yesterday as a rally in growth stocks ran out of steam, while economically sensitive cyclical gained as a fall in weekly jobless claims last week strengthened views about a recovery in the labor market. Mega-cap technology stocks including Apple Inc., Microsoft Corp, Amazon.com, Alphabet Inc., and Facebook Inc. fell between 0.7% and 1.7%. The S&P 500 technology sector index fell 0.9% and was on track to snap a four-day winning streak. Seven of the 11 major S&P sectors were trading lower, including consumer discretionary and communication services. Value-oriented sectors such as financials, industrials, and materials led gains yesterday, as the Labor Department said initial claims for state unemployment benefits fell 26,000 to a seasonally adjusted 360,000 for the week ended July 10, a 16-month low. However, investors have been fretting over a sooner-than-expected hawkish shift by the Federal Reserve amid signs of a steady economic rebound.

Dow Jones Industrial Average 

The Dow Jones Industrial Average rose 0.15%. The biggest gainers of the session on the Dow Jones Industrial Average were Honeywell International Inc., which rose 2.20% or 5.02 points to trade at 232.79 at the close. UnitedHealth Group Incorporated added 1.27% or 5.25 points to end at 420.00 and Home Depot Inc. was up 1.05% or 3.36 points to 322.58 in late trade. The biggest losers included Salesforce.com Inc., which lost 2.01% or 4.88 points to trade at 237.55 in late trade. Walgreens Boots Alliance Inc. declined 1.34% or 0.63 points to end at 46.25 and Intel Corporation shed 1.24% or 0.70 points to 55.82.

NASDAQ 100 The NASDAQ index lost 0.70%. The top performers on the NASDAQ Composite were Liquid Media Group Ltd which rose 67.09% to 2.6400, Cinedigm Corp which was up 37.04% to settle at 1.4800 and ATA Inc. which gained 28.02% to close at 3.815. The worst performers were Imv Inc. which was down 30.29% to 1.450 in late trade, 1895 of Wisconsin Inc. Bancorp which lost 28.82% to settle at 11.19, and Marin Software Inc. which was down 27.36% to 9.93 at the close.

Oil

Oil prices fell by more than $1 a barrel yesterday on expectations of more crude hitting the market after a compromise deal between leading OPEC producers and a surprisingly poor weekly reading on U.S fuel demand. U.S. West Texas Intermediate (WTI) crude settled at $71.65 a barrel, down $1.48, or 2.2%. The slide continued Wednesday's losses after Reuters reported that Saudi Arabia and the United Arab Emirates had reached an accord that should pave the way for a deal to supply more crude to a tight oil market. A deal has yet to be solidified, and the UAE energy ministry said deliberations are continuing. Talks among the Organization of the Petroleum Exporting Countries, Russia, and their allies, a group is known as OPEC+, broke down this month after the UAE objected to extending the group's supply pact beyond April 2022, saying the deal did not account for the UAE's increased output capacity. Several banks, including Goldman Sachs, Citi, and UBS expect supplies to remain tight in the coming months.

Precious and Base Metals

Gold prices today were headed for the fourth straight weekly gain, as investors took comfort from Federal Reserve Chair Jerome Powell’s stance that the U.S central bank would continue to support the economy and inflation will be transitory. Spot gold was flat at $1,829.14 per ounce but gained 1.2% so far this week. U.S gold futures edged up 0.1% to $1,830.30. Powell faced sharp questions about inflation and banking regulation in a hearing before the Senate Banking Committee on Thursday and repeated his pledge of “powerful support” to complete the U.S. economic recovery. Large stimulus measures tend to support gold, which is often considered a hedge against inflation and currency debasement. The Federal Reserve will shutter its asset purchases program by the end-2022, according to a Reuters poll, with a few more economists now predicting a rate hike as early as next year, but they pegged new COVID-19 variants as the biggest economic risk. The economy in China, a leading consumer of gold, grew slightly more slowly than expected in the second quarter, weighed down by higher raw material costs and new COVID-19 outbreaks, fanning expectations that policymakers may have to do more to support the recovery. Silver was flat at $26.32 per ounce, palladium rose 0.1% to $2,731.96, and platinum dipped 0.1% to $1,136.94. Copper prices rose yesterday as lower than expected growth from top consumer China stoked hopes for more support for the world’s second-largest economy. China’s growth in the second quarter undershot expectations in a Reuters poll owing to slowing manufacturing activity, higher raw material costs, and new COVID-19 outbreaks. Meanwhile, U.S Fed chairman Jerome Powell told Congress he saw no need to rush the shift towards tighter post-pandemic monetary policy, which bodes well for liquidity and metals demand.

Traditional Agricultures

Corn futures retreated from a near two-week high hit in the previous session, although losses were limited by worries about crops in key U.S growing regions. Wheat dipped yesterday after a rally, while soybean ticked higher. Corn and soybeans are being underpinned by sustained dry weather.

Disclaimer

This information has been prepared for information only and does not constitute an offer or commitment. This information does not constitute investment advice as defined by the rules of the FCA.