Market Focus
U.S. stocks rose alongside equities in Europe and Asia amid new bouts of stimulus and positive economic signal as coronavirus lockdowns ease. Dollar slumped for a fourth consecutive day.
Stock are hovering near their highest in three months as businesses reopen around the world and manufacturing gauges show economies stabilizing following coronavirus shutdowns. That is despite a slew of risks still on the horizon, including tense U.S.-China relations that may jeopardize a hard-won trade deal.
At the same time, violent demonstrations across U.S. cities over the killing by police, are not yet seen as a major drag on the economy and corporate profits.
Market Wrap
Main Pairs Movement
Greenback and havens pair declined as risk premium from the pandemic continued unwind, pushing some higher beta currencies into overbought territory as investors focused on reopening and constructive economic data. So far, dollar contained a very large safe-haven premium that was inconsistent with the improvement condition in economic environment, risk appetite and low volatility. U.S. 10 years Treasuries was higher to 0.68%.
For RBA, it kept its interest rate and yield objective unchanged as an abatement of the health crisis allows and economy to begin reopening.
Key takeaways from RBA rate statement:
COVID-19 Data (EOD):
Technical Analysis:
EURUSD (H4)
EURUSD reached it highest level since March against the dollar, with Germany reportedly lining up a second stimulus package of as much as 100 billion euros. This comes ahead of the ECB’s decision Thursday, when policy makers are expected to boost a relief fund made to combat the virus fallout. Some market participants are expecting the ECB to increase its PEPP asset purchases.
Resistance: 1.1145, 1.1163, 1.1180
Support: 1.1030, 1.0986, 1.1066
USDCAD (H4)
Loonie had another consecutive drop to the lowest since March 9 at 1.348, support is widely expected at 1.3465. A large number of puts struck at 1.35 expire on Friday according to DTCC data.
Loonie like other commodities-linked peers that outperformed is driven by unwinding of pandemic fears and is taking account of a optimistic retaliatory consumption demand while economies gradually boost. At the same time, oil remained upwind giving prospect to CAD as well.
Resistance: 1.4006, 1.3856, 1.3735
Support: 1.35, 1.3465, 1.3385
USDJPY (H4)
USDJPY has clinched a multi-week high beyond 108.500 today. The move took place despite a decline of demand for the greenback. The overall risk-on appetite across the market has fueled the investors to take on riskier assets and neglect the Japanese Yen (a safe-haven currency). Moreover, optimism about the economy recovery not only boosted the US equity market and offset the ongoing social unrest in America, but it also further weighted down on the JPY. We expect the pair to stay above the immediate support of 108.30 and continue to test the 108.75 resistance.
Resistance: 108.750, 109.035, 109.240
Support: 108.30, 107.900, 107.750
Economic Data
Currency |
Data |
Time (TP) |
Forecast |
Exposure (Our side) |
AUD |
GDP(QoQ) (Q1) | 09:30 |
-0.3% |
|
EUR |
German Unemployment Change (May) | 15:55 | 200k |
|
GBP |
Composite PMI (May) | 16:30 |
28.9 |
|
GBP |
Service PMI (May) | 16:30 |
28 |
|
USD |
ADP Nonfarm Employment Change (May) | 20:15 | -9000k |
|
USD |
ISM Non-Manufacturing PMI (May) | 22:00 | 44 |
|
CAD |
BoC Interest Rate Decision | 22:00 | 0.25% |
|
CAD |
BoC Rate Statement | 22:00 |
|
|
Oil |
Crude Oil Inventories | 22:30 |
3.038M |
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