Market News


TIME
2020-08-06 12:30 GMT
Pair

Summary
United States Initial Jobless Claims below expectations (1415K) in July 31: Actual (1186K)
Content

Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-08-06 12:30 GMT
Pair

Summary
United States Continuing Jobless Claims below forecasts (16.72M) in July 24: Actual (16.107M)
Content

Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-08-06 12:30 GMT
Pair

Summary
United States Initial Jobless Claims 4-week average down to 1337.75K in July 31 from previous 1368.5K
Content

Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-08-06 12:27 GMT
Pair
USD/TRY
Summary
The lira has been the worst performing major EM currency in August. TRY has already weakened by over 4% against the USD, with USD/TRY today hitting an
Content

The lira has been the worst performing major EM currency in August. TRY has already weakened by over 4% against the USD, with USD/TRY today hitting an all-time high of 7.2850. Izidor Flajsman, from TD Securities, thinks the CBRT needs to hike rate dramatically to avoid  further lira depreciation. 

Key quotes

“We've consistently stated that monetary policy in Turkey is too loose and the CBRT will have to hike rates dramatically. In April, we pointed out that the CBRT had taken net reserves to zero and would likely deplete other liquidity buffers in Q3, with hikes needed by September. At this point, policymakers will have to hike significantly, and possibly introduce capital controls.” 

“Last week, we stated that the pace of reserve burn YTD would match the CBRT's reported gross reserves (mostly borrowed) by late summer/early autumn unless alternative funds are found or FX interventions halted.” 

“While higher US rates could take some near-term pressure off TRY, unless we see a sharp improvement in sentiment with renewed capital inflows, we think the CBRT will have to hike rates and continue to look for at least 200bps of tightening by end-Sep, with further tightening beyond that.”

 


Chart
Null
Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-08-06 12:17 GMT
Pair
USD/CAD
Summary
The USD/CAD pair fell to a daily low of 1.3240 in the early trading hours of the European session and staged a rebound in the last hours. As of writin
Content
  • USD/CAD is posting modest daily gains on Thursday.
  • WTI is staging a technical correction, trades below $42.
  • Risk-averse market environment helps the greenback find demand.

The USD/CAD pair fell to a daily low of 1.3240 in the early trading hours of the European session and staged a rebound in the last hours. As of writing, the pair was trading at 1.3299, gaining 0.26% on a daily basis.

On Wednesday, the selling pressure surrounding the greenback and crude oil's impressive upsurge caused USD/CAD to push lower. After gaining nearly 2% on Wednesday, the barrel of West Texas Intermediate (WTI) is down 0.8% on the day at $41.85, not allowing the commodity-sensitive loonie to stay resilient against its rivals.

USD gathers strength ahead of Friday's NFP report

On the other hand, the cautious market mood is helping the USD find demand. At the moment, the S&P 500 futures are down 0.33% on the day, suggesting that Wall Street's main indexes are likely to open in the negative territory. If risk-off flows continue to dominate markets in the second half of the day, the US Dollar Index, which was last up 0.15% on the day at 92.95, could extend its rebound.

The US Department of Labor's weekly Initial Jobless Claims will be the only data release from the US. On Friday, labour market reports from both Canada and the United States will be watched closely by market participants. 

Markets expect the Nonfarm Payrolls (NFP) in the US to increase by 1.6 million in July. On the flip side, Canada is expected to add 400,000 jobs with the Unemployment Rate edging lower to 11% from 12.3%.

Technical levels to watch for

 


Chart
Null
Technical Analysis
DATE: 0001-01-01T00:00:00 : 0 Close: 0 high: 0 low: 0 bid: 0 ask: 0 pct: 0
Key Level
S1: 1.3223 S2: 1.3180 S3: 1.3126 R1: 1.3321 R2: 1.3374 R3: 1.3418
Trend Index
Recommendation : Bearish Strength : -3
OBOS Index
OBOS Index : Oversold

TIME
2020-08-06 12:07 GMT
Pair

Summary
Economist at UOB Group Barnabas Gan reviewed the latest BoT event. Key Quotes “The Bank of Thailand (BOT) kept its one-day repurchase rate unchanged a
Content

Economist at UOB Group Barnabas Gan reviewed the latest BoT event.

Key Quotes

“The Bank of Thailand (BOT) kept its one-day repurchase rate unchanged at 0.50% for the second consecutive meeting. The last time it made a move was in May when the benchmark rate was cut by 25 basis points. The decision to keep its policy rate unchanged was voted unanimously by all seven committee members.”

“The central bank reiterates its view for negative inflation in 2020, while keeping the outlook for GDP to contract by 8.1% in 2020. It added that a recovery to pre-COVID-19 levels will take at least two years.”

“Policy-makers continued to highlight their concern over the strengthening Thai Baht “which affects economic recovery”, suggesting that more accommodative measures may still be seen in the future to stem THB’s strength.”

“With rates approaching the zero mark, policy space is increasingly limited. Policy-makers may cut the benchmark rate by just another 25 basis points to 0.25% to support growth and inflation in the year ahead, failing which, unconventional measures such as asset purchases or yield curve control may be adopted.”

 


Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-08-06 12:00 GMT
Pair

Summary
Brazil Unemployment Rate registered at 13.3% above expectations (13.2%) in June
Content

Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-08-06 11:55 GMT
Pair

Summary
Sellers remain well in control of the sentiment around the dollar and pushed DXY further south to 92.52, recording at the same time fresh lows last se
Content
  • DXY prints fresh lows at 92.52 in the second half of the week.
  • Further decline is seen visiting the 91.92/80 band.

Sellers remain well in control of the sentiment around the dollar and pushed DXY further south to 92.52, recording at the same time fresh lows last seen in May 2018.

In fact, further downside is increasingly likely in the current context. If 92.52 is breached on a convincing fashion, then there are no support of relevance until the Fibo level (of the 2017-2018 drop) at 91.92 ahead of the May 2018 low at 91.80.

The negative outlook on the dollar is expected to remain unaltered while below the 200-day SMA, today at 97.94. Of note: the 100-day SMA (97.98) is about to break below the 200-day SMA (97.94), adding to the bearish scenario.

DXY weekly chart

 


Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-08-06 11:55 GMT
Pair
GBP/USD
Summary
The GBP/USD pair maintained its bid tone through the mid-European session and was last seen trading near the 1.3170 region, just below five-month tops
Content
  • A combination of factors assisted GBP/USD to gain traction for the second straight session.
  • The USD fell to two-year lows amid concerns about the pace of the US economic recovery.
  • The not so dovish BoE monetary policy update provided an additional boost to the sterling.

The GBP/USD pair maintained its bid tone through the mid-European session and was last seen trading near the 1.3170 region, just below five-month tops set earlier this Thursday.

The pair added to the previous day's positive move and gained some follow-through traction for the second consecutive session on Thursday. The early uptick was supported by the prevalent bearish sentiment surrounding the US dollar, which dropped to a new two-year low amid doubts about the US economic recovery.

Investors remain worried that the US economy could be stalling again due to the country's poor performance in containing the coronavirus outbreak. The market concerns were further fueled by Wednesday's disappointing ADP report, which showed that the private-sector employment in the US increased by only 167K.

The greenback was further pressured by the deadlock in the US Congress over the next round of fiscal stimulus measures. It is worth reporting that Republicans and Democrats harden their stances on the new coronavirus relief plan, raising uncertainty over the possibility of an agreement before the end-of-week deadline.

On the other hand, the British pound found some support after the Bank of England struck a less pessimistic tone on the outlook for the British economy. The UK central bank said the recession will be less severe than feared and predicted that the economic output will shrink by 9.5% this year as against the 14.5% estimated previously.

Meanwhile, the BoE expressed doubts whether negative interest rates would be effective and also refrain from providing any clues about further policy stimulus at this stage. This, in turn, underpinned the sterling and triggered a little more short-covering around the GBP/USD pair, pushing it further beyond the recent swing highs.

However, extremely overbought conditions on short-term charts held investors from placing fresh bullish bets, which seemed to be the only factor that kept a lid on any further gains for the major. Nevertheless, relatively less dovish than expected BoE statement might have already set the stage for a further near-term appreciating move.

Moving ahead, market participants now look forward to the release of the US Initial Weekly Jobless Claims for some short-term trading impetus during the early North American session. The data is unlikely to be a major game-changer as the focus remains on the official non-farm payrolls, popularly known as NFP, scheduled for release on Friday.

Technical levels to watch

 


Chart
Null
Technical Analysis
DATE: 0001-01-01T00:00:00 : 0 Close: 0 high: 0 low: 0 bid: 0 ask: 0 pct: 0
Key Level
S1: 1.3061 S2: 1.3008 S3: 1.2958 R1: 1.3165 R2: 1.3215 R3: 1.3268
Trend Index
Recommendation : StronglyBullish Strength : 5
OBOS Index
OBOS Index : Overbought

TIME
2020-08-06 11:52 GMT
Pair

Summary
The S&P 500 Index has extended the rally to what is seen as a much tougher resistance test from the top of the February “pandemic” price gap at 3328/3
Content

The S&P 500 Index has extended the rally to what is seen as a much tougher resistance test from the top of the February “pandemic” price gap at 3328/38. The Credit Suisse analyst team continues to look for this to cap for now and for a pullback/consolidation to emerge. 

Key quotes

“S&P 500 strength has extended to our next flagged resistance/objective and what we continue to see as important and what we would expect to be tougher initial resistance at the top of the February price gap at 3328/38.” 

“Whilst the underlying trend remains higher, we continue to expect 3328/38 to remain a tough barrier and look for this to cap for now for a fresh consolidation phase. Support for a setback moves to 3319/17 initially, then the lower end of the price gap from yesterday at 3307. Beneath here is needed to add weight to our consolidation scenario with support next at 3286/85, then 3271/61, but with this latter area then ideally holding.” 

“A direct and closing break above 3338 would be seen clearing the way for a move to 3373 next and eventually a challenge on the 3394 record high.”

 


Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-08-06 11:45 GMT
Pair

Summary
Planned job cuts in the US-based employers increased by 54% from 170,219 in June to 262,649 in July, Challenger Gray & Christmas announced in its late
Content
  • Challenger Job Cuts in the US increased by 54% in July.
  • US Dollar Index clings to small daily gains, stays below 93.00.

Planned job cuts in the US-based employers increased by 54% from 170,219 in June to 262,649 in July, Challenger Gray & Christmas announced in its latest Job Cut Report on Thursday.

Commenting on the publication, "the downturn is far from over, especially as COVID cases rise around the country," said Andrew Challenger, senior vice president at Challenger, Gray.

"Consumers are buying fewer goods and services, businesses are closing, and bankruptcies are rising," Challenger added, as reported by Reuters. "It is clear that many job losses are now permanent, and it will be challenging for many workers to find new jobs and feel safe taking jobs that are public-facing."

Market reaction

The US Dollar Index largely ignored this report and was last seen gaining 0.1% on the day at 92.90.


Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-08-06 11:36 GMT
Pair
AUD/USD
Summary
After advancing to its highest level since February of 2019 at 0.7243 on Wednesday, the AUD/USD pair came under modest bearish pressure on Thursday an
Content
  • AUD/USD turned south after climbing to fresh multi-month highs on Wednesday.
  • New coronavirus lockdown measures are expected to weigh heavily on activity.
  • US Dollar Index posts small daily gains, recovers toward 93.00.

After advancing to its highest level since February of 2019 at 0.7243 on Wednesday, the AUD/USD pair came under modest bearish pressure on Thursday and fell to a fresh daily low of 0.7175. As of writing, the pair was down 0.12% on the day at 0.7182.

Earlier in the day, Australian Prime Minister (PM) Scott Morrison said the Treasury had estimated Victoria's stage 4 lockdown is expected to cause the economy in the September quarter to contract by between $7 billion to $9 billion. “The effective unemployment numbers will be between 250,000 and 400,000,” Morrison added and caused the AUD to lose its strength against its rivals.

USD capitalizes on risk-off flows

On the other hand, the risk-averse market environment, as reflected by the sharp drop in major European equity indexes, is helping the greenback find demand as a safe-haven. Ahead of the US Department of Labor's weekly Initial Jobless Claims data, the US Dollar Index is up 0.1% on a daily basis at 92.90. In case Wall Street snaps its winning streak and falls on Thursday, the USD could continue to outperform its rivals and force the pair to push lower.

On Friday, the Reserve Bank of Australia will release its Monetary Policy Statement. Additionally, Trade Balance data from China will be looked upon for fresh impetus.

Technical levels to watch for

 


Chart
Null
Technical Analysis
DATE: 0001-01-01T00:00:00 : 0 Close: 0 high: 0 low: 0 bid: 0 ask: 0 pct: 0
Key Level
S1: 0.7149 S2: 0.7106 S3: 0.7060 R1: 0.7238 R2: 0.7284 R3: 0.7326
Trend Index
Recommendation : StronglyBullish Strength : 5
OBOS Index
OBOS Index : Neutral

TIME
2020-08-06 11:33 GMT
Pair
USD/JPY
Summary
The USD/JPY pair is trading uneventfully around 105.50 while pressure mounts ahead of US employment data. The bearish potential is set to accelerate o
Content

The USD/JPY pair is trading uneventfully around 105.50 while pressure mounts ahead of US employment data. The bearish potential is set to accelerate on a break below 105.30, the weekly low, FXStreet’s Chief Analyst Valeria Bednarik reports.

Key quotes

“The market’s attention is now centred in US employment data, ahead of the Nonfarm Payroll report to be out on Friday. The US will publish the July Challenger Job Cuts, previously at 170.219K and Initial Jobless Claims for the week ended July 31, foreseen at 1.41M from 1.43M in the previous week. So far, employment-related data released these days hints a terrible number for July. Falling equities and Treasury yields flirting with multi-month lows skew the risk to the downside.”

“The USD/JPY pair is bearish according to technical readings in the 4-hour chart, as the 20 SMA has turned south, capping the upside around 105.76. Technical indicators, in the meantime, turned lower within negative levels. The pair needs to break below 105.31, the weekly low, to confirm a new leg lower which can extend towards the 104.40 price zone.”

 


Chart
Null
Technical Analysis
DATE: 0001-01-01T00:00:00 : 0 Close: 0 high: 0 low: 0 bid: 0 ask: 0 pct: 0
Key Level
S1: 105.32 S2: 105.05 S3: 104.77 R1: 105.88 R2: 106.15 R3: 106.43
Trend Index
Recommendation : Bearish Strength : -3
OBOS Index
OBOS Index : Neutral

TIME
2020-08-06 11:30 GMT
Pair

Summary
UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting reviewed the latest inflation figures in the Philippines. Key Quotes “Headline inf
Content

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting reviewed the latest inflation figures in the Philippines.

Key Quotes

“Headline inflation unexpectedly edged up to 2.7% y/y in Jul (from 2.5% y/y in Jun), bringing yearto-date (YTD) inflation to 2.5% in the first seven months of 2020 (Jan-Jul 2019: 3.2%)… July’s inflation was largely due to costlier fuel, transport services, housing rental, alcoholic beverages, and tobacco, which fully offset the moderation in food price inflation and electricity rates amid a stronger peso (PHP).”

“Despite the uptrend in inflation, expectations of subdued domestic demand due to high unemployment, falling overseas remittances, and return to a lockdown in and around capital Manila for 15 days from 4 Aug following the spike in new COVID-19 cases underpins a benign inflation environment for the rest of the year and into 2021. Steady global oil prices at around USD40 /bbl and firm PHP also ensures manageable inflationary pressures ahead. We maintain our full-year inflation forecasts at 2.5% for both 2020 and 2021.”

 


Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-08-06 11:30 GMT
Pair

Summary
United States Challenger Job Cuts increased to 262.649K in July from previous 170.219K
Content

Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-08-06 11:20 GMT
Pair

Summary
Currency markets have sold the US dollar to pre-pandemic levels over the last three weeks largely on anticipated economic weakness. Initial jobless cl
Content

Currency markets have sold the US dollar to pre-pandemic levels over the last three weeks largely on anticipated economic weakness. Initial jobless claims, which are forecast to show little improvement in the latest week as businesses continue to lay off workers or fail in the uneven economic recovery from the pandemic shutdown, set the tone ahead of Friday’s NFP, FXStreet’s Joseph Trevisani briefs.

Key quotes

“First time filings for jobless benefits are forecast to be 1.408 million in the July 31 week, a small drop from 1.434 in the prior period and exactly where they were six weeks ago on June 26 while continuing claims are projected to dip to 16.839 million from 17.018 million. The low has been 16.151 million the week of July 10.”

“The continuing layoffs represented by the claims numbers may come from struggling and failing small businesses that cannot exist without substantial foot traffic, something still missing in many cities. On the other hand, payrolls may show the growth, expansion and hiring in the larger businesses covered in the improving manufacturing PMI figures and the likely gains in the larger service sector.”

“Currency markets have sold the US dollar against the majors over the last three weeks on expected economic weakness from the second wave of Covid cases. The stalling labor market is a main component of that scenario with Non-farm payrolls on Friday the key metric but claims will set the stage.”   

 


Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-08-06 10:59 GMT
Pair
USD/CHF
Summary
USD/CHF seems to be resuming the core bear trend, reinforcing the view that a major top is in place with support seen back to 0.9056/47 before the 0.9
Content

USD/CHF seems to be resuming the core bear trend, reinforcing the view that a major top is in place with support seen back to 0.9056/47 before the 0.9000 psychological mark. On the flip side, resistance moves to 0.9139, per Credit Suisse.

Key quotes

“USD/CHF is back under pressure with the core bear trend resuming, after having partially unwound its oversold condition, thus adding further weight to the view that strength was indeed only corrective and that a major top is in place.” 

“We see support initially at the July and current August lows at 0.9056/47, ahead of a major psychological inflection point at 0.9000, where we would expect to see fresh buyers at first to unwind the already oversold condition. Beneath here though would further reinforce the strong downtrend and see support thereafter initially at 0.8986.” 

“Resistance is seen initially at 0.9091, then 0.9109, ahead of 0.9139, removal of which would ease the immediate downside pressure and suggest further near term consolidation. Resistance is seen thereafter at 0.9230/41, where we would then expect to see a more important effort to cap once more.”

 


Chart
Null
Technical Analysis
DATE: 0001-01-01T00:00:00 : 0 Close: 0 high: 0 low: 0 bid: 0 ask: 0 pct: 0
Key Level
S1: 0.9044 S2: 0.9003 S3: 0.8955 R1: 0.9132 R2: 0.9180 R3: 0.9221
Trend Index
Recommendation : Bearish Strength : -3
OBOS Index
OBOS Index : Oversold

TIME
2020-08-06 10:58 GMT
Pair
EUR/JPY
Summary
EUR/JPY’s rally has managed to hit fresh tops near 125.60 during early trade in the second half of the week, just to come under some selling pressure
Content
  • EUR/JPY recorded new 2020 highs in the 125.55/60 band on Thursday.
  • The March 2019 high near 127.50 is the next target of significance.

EUR/JPY’s rally has managed to hit fresh tops near 125.60 during early trade in the second half of the week, just to come under some selling pressure soon afterwards.

In spite of the ongoing correction, extra gains remain well on the cards and underpinned by the generalized improvement in the risk complex. Against this, the next area of interest emerges at the mid-127.00s, where sits the March 2019 high.

If sellers remain in control in the short-term, then EUR/JPY should meet initial contention in the weekly lows around the 124.00 mark (August 3).

EUR/JPY weekly chart

 


Chart
Null
Technical Analysis
DATE: 0001-01-01T00:00:00 : 0 Close: 0 high: 0 low: 0 bid: 0 ask: 0 pct: 0
Key Level
S1: 124.77 S2: 124.27 S3: 123.89 R1: 125.65 R2: 126.02 R3: 126.52
Trend Index
Recommendation : Bullish Strength : 1
OBOS Index
OBOS Index : Overbought

TIME
2020-08-06 10:50 GMT
Pair
NZD/USD
Summary
The NZD/USD pair is struggling to make a decisive move in either direction amid a lack of significant fundamental drivers on Thursday. As of writing,
Content
  • NZD/USD is fluctuating in a tight range on Thursday.
  • US Dollar Index stages a modest recovery toward 93.00.
  • Eyes on weekly Initial Jobless Claims data from the US.

The NZD/USD pair is struggling to make a decisive move in either direction amid a lack of significant fundamental drivers on Thursday. As of writing, the pair was down 0.08% on the day at 0.6640.

Earlier in the day, the data published by the Reserve Bank of New Zealand (RBNZ) showed that Inflation Expectation for the third quarter rose modestly to 1.43% from 1.24% in the second quarter. However, this reading failed to provide a boost to the NZD.

On the other hand, the US Dollar Index (DXY), which dropped to its lowest level since May 2018 at 92.52 earlier in the day, is staging a rebound ahead of the American session, forcing NZD/USD to stay in the negative territory. At the moment, the DXY is up 0.1% on the day at 92.90.

The US Department of Labor's weekly Initial Jobless Claims data will be featured in the US economic docket on Thursday.

NZD/USD outlook

Westpac analysts think that NZD/USD remains "slightly biased to the upside" after breaking above 0.6600 and see the pair targeting 0.6750 in the months ahead. 

“The fundamental backdrop remains supportive: trend decline in the USD, global demand for risky assets, unprecedented fiscal and central bank stimulus, NZ economic (and COVID management) outperformance, and China’s recovery boosting demand for NZ commodities,” analysts further explained.

Technical levels to watch for

 


Chart
Null
Technical Analysis
DATE: 0001-01-01T00:00:00 : 0 Close: 0 high: 0 low: 0 bid: 0 ask: 0 pct: 0
Key Level
S1: 0.6618 S2: 0.6589 S3: 0.6560 R1: 0.6675 R2: 0.6704 R3: 0.6733
Trend Index
Recommendation : Bullish Strength : 3
OBOS Index
OBOS Index : Neutral

TIME
2020-08-06 10:42 GMT
Pair

Summary
FX Strategists at UOB Group now expect USD/CNH to drop further on a breach of the 6.9300 level. Key Quotes 24-hour view: “While we held the view that
Content

FX Strategists at UOB Group now expect USD/CNH to drop further on a breach of the 6.9300 level.

Key Quotes

24-hour view: “While we held the view that USD ‘could dip below 6.9645’ yesterday, we did not anticipate the subsequent sharp sell-off that sent USD to a low of 6.9325. The sharp and rapid decline is severely oversold and further sustained weakness is unlikely for today. USD is more likely to consolidate and trade between 6.9350 and 6.9590.”

Next 1-3 weeks: “Our latest narrative was from Monday (03 Aug, spot at 6.9850) where we highlighted that ‘the downside risk still appears to be higher’ and added, ‘USD has to crack and close below the July’s low of 6.9645 before a sustained weakness can be expected’. While we are aware that 6.9645 is a critical support, we did not quite anticipate the sharp sell-off upon the break of this level (USD cracked 6.9645 and plunged to a low of 6.9325 yesterday). The current movement is viewed as the start of a negative phase and a break of the next critical support at 6.9300 could lead to a quick move to 6.9050. Resistance is at 6.9550 but only a break of 6.9730 (‘strong resistance’ level) would indicate that our view is wrong.”


Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-08-06 10:35 GMT
Pair
USD/CAD
Summary
The loonie is likely to amble in a 1.30-1.35 range into year’s end, according to economists at Westpac. 2021 will be likely a more auspicious year for
Content

The loonie is likely to amble in a 1.30-1.35 range into year’s end, according to economists at Westpac. 2021 will be likely a more auspicious year for CAD as vaccines are deployed and global recovery lifts up pace.

Key quotes

“Canada has not covered itself in glory lately. The recent Fitch downgrade underscores rising fiscal risks, while PM Trudeau and his government have been wounded by a government contract ethics scandal.”

“High frequency alternative data show the pace of rebound has lost some of its zest and the BoC remains among the more aggressive central banks, the Bank’s balance sheet growth approaching +20% of GDP since March 2020, well ahead of G10 peers.”

“USD/CAD likely to amble in a 1.30-1.35 range into the year's end. 2021 likely to be a more propitious year for CAD, as vaccines are deployed and global recovery picks up pace.”

 


Chart
Null
Technical Analysis
DATE: 0001-01-01T00:00:00 : 0 Close: 0 high: 0 low: 0 bid: 0 ask: 0 pct: 0
Key Level
S1: 1.3223 S2: 1.3180 S3: 1.3126 R1: 1.3321 R2: 1.3374 R3: 1.3418
Trend Index
Recommendation : Bearish Strength : -3
OBOS Index
OBOS Index : Oversold

TIME
2020-08-06 10:27 GMT
Pair
GBP/USD
Summary
US jobless claims, fiscal stimulus talks and Non-Farm Payrolls tensions are in play while GBP/USD has hit 1.3183, the highest since March, amid an upb
Content

US jobless claims, fiscal stimulus talks and Non-Farm Payrolls tensions are in play while GBP/USD has hit 1.3183, the highest since March, amid an upbeat message from the BoE, FXStreet’s analyst Yohay Elam informs.

Key quotes

“The negative message on sub-zero borrowing costs is boosting the pound. Andrew Bailey, Governor of the BoE, has told reporters not to think that the BoE is about to use negative rates, following other positive developments in the bank's ‘Super Thursday.’ The BoE reduced its contraction forecast for 2020 to -9.5% from 14% beforehand and also noted that high-frequency indicators are pointing to robust spending. While the bank refrained from hinting about new bond-buying and repeated that risks are skewed to the downside, Bailey and his colleagues are seeing the glass half full.”

“Initial jobless claims are projected to fall after a worrying increase beforehand. The high-frequency weekly figures will add to jitters ahead of Friday's all-important Non-Farm Payrolls. Did the US lose jobs in July? The chances are rising, and analysts may downscale their forecasts.” 

“President Trump has threatened to use an executive order to extend federal unemployment claims. His move comes as Democrats and Republicans remain divided on the next fiscal boost. Markets are pricing in a large package, seeing through politicians' blame-game. Further developments in Washington and updated coronavirus figures are eyed later in the day. The COVID-19 curves have begun bending lower in America, yet remain elevated.” 

“UK coronavirus cases are grinding higher, with the Scottish administration slapping new restrictions on Aberdeen. For now, the focus is on the BoE and not on COVID-19, nor on US-UK trade talks. Negotiations continue, but expectations for an accord this year remain slim.” 

 


Chart
Null
Technical Analysis
DATE: 0001-01-01T00:00:00 : 0 Close: 0 high: 0 low: 0 bid: 0 ask: 0 pct: 0
Key Level
S1: 1.3061 S2: 1.3008 S3: 1.2958 R1: 1.3165 R2: 1.3215 R3: 1.3268
Trend Index
Recommendation : StronglyBullish Strength : 5
OBOS Index
OBOS Index : Overbought

TIME
2020-08-06 10:19 GMT
Pair
USD/CHF
Summary
The USD/CHF pair faded an early European session spike and has now retreated to the lower end of its daily range, around the 0.9080 region. Following
Content
  • USD/CHF struggled to register any meaningful recovery from multi-year lows.
  • A modest USD bounce, the prevalent risk-on mood extended some support.
  • The price action suggests that the bearish trend might still be far from over.

The USD/CHF pair faded an early European session spike and has now retreated to the lower end of its daily range, around the 0.9080 region.

Following an early uptick to levels beyond the 0.9100 mark, the pair met with some fresh supply and drifted into the negative territory for the third consecutive session on Thursday. However, a combination of supporting factors helped limit any deeper losses.

The US dollar witnessed some intraday short-covering move from two-year lows amid extremely oversold conditions. Adding to this, the upbeat market mood undermined the safe-haven Swiss franc and further collaborated towards extending some support to the USD/CHF pair.

Meanwhile, concerns about the pace of the US economic recovery, along with the impasse over the next round of the US fiscal stimulus measures might also hold the USD bulls from placing aggressive bets. This, in turn, should cap the upside for the USD/CHF pair.

The pair's inability to gain any meaningful traction clearly indicates that the near-term bearish trend might still be far from being over. However, oscillators on short-term charts are flashing oversold conditions and warrant some caution for bearish trades.

Hence, it will be prudent to wait for some near-term consolidation or a modest bounce before positioning for an extension of the recent downtrend to multi-year lows. In the meantime, Thursday's release of the US Initial Weekly Jobless Claims will be looked upon for some trading impetus.

Technical levels to watch

 


Chart
Null
Technical Analysis
DATE: 0001-01-01T00:00:00 : 0 Close: 0 high: 0 low: 0 bid: 0 ask: 0 pct: 0
Key Level
S1: 0.9044 S2: 0.9003 S3: 0.8955 R1: 0.9132 R2: 0.9180 R3: 0.9221
Trend Index
Recommendation : Bearish Strength : -3
OBOS Index
OBOS Index : Oversold

TIME
2020-08-06 10:15 GMT
Pair

Summary
The People’s Bank of China’s (PBoC) said on Wednesday that the prudent monetary policy will be more flexible and targeted and added that it will stabi
Content

The People’s Bank of China’s (PBoC) said on Wednesday that the prudent monetary policy will be more flexible and targeted and added that it will stabilise land prices, home prices and property market expectations.

"The PBoC will keep liquidity appropriately ample," the bank further noted, as reported by Reuters. "PBoC expects macro leverage ratio to gradually return to a reasonable level."

Market reaction

These headlines don't seem to be having a significant impact on market sentiment. As of writing, the S&P 500 futures were posting small daily gains at 3,318.


Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-08-06 09:57 GMT
Pair
EUR/USD
Summary
A general lockdown could be imposed again if the coronavirus numbers rise, Germany’s Health Minister Jens Spahn said on Thursday. His comments come af
Content

A general lockdown could be imposed again if the coronavirus numbers rise, Germany’s Health Minister Jens Spahn said on Thursday.

His comments come after daily cases in the country rose above 1,000 for the first time since May.

Additional comments

“But does not think have to comprehensively close shops again.”

“May have to re-look at what kind of events/celebrations can take place.”

“Some people are failing to take the pandemic as serious as they should be.”

“Travelers returning to Germany from risk regions will face mandatory coronavirus tests from Saturday.”

Market reaction

EUR/USD is holding midway of its intraday trading range so far, modestly flat around 1.1855. The dollar comeback combined with renewed coronavirus concerns seem to weigh on the major.


Chart
Null
Technical Analysis
DATE: 0001-01-01T00:00:00 : 0 Close: 0 high: 0 low: 0 bid: 0 ask: 0 pct: 0
Key Level
S1: 1.1802 S2: 1.1742 S3: 1.1690 R1: 1.1915 R2: 1.1966 R3: 1.2027
Trend Index
Recommendation : StronglyBullish Strength : 5
OBOS Index
OBOS Index : Overbought

TIME
2020-08-06 09:51 GMT
Pair

Summary
Spain 10-y Obligaciones Auction: 0.263% vs previous 0.27%
Content

Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-08-06 09:51 GMT
Pair

Summary
Spain 3-y Bond Auction down to -0.392% from previous -0.242%
Content

Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-08-06 09:51 GMT
Pair

Summary
The corrective decline in WTI (futures on Nymex) from five-month highs of $43.52 has regained traction in the European session, now knocking-off the r
Content
  • WTI weighed down by broad risk-aversion, dollar comeback.
  • Rise in US refined products offset drop in crude stockpiles.
  • All eyes remain on the US macro news, risk trends.

The corrective decline in WTI (futures on Nymex) from five-month highs of $43.52 has regained traction in the European session, now knocking-off the rates below the $42 level.

At the press time, the US oil sheds 0.80% to trade at $41.85, breaking the Asian consolidation phase to the downside. The bears fought back control after the minor recovery met supply just above $42.50.

The renewed risk-off wave gripping the European markets seems to have bode ill for the higher-yielding oil, as the haven demand for the US dollar gets a lift. A stronger greenback makes the USD-denominated oil expensive in foreign currencies.

Meanwhile, the coronavirus resurgence and its ongoing negative impact on the global economic recovery, undermine the fuel demand prospects and eventually weigh on the barrel of WTI.

Additionally, oil bears cheer the rise in the US refined product inventories, which outweigh the sharp drawdown in the crude oil stockpiles. The Energy Information Administration
(EIA) data showed distillate stockpiles, which include diesel and heating oil, climbed to a 38-year high and gasoline inventories unexpectedly rose for a second week, per Reuters.

However, the further downside appears cushioned by expectations of disappointing US Jobless Claims data, which could re-ignite the dollar selling across its main peers, benefiting the US oil.

WTI technical levels to watch

“In a case where the energy benchmark manages to conquer $43.75, February month’s low near $44.00 holds the key to the further upside towards March 03 top near $48.75. Alternatively, June month’s top of $41.64 can entertain sellers during the pullback ahead of $40.00 and 50-day SMA level near $39.70. If at all the bears dominate past-$39.70, 50% Fibonacci retracement level of $37.10 will be in focus,” explains Anil Panchal, FXStreet’s Analyst.

WTI additional levels

 

 

 

 


Chart

Technical Analysis
DATE: : Close: high: low: bid: ask: pct:
Key Level
S1: S2: S3: R1: R2: R3:
Trend Index
Recommendation : Strength :
OBOS Index
OBOS Index :

TIME
2020-08-06 09:40 GMT
Pair
GBP/USD
Summary
GBP/USD is approaching daily highs at 1.3183 as Thursday's 4-hour chart is pointing to room for more gains, Yohay Elam, an analyst at FXStreet, report
Content

GBP/USD is approaching daily highs at 1.3183 as Thursday's 4-hour chart is pointing to room for more gains, Yohay Elam, an analyst at FXStreet, reports.

Key quotes

“The Relative Strength Index on the 4-hour chart is still below 70 – outside overbought conditions and allowing bulls to squeeze more gains. Momentum remains positive and GBP/USD is holding above the 50, 100, and 200 Simple Moving Averages.”

“Above the fresh high of 1.3183, the next barrier is 1.32 – March's high. Further above, 1.3270 and 1.3320 are eyed.”

“Support awaits at 1.3110, the daily low, followed by 1.3055, a stepping stone on the way up. Next, 1.2980 and 1.2905 are eyed.”

 


Chart
Null
Technical Analysis
DATE: 0001-01-01T00:00:00 : 0 Close: 0 high: 0 low: 0 bid: 0 ask: 0 pct: 0
Key Level
S1: 1.3061 S2: 1.3008 S3: 1.2958 R1: 1.3165 R2: 1.3215 R3: 1.3268
Trend Index
Recommendation : StronglyBullish Strength : 5
OBOS Index
OBOS Index : Overbought

TIME
2020-08-06 09:33 GMT
Pair
USD/JPY
Summary
The USD/JPY pair edged higher during the early European session and refreshed daily tops, around the 105.70 region in the last hour. The pair once aga
Content
  • USD/JPY attracted some dip-buying near the 105.40 area, just ahead of weekly lows.
  • A modest USD bounce, the prevalent risk-on mood remained supportive of the uptick.
  • The attempted recovery lacked any strong bullish conviction, warranting some caution.

The USD/JPY pair edged higher during the early European session and refreshed daily tops, around the 105.70 region in the last hour.

The pair once again showed some resilience below 200-hour SMA and managed to attract some dip-buying ahead of weekly lows, around the 105.30 region set in the previous session. The uptick was sponsored by a modest US dollar rebound and the upbeat market mood, which tends to undermine demand for the safe-haven Japanese yen.

Having dropped to fresh two-year lows, the USD witnessed some intraday short-covering move amid extremely oversold conditions and extended some support to the major. This comes amid the prevalent bullish sentiment around the equity markets, which further collaborated to the USD/JPY pair's intraday bounce of around 30-35 pips.

However, concerns about the pace of the US economic recovery might keep a lid on the attempted USD recovery move. The market worries were further fueled by Wednesday's disappointing ADP report, which showed that the private-sector employment in the US increased by only 167K and indicated that the labour market recovery was faltering.

Adding to this, the impasse over the next round of the US fiscal stimulus measures might hold the USD bulls from placing any aggressive bets. It is worth reporting that Republicans and Democrats harden their stances on the new coronavirus relief plan, raising uncertainty over the possibility of an agreement before the end-of-week deadline.

Thursday's US economic docket highlights the release of Initial Weekly Jobless Claims, scheduled later during the early North American session. The data might produce some short-term trading opportunities, though is unlikely to be a major game-changer ahead of the closely watched official monthly jobs report, popularly known as NFP on Friday.

This makes it prudent to wait for some strong follow-through buying before traders start positioning for any further appreciating move for the USD/JPY pair. The overnight swing high, around the 105.85 region, is likely to act as an immediate resistance, above which the pair is likely to aim back towards testing weekly swing highs, around the 106.45 zone.

Technical levels to watch

 


Chart
Null
Technical Analysis
DATE: 0001-01-01T00:00:00 : 0 Close: 0 high: 0 low: 0 bid: 0 ask: 0 pct: 0
Key Level
S1: 105.32 S2: 105.05 S3: 104.77 R1: 105.88 R2: 106.15 R3: 106.43
Trend Index
Recommendation : Bearish Strength : -3
OBOS Index
OBOS Index : Neutral

MEET OUR INSTRUCTORS


OUR PARTNERS