Contact Us:  

Daily Market Report
04 Feb 2020

EURUSD

The start of the week saw the greenback recovering its bullish tone, appreciating against most major rivals on the back of stronger than expected US data. The EUR/USD pair fell to 1.1035 bouncing from the level to settle around 1.1060, after the US ISM Manufacturing PMI resulted in 50.9 in January, largely surpassing the market’s expectations, while December index was upwardly revised from 47.2 to 47.8. The Markit Manufacturing PMI for the same period also beat the market’s expectations printing at 51.9. Earlier in the day, the final versions of the EU Markit Manufacturing PMI were revised higher from their preliminary estimates with the German index resulting in 45.3 and the Union’s index printing at 47.9.

Concerns about the coronavirus outbreak continue to affect markets. Chinese stocks plummeted after the long holiday and the government took some measures to stabilize markets. The sentiment improved modestly after WHO Chief, Dr. Tedros, reiterated that there’s no need for measures that unnecessarily interfere with international travel and trade. There won’t be relevant releases from the EU and the US this Tuesday.

The EUR/USD pair trades around the 38.2% retracement of its latest daily decline, after meeting buyers around the 23.6% retracement of the same slide. The pair has lost its bullish potential, according to the 4-hour chart, but the downside remains limited.  In the mentioned time-frame, technical indicators have eased from overbought levels but later stabilized within positive levels, while the 20 SMA maintains its bullish slope around the mentioned daily low and the mentioned Fibonacci support.

Support levels: 1.1035 1.1005 1.0980  

Resistance levels: 1.110 1.1145 1.1190

USDJPY

The USD/JPY pair managed to post a modest advance this Monday but held below a critical Fibonacci resistance level at 108.65. The Japanese currency was unable to appreciate despite risk aversion took over financial markets at the beginning of the day, amid escalating concerns related to the coronavirus outbreak. Fears receded in the European session, with local shares posting modest gains, while the sentiment continued to improve in American trading hours, amid upbeat US data.

Treasury yields recovered, with the yield on the benchmark 10-year Treasury note hitting an intraday high of 1.58%, although settling barely up for the day at around 1.52%. Japanese data released at the beginning of the day failed to impress, as the Jibun Bank Manufacturing PMI for January which resulted in 48.8, worse than the 49.3 previous and expected. The country will release January Monetary Base for January during the upcoming Asian session.

The USD/JPY pair is technically bearish, according to the 4-hour chart, as it met sellers around a 20 SMA, which continues heading south below the larger ones. Technical indicators in the mentioned time-frame recovered from oversold readings but pared their advances well below their midlines, now lacking directional strength. The pair would need to recover beyond 109.00 to shrug off the negative stance, while once below 108.30, the pair has room to extend its decline toward 107.64, January’s low.

Support levels: 108.30 107.95 107.60

Resistance levels: 108.65 109.00 109.40  

GBPUSD

The Sterling Pound was the worst performer against the greenback this Monday, with the GBP/USD pair plummeting to 1.2989, down over 200 pips in the day. The slide came with comments from UK PM Boris Johnson, who stated that the kingdom does not need for “a free trade agreement to involve accepting EU rules on competition policy, subsidies, social protection, the environment or anything similar, any more than the EU should be obliged to accept UK rules."  Johnson added that the UK wants a comprehensive free trade agreement like Canada's one.

His words spurred concerns about a hard-Brexit, later fueled by words from EU’s Chief Brexit Negotiator, Michel Barnier, who said that they will defend the interests of EU citizens and business, adding that the EU is preparing for all options, “including a no-deal by year-end.” The market ignored the January Markit Manufacturing PMI, which came in at 50, better than the expected 49.8. On Tuesday, the UK will release the January Markit Construction PMI, foresee at 46.6 from 44.4 in December.

The GBP/USD pair is struggling with the 1.3000 level after trading as low as 1.2989. The sharp retracement from a relevant Fibonacci resistance at 1.3210, the 50% retracement of its latest daily slump, skews the risk to the downside. In the 4-hour chart, the pair collapsed below all of its moving averages, which anyway remain directionless and confined to a tight range. Technical indicators head sharply lower, entering negative ground and coming straight from overbought levels, indicating substantial selling interest.

Support levels: 1.2980 1.2945 1.2900

Resistance levels: 1.3035 1.3070 1.3110

AUDUSD

The Australian dollar remained subdued, despite a slightly better market mood during European and American trading hours, amid dismal Asian data. Australia released the AIG Performance of Manufacturing Index, which fell in January to 45.4 from 48.3 in December. The Commonwealth Bank Manufacturing PMI for the same month beat expectations, as it came in at 49.6 from 49.1 previously. Finally, the Caixin Manufacturing PMI showed that output in China contracted to 51.1 from 51.5. Furthermore, base metals were affected by plummeting Chinese equities, all of which affected the commodity-linked currency.

This Tuesday, attention will be on the Reserve Bank of Australia, as the central bank will announce its latest monetary policy decision. Policymakers were expected to cut rates again this month, although odds for another cut decreased after Governor Lowe stated that the economy is at a “gentle turning point.” His words will be scrutinized, although rates are expected to remain on hold.

The AUD/USD pair trades around 0.6690 heading into the Asian opening, holding on to its bearish stance according to the 4-hour chart, as the pair keeps developing below a firmly bearish 20 SMA. Technical indicators remain within negative levels, the Momentum recovering modestly but the RSI still consolidating near oversold readings. The picture remains the same with a steeper decline expected on a break below 0.6670, the immediate support.

Support levels:  0.6670 0.6630 0.6590

Resistance levels: 0.6710 0.6750 0.6795

GOLD

The market sentiment turned upside down on Monday although there is no solid positive news coming from China regarding the fight with the deadly virus outbreak. As markets rely on China’s willingness to support the economy against the negative impacts of the virus outbreak, risk appetite showed signs of life. While the 10-year US Treasury bond gains nearly 2% on Monday, the USD index DXY tried to recover through 98 zone with Wall Street was trading with modest gains at the time of writing.  

The first resistance for Gold is still at the physiological level of 1.600$. Over this level, 1.615$ (April 2012-March 2013 support/resistance line) and 1.650$ can be followed as resistances. Below the 1.557$ (2019 peak), 1.530$ (%76.40 1.557$-1.445$) and 1.514$ (%61.80 1.557$-1.445$) levels can be followed as support levels.

Support Levels: 1.557$ 1.530$ 1.514$

Resistance Levels: 1.600$ 1.615$ 1.650$


SILVER

Silver also failed to keep the momentum and gave away all of its gains made on Friday as the risk appetite emerged in the markets. The white metal lost 18.00$ handle on Monday and tested mid-17.00$. China’s efforts to fight the virus outbreak helped the market sentiment to re-gain its relief. Also, as an industrial metal, Silver is highly affected by the fears of a slowdown in the manufacturing sector.

If Silver stays over 18.00$ it can test 18.38$ (%23.6 14.29$-19.65$) and 18.70$. On the other hand, below the 17.60$ level, which is the %38.20 level of 14.29$ and 19.64$ move the first support is located at 16.97$ (%50.0 14.29$-19.65$) and 16.33$ (%61.8 14.29$-19.65$). 

Support Levels: 17.60$ 16.97$ 16.33$

Resistance Levels: 18.38$ 19.00$ 19.64$


CRUDE WTI

WTI is in a freefall and it seems it will not be easy to stop this heavy sell-off in the near future. WTI tested sub-50$ for the first time since early January 2019 and lost almost %16 in January 2020 as a result of the global events. According to Bloomberg, crude oil consumption in China has declined by nearly 20% due to the outbreak and fears of a bigger retracement in the demand is pressuring the oil prices. On the other hand, Reuters reported that the OPEC+ is considering deepening the oil output by 500,000 barrels per day to offset the negative impact of the dismal demand outlook on prices. The news failed to support the oil prices as the market players believe that the move will not be enough to support the oil prices. However, OPEC+ will organise an emergency meeting next week to discuss the issue.

WTI broke the important support at 51.03$ (2019 support) and even tested sub-50.00$ at the time of writing. In WTI stays below the 50.00$ level, next targets can be followed at 47.39$ and 45.43$ levels. Over the 50.00$ level, resistances can be followed at 51.03$, 53.93$ (63.33$-51.03$ %23.60) and 55.73$ (63.33$-51.03$ %38.20) levels.

Support Levels: 50.00$ 47.39$ 45.43$

Resistance Levels: 51.03$ 53.93$ 55.73$


DOW JONES

As the indexes at China are smashed with almost %9 decline after the new year holiday, Wall Street opened higher on Monday after Friday’s plunge as the risk appetite re-emerged. As the countermeasures are taken in China seem to impress the investors, fears of a global pandemic eased and thus supported the risk appetite. On the data front, the ISM manufacturing index came at 50.9, rising to the expansion zone in January for the first time in six months. However, the virus outbreak effect is still not in January’s numbers so it is early to be optimistic about the manufacturing figures as the supply chains will be interrupted.

From the technical point of view, over the physiological 28.000 level, 28.400 can be followed as next resistance while below 27.770 level, the supports can be seen at 27.400, 27.000 and 26.757 (24.680-27.400 %23.60) levels.

Support Levels: 27.700 27.400 27.000

Resistance Levels: 28.400 29.000 29.500


MACROECONOMIC EVENTS

Do you have any questions?

Our Customer Services team is here to help you.

Get in touch 24 hours a day, 5 days a week:

 

* All the Moving Average support and resistance levels are dynamic by nature. Means when the price approaches the Moving averages, slight variation occurs in the forecasted Moving Average support and resistance levels. Previous few days’ intraday levels are also signicant while trading the current day as the price tend to hover around these levels for some time. Levels in red indicate strong, critical or vital.

All News & Analysis provided by:

Disclaimer: NCM Investment is a subsidiary and service provider of Amwal International Investment Company. The material contained here does not contain (and should not be construed as containing) investment advice or an investment recommendation, or, an offer of or solicitation for, a transaction in any financial instrument. NCM Investment accepts no responsibility for any use that may be made of these comments and for any consequences that result. This communication must not be reproduced or further distributed. All information in this publication has been compiled from publicly available sources that are believed to be reliable; however, we cannot guarantee the accuracy of all information. All information and documentation associated with this report have been produced for the purposes of providing the report only.

Please remember that trading financial markets carry a high degree of risk to your capital. It is possible to lose more than your initial stake. Leveraged products may not be suitable for all investors, therefore please ensure you fully understand the risks involved and seek independent advice if necessary.

All Rights Reserved © NCM Investment