Contact Us:  

Daily Market Report
07 May 2020

EURUSD

Investors see safety this Wednesday, with the dollar and the yen stronger against most other rivals. The market’s sentiment was mixed, torn between optimism related to economic reopenings and renewed tensions between the US and China. The EUR/USD pair was under pressure for a third consecutive day, trading as low as 1.0781 to finally settle around 1.0810.

European data hit the shared currency, as March Germany Factory Orders plunged 15.6% monthly basis and fell by 16% when compared to a year earlier, worse than anticipated. The final versions of the Markit Services PMI were upwardly revised in Germany and the Union, although in Spain and France were worse than previously estimated. EU Retail Sales were better than expected in March, down anyway 9.2% in the month. In the US things were no better as the ADP survey on private job’s creation showed that during April, 20.23 million jobs were lost, although the market barely reacted to it.

This Thursday, Germany will release March Industrial Production, seen down by 7.5% when compared to February. The US will publish Q1 Nonfarm Productivity and Unit Labour Cost, alongside weekly unemployment claims for the week ended May 1, this last expected to show an increase of 3 million people. Data is relevant ahead of Friday’s Nonfarm Payroll release.

The bearish pressure mounts around the EUR/USD pair, which barely holds above the 1.0800 figure. The 4-hour chart shows that the 20 SMA has turned sharply lower and is about to cross below the 100 and 200 SMA. Technical indicators, in the meantime, remain flat near their daily lows, showing no signs of changing direction. A steeper decline could be expected on renewed selling interest below 1.0790, the immediate support.

Support levels:  1.0790 1.0755 1.0710

Resistance levels: 1.0830 1.0865 1.0900

USDJPY

The USD/JPY pair bottomed at 105.98 this Wednesday, a level that was last seen on March 17. The Japanese yen found demand on mounting tensions between the US and China, while the pair was later undermined by dismal US employment-related data. The poor performance of equities maintained the pair at the lower end of its weekly range.

Traders ignored a strong bounce in US Treasury yields. The Treasury Department announced a new 20-year note to help fund a record level of borrowing amid the ongoing crisis. The first auction will take place on May 20. The yield on the benchmark 10-year Treasury note hit 0.74%, ending the day at around 0.72%.  Meanwhile, Japan is set to come back from a long holiday and will publish the April Monetary Base.

The USD/JPY pair could extend its decline during the upcoming hours, as, in the 4-hour chart, it is developing below all of its moving averages, which gain bearish strength. Technical indicators have lost their bearish momentum but remain near daily lows, indicating absent buying interest. The 106.35 level is now the immediate resistance, and the bearish case will remain in place as long as sellers remain around this last.

Support levels: 106.00 105.65 105.20

Resistance levels: 106.35 106.70 107.00

GBPUSD

The GBP/USD pair fell to 1.2334, its lowest in two weeks, amid resurgent demand for the greenback, and worse than expected UK data. Markit published the April Construction PMI for the kingdom, which plunged to 8.2 from 39.3 previously, missing the market’s forecast of 22. The UK was set to review its lockdown measures this Thursday, but PM Johnson said that it would make an announcement on Sunday. Speaking in front of the Parliament, Johnson said that the UK could start easing restrictions as soon as next Monday, although he also made it clear that they would move on stages to prevent a second spike in cases.

Thursday will bring the Bank of England’s latest decision on monetary policy.  Rates and the APP are expected to be left on hold, and the focus will be on growth and inflation forecasts for the quarters ahead, as large downward reviews are expected on the back of the ongoing pandemic. Also, investors will be looking for hints on how the BOE will deal with the economic contraction.

The GBP/USD pair is hovering around 1.2340 as the day comes to an end, below the 23.6% retracement of the latest daily advance measured between 1.1409 and 1.2647. The 4-hour chart shows that the pair bottomed around a mild-bullish 200 SMA while holding below the 20 and 100 SMA, both converging in the 1.2430 price zone. Technical indicators have stabilised within negative levels, the RSI nearing oversold readings. Nevertheless, the risk remains skewed to the downside, although the next directional move will likely come post-BOE.

Support levels: 1.2330 1.2290 1.2250

Resistance levels: 1.2430 1.2485 1.2520  

AUDUSD

The AUD/USD pair is unchanged for a third consecutive week, as despite some intraday volatility it has closed around the current level ever since the week started. Bulls were nowhere to be found, despite Australian data came in better than anticipated. According to the official release, Retail Sales in the country were up by 8.5% MoM in March, beating the market’s forecast of 8.2%.  The sour tone of equities and falling commodities’ prices capped the upside for the Aussie.

The upcoming Asian session will bring Australian trade figures for March, with the trade balance foreseen posting a surplus of 6800M. China will also publish its trade data but for April. In dollar terms, the trade balance is seen posting a surplus of $6.35B.

The AUD/USD pair holds above 0.6400, maintaining a neutral-to-bullish stance in the short-term. The 4-hour chart shows that it hovers around its 20 SMA while above the larger ones, as technical indicators hover directionless around their mid-lines. The potential of a downward move is limited as long as the pair remains above 0.6370 a strong static support level.

Support levels: 0.6405 0.6370 0.6330

Resistance levels: 0.6445 0.6480 0.6515  

GOLD

The USD dominated the markets on Wednesday as DXY tested slightly over 100.00 levels. The broad USD strength came after the uncertainty regarding ECB’s bond-buying program. Also, the overall risk sentiment in the markets shifted to risk-off after ADP Non-Farm Payrolls report showed over 20 million jobs lost in the US. Pandemic era short-term safe-haven shifted to USD while Gold acts as more longer-term security. Even in the risk-on trading times, investors are still keeping a portion of Gold in their portfolios, therefore, the Gold price is stuck between 1.60$ and 1.700$ waiting for the next big move. During the pandemic time, cash has more priority and the demand for liquidity limiting Gold to advance through 1.800$ levels.       

From the technical point of view, if Gold decisively stays over 1.700$, the resistances might be followed at 1.750$(December 2012 peak) and 1.785$ (2012 multi-time peak). Below the 1.650$, the supports might be followed at 1.615$, 1.600$ and 1.557$.

Support Levels: 1.650$ 1.615$ 1.600$

Resistance Levels: 1.700$ 1.750$ 1.785$


SILVER

Silver had another indecisive trading session on Wednesday as the white metal waved in a tight range close to 15.00$. Current Silver trading is showing exact signs of a previous market panic schematics. The 124.00 level seen in Gold to the Silver ratio in March was an all-time low indicating a rally in silver is brewing if we look at previous historic high levels in the ratio.   

Silver is still keeping its consolidation zone between 14.60$ and 15.50$. As long as Silver stays over 15.00$ levels, 15.55$ and 16.33$ levels can be followed as resistances. Below the 15.00$ level, the targets can be followed at 14.29$ (2019 dip), 13.00$ and 12.00$ levels.  

Support Levels: 14.29$ 13.00$ 12.00$

Resistance Levels: 15.00$ 15.55$ 16.33$


CRUDE WTI

WTI ended its six-day winning streak on Wednesday and faced profit-taking. The last rally ended around 28.00$ level which was tested a couple of times back in March before the May contract meltdown. The US Energy Information Administration has reported an inventory increase of 4.6 million barrels in the week of May the 1st, well below the market expectations of 7.1 million. However, better than expected data has failed to ease concerns about over-supply conditions as macroeconomic data sets keep showing that global demand will not return to pre-crisis levels any time soon although the current rally was supported by the optimism regarding easing measures starting to take place.   

The first support is watched at 26.00$ (2016 dip). Below this level, 24.75$ (2002-2003 support) and 17.05$ (2001 dip) levels can be followed. Over the 30.00$ level, the resistances can be followed at 33.17$ (12-13 March 2020 resistance) and 36.20$ (11 March 2020 peak) levels.

Support Levels: 26.00$ 24.75$ 17.05$

Resistance Levels: 30.00$ 33.17$ 36.20$


DOW JONES

Dow Jones failed to protect its 24.000 levels on Wednesday although the index started the day on a positive note despite the catastrophic US employment data. In its monthly publication, the ADP Research Institute showed that the private sector employment in April declined at a record pace of more than 20 million. The index later retraced back while the USD index DXY tested 100.00 level again amid uncertainty in the Eurozone. It is no surprise that the NFP data on Friday will also print a heavy decline in the labour market. On the other hand, confirmed coronavirus cases worldwide are approaching 3.8 million with over 261,000 deaths, according to Worldometer data tracker. Russia, the UK. and the US added more than 6,000 cases each. In the US, cases topped 1.2 million with nearly 73,000 deaths. Despite the rising numbers, some states are re-opening their business activity and some are easing lock-down measures already. 

If the index slides below 23.000 level, 22.500 and 22.000 levels might be seen as new targets down. Over the 24.000 level, the resistances might be followed at 24.680 level (June 2019 and 28 February Low) and 25.000 levels.

Support Levels: 23.000 22.500 22.000

Resistance Levels: 24.000 24.680 25.000 


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