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Daily Market Report
06 Aug 2020

EURUSD

The EUR/USD pair flirted with the yearly high, trading as high as 1.1904 this Wednesday, as speculative interest kept selling the greenback. European data were mixed but didn’t affect the shared currency. The final readings of July Markit Services PMIs missed expectations, most of them suffering downward revisions. The German index came in at 55.6 from a previous estimate of 56.7. For the whole EU, services output resulted at 54.7 from a preliminary estimate of 56.7.  Also, the Union reported June Retail Sales, which were up in the month 5.7%, slightly worse than anticipated.

The US published the ADP Employment Survey, which showed that the private sector added only 167,000 jobs in July, far lower than the 4.3 million it added in the previous month. June reading was upwardly revised, which only highlighted the terrible July outcome. The Markit Services PMI was revised to 50 from 49.6, although the report also showed that demand conditions deteriorated in the month. The official ISM Services PMI unexpectedly rose to 58.1 but was unable to trigger interest on the greenback.  Thursday will bring German Factory Orders, seen in June increasing by 10.1%, although declining 34% from a year earlier. The US will publish the usual weekly unemployment figures, relevant ahead of the Nonfarm Payroll report to be out on Friday.

The EUR/USD pair has eased from the mentioned high, now trading in the 1.1860 price zone, retaining its bullish bias. The decline seems corrective, with bulls still in control. In the 4-hour chart, the pair is holding above a flat 20 SMA, while technical indicators retain their upward strength well into positive ground. A steeper advance is to be expected on a break above 1.1910 towards the 1.20 threshold, while retracements will continue to be seen as buying opportunities.

 Support levels: 1.1835 1.1790 1.1740

Resistance levels:  1.1910 1.1950 1.1990

USDJPY

The persistent dollar’s weakness sent USD/JPY to a daily low of 105.31, although the pair trimmed most of its intraday ahead of the close, now trading around 105.60. The solid performance of equities and an uptick in government bond yields limited the intraday decline. Yields were up amid moderate optimism the US Congress may reach an agreement on the next coronavirus aid-package by the end of the week. Still, the American currency remained out of investors’ radar, as macroeconomic data continued to signal a steeper economic deterioration throughout July.

At the beginning of the day, Japan published the July Jibun Bank Services PMI, which came in at 45.4, from 45 in the previous month. The country’s macroeconomic calendar will offer minor money-related data this Thursday.

The short-term picture for USD/JPY shows that the risk is skewed to the downside. In the 4-hour chart, the pair has extended its decline below a still bullish 20 SMA, although the larger ones are gaining bearish strength above it. Technical indicators, in the meantime, stand within negative levels, the RSI directionless but the Momentum heading firmly lower after a failed attempt to regain positive territory. Further declines are to be expected on a break below the mentioned daily low, with scope then to test the 104.50 price zone.

 Support levels:  105.30 104.90 104.55

Resistance levels: 106.00 106.45 106.80  

GBPUSD

The GBP/USD pair continued enjoying dollar’s weakness, extending its weekly advance to 1.3162, now trading around the 1.3130 level. As it been has happening lately, the pair’s advance was backed by a weaker dollar, with the market ignoring negative UK headlines. According to Markit, services activity in the UK expanded less-than-expected in July,  with the PMI revised lower to 56.5 in July versus 56.6 previously estimated. In the coronavirus front, news are once again worrisome in the UK. The Scottish first minister, Nicola Sturgeon announced a new lockdown in the Aberdeen city council area, after 54 new coronavirus cases were confirmed, while roughly 200 close contacts have been traced.

This Thursday, the focus will be on the Bank of England monetary policy decision. The central bank is not expected to change its current policy in this particular meeting, although there could be a reference to negative rates, an option that has been on the table these last few months. Still, no action is expected this time, with all eyes on Bailey’s words and economic forecasts.

From a technical point of view, the GBP/USD pair offers a bullish perspective in the short-term, with room to extend its advance during the upcoming sessions. The 4-hour chart shows that the pair has recovered above its 20 SMA, while the larger moving averages maintain their bullish slopes below the shorter ones. Technical indicators, in the meantime, remain within positive levels, although with uneven directional strength.

Support levels: 1.3080 1.3035 1.2990

Resistance levels: 1.3165 1.3200 1.3250

AUDUSD

The AUD/USD pair is ending the day with modest gains a few pips below the 0.7200 level, after reaching a new high for this year at 0.7240. Mixed Australian data has nothing to do with the pair’s rally, once again the result of the broad dollar’s weakness. The country published the AIG Performance of Construction Index at the beginning of the day, which resulted in 42.7 in July from 35.5 in the previous month. The Commonwealth Bank Services PMI, however, missed the market’s expectation with 58.2. The country also published June Home Loans, which were up 7.1% in the month.

Another factor underpinning the Aussie was gold, as the bright metal hit a record high of $2,055 a troy ounce. The Australian macroeconomic calendar has nothing to offer this Thursday.

The late decline ahead of the close has not affected the positive tone of AUD/USD. The 4-hour chart shows that the pair continues to develop well above all of its moving averages, while the Momentum indicator keeps heading north, nearing overbought readings. The RSI indicator, in the meantime, has retreated towards the current 56 level.

Support levels: 0.7160 0.7115 0.7070  

Resistance levels: 0.7225 0.7260 0.7300

GOLD

After surpassing the 1.800$, Gold rally became unstoppable printing a new all-time high almost in every session. The USD index DXY is keeping its foot down testing mid-92.00 levels and supporting the rally seen in Gold. On the other hand, the uncertainty surrounding the economies combined with the current monetary policies are creating the environment for the Gold rally. Despite the depressive labour data, yields in the US managed to pick up the pace but did not weigh on Gold hitting its new all-time level at 2.055$. While markets are gearing up for the important NFP data set on Friday as the estimates began to retreat.   

As Gold cleared its 2.000$ level, next targets upside can be followed at 2.040$, 2.100$ and 2.200$. On the downside, 1.980$, 1.950$ and 1.920$ levels can be followed as supports.

Support Levels: 1.980$ 1.950$ 1.920$

Resistance Levels: 2.040$ 2.100$ 2.200$


SILVER

The impressive rally seen in Gold also lifted Silver to its highest level since April 2013. This time, Silver’s precious metal etiquette is pushing the prices and Gold to silver ratio now tests 75.00 level while the 10-year average stands at 60.00 level. Until the ratio finds balance, Silver will most likely outperform Gold during rallies. As an indicator of the Silver demand, holdings in Silver-backed exchange-traded funds (ETF's) had risen to a record 8,445 tonnes this year. This is almost double the previous record set in 2009. Also, if the industrial demand kicks in, the demand for Silver will increase creating an extra catalyst for the white metal to rally.

If Silver manages to stay over 27.00$, next targets upside might be followed at  29.28$ (March 2013 resistance) and 30.00$ levels. Below the 27.00$ level, the supports might be followed at 25.00$, 24.00$ and 23.38$ levels.

Support Levels: 25.00$ 24.00$ 23.38$

Resistance Levels: 27.00$ 29.28$ 30.00$ 


CRUDE WTI

WTI finally made an attempt to lift testing 43.50$ level as its highest in the last five-month period. The US Energy Information Administration's weekly report revealed that crude oil stocks declined by 7.3 million barrels in the week ending July 31st providing an additional boost to crude oil prices along with the better than expected ISM data. The data published by the ISM showed that the economic activity in the US' service sector expanded at a strong pace in July with the ISM Services PMI rising from 57.1 in June to 58.1. This report revived hopes of a steady recovery in energy demand and helped the WTI push higher. Positive risk appetite based on the possible agreement for the second stimulus program is supporting Wall Street and also oil prices at the moment.

If WTI manages to hold over 42.00$, next targets upside can be followed at 44.00$ (February 2020 low), 48.64$ (March 2020 high) and 50.00$. Below the 42.00$ level, supports can be followed at 41.00$ and 40.00$ consolidation zone.

Support Levels: 42.00$ 41.00$ 40.00$

Resistance Levels: 44.00$ 48.64$ 50.00$       


DOW JONES

Dow Jones kept its way up north on the fourth consecutive day supported by the better than expected macro data sets and the expectation of an agreement for the second stimulus program. The economic activity in the US' service sector expanded at a robust pace in July with the Institute for Supply Management's (ISM) Non-Manufacturing PMI rising from 57.1 in June to 58.1. This reading beat the market expectation of 55 by a wide margin. Also, the IHS Markit's Services Purchasing Managers' Index (PMI) for the US improved from 47.9 in June to 50 in July to show that the economic activity in the service sector stabilized. This reading came in better than the previous estimate and the market expectation of 49.6. However, the US published the ADP Employment Survey, which showed that the private sector added only 167,000 jobs in July, far lower than the 4.3 million it added in the previous month. Despite the terrible reading, "Big jobs number on Friday" – said President Donald Trump to Fox News and the public ahead of July's all-important Non-Farm Payrolls report. Supporting the risk sentiment, top U.S. infectious disease official Anthony Fauci said on Wednesday that he doesn’t think the United States will have to go back into “shutdown mode” in order to contain the spread of COVID-19.  

If dow Jones keeps its stance over 27.000 level decisively, 27.583 (June 2020 high), 28.000 and 28.402  levels can be followed as resistances. Below the 27.000 level, the supports can be followed at 26.000, 25.210 (29.568-18.158 %61.80) and 24.690 (2020 April-May resistance) levels.     

Support Levels: 26.000 25.210 24.690

Resistance Levels: 27.583 28.000 28.402

MACROECONOMIC EVENTS

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* 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.

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