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Daily Market Report
10 Aug 2020

EURUSD

The greenback closed the week appreciating against most major rivals, although EUR/USD settled in the 1.1780 price zone, holding on to modest weekly gains. The dollar got boosted by US President Trump´s announcement on executive orders and after an encouraging monthly employment report. The US administration imposed sanctions on Hong Kong’s chief leader, Carrie Lam, and ten other senior officials for their roles in the political turmoil in the region, also anticipating fiscal stimulus executive orders, which finally came on Saturday. The US Congress has been trying to reach an agreement on the matter for two weeks already, to no avail. The four orders extend unemployment benefits by $400, suspends the collection of payroll taxes till December, stop evictions from rental housing that has federal financial backing and extend zero per cent interest on federally financed student loans.

As for employment data, according to the Nonfarm Payroll report, the US added 1.76 million jobs in July, while the unemployment rate decreased to 10.2%, both figures better than anticipated. The numbers had a limited impact once out, as they reflect the long way to recovery the country still faces. In the last three months, the country recovered only 42% of the job positions lost in March and April. The US won’t publish relevant data this Monday, but the EU will unveil the August Sentix Investor Confidence, foreseen at -15.2 from -18.2 in the previous month.

The EUR/USD pair has closed above the 23.6% retracement of its 1.1184/1.1915 rally at 1.1742, the immediate support level. Daily basis, the latest decline seems corrective, as the pair continues to develop above a firmly bullish 20 DMA, which converges with the 38.2% of the mentioned advance at 1.1630, while technical indicators are barely retreating from overbought readings. In the 4-hour chart, and for the shorter-term, however, the risk is skewed to the downside, as the pair has broken below its 20 SMA, while technical indicators have entered bearish territory, the Momentum maintaining its downward slope.

 Support levels: 1.1740 1.1700 1.1660

Resistance levels:  1.1810 1.1850 1.1900

USDJPY

The USD/JPY pair hit 106.05 on Friday, ending a second consecutive week little changed a few pips below that level. The pair found some support in a better-than-expected US employment report, which put some pressure on safe-haven assets. US Treasury yields climbed, with the yield on the benchmark 10-year note ending the week at 0.56%, while US indexes closed mixed, with the Nasdaq down but the DJIA and the S&P posting gains. Concerns about a US coronavirus aid package limited the market’s optimism. US President Trump executive orders on the matter, however, may fuel confidence at the weekly opening.

Japan published on Friday Overall Household Spending, which improved in June to -1.2% YoY from -16.2% in the previous month. Labor Cash Earnings in the same period, resulted in -1.7%, better than the previous but missing expectations of -0.6%. The preliminary estimate of the June Leading Index improved to 85 from 78.3, beating expectations. Japan won’t publish relevant macroeconomic data at the beginning of the week.

The USD/JPY pair is still bearish according to technical readings, as, in the daily chart, the pair continues developing below all of its moving averages. The 20 DMA provides dynamic resistance at around 106.25, while technical indicators remain within negative levels, lacking clear directional strength. In the shorter-term, and according to the 4-hour chart, the risk is skewed to the upside, as technical indicators regained positive territory, as the pair moved above its 20 SMA, although it remains below the 100 SMA and 200 SMA, both with bearish slopes.

Support levels: 105.70 105.25 104.90  

Resistance levels: 106.25 106.60 107.00

GBPUSD

The GBP/USD pair finished the week with modest losses at 1.3050, giving up to the dollar’s demand at the end of the week. The pair hit a 1.3185 on Thursday, its highest since March, underpinned by the greenback’s sell-off and ignoring UK data and Brexit-related headlines. On this last, British Cabinet Minister Michael Gove said that he believes there will be a successful negotiation Brexit outcome with the EU, adding "we are making progress with the EU." No official comments, however, came from the Union.

Meanwhile, the UK is working on plans to reopen schools in September. According to the latest official data, the number of people in hospital being treated for coronavirus has fallen over 95% from the peak of the outbreak. Pubs and restaurants remain open in the kingdom, but alongside schools, could be closed in the case of an outbreak. Over the weekend, news indicated that using face masks has become mandatory in more indoor places in England, Scotland and Northern Ireland.

The daily chart for GBP/USD shows that the pair spent the week in consolidative mode near its recent highs, with the positive momentum easing but far from suggesting a slide. The 20 DMA heads firmly higher below the current level and above the larger ones, as technical indicators ease from overbought readings. In the shorter-term, and according to the 4-hour chart, the pair has settled below its 20 SMA but holds above the larger ones. The Momentum indicator heads firmly lower within negative levels as the RSI consolidates around 42, all of which skews the risk to the downside.

Support levels: 1.3025 1.2980 1.2940

Resistance levels: 1.3065 1.3110 1.3160

AUDUSD

The AUD/USD pair closed Friday little changed around 0.7160, but a seventh consecutive week with gains. Increased demand for the greenback kept the upside in check, alongside encouraging Chinese data released at the beginning of the day. According to the official report, the July Trade Balance in the country surged to $62.33B with imports and exports rising by more than expected. The RBA released the Statement of its latest Monetary Policy, which was not that encouraging. Policymakers believe the jobs market will take longer to recover from the ongoing pandemic, while growth for 2021 has been downwardly revised to 5%. This came after Australian PM Scott Morrison said that the Treasury had estimated Victoria's lockdown would reduce the size of the economy in Q3 by between $7 billion and $9 billion.

Australia won’t release relevant macroeconomic data at the beginning of the week, but China will publish July inflation data. The yearly CPI is foreseen at 2.6% from 2.5% previously, while the Producer Price Index is expected at -2.5% from -3% in the same period.

The daily chart for the AUD/USD pair shows that the bearish potential remains limited, as the pair continues to develop above all of its moving averages, while technical indicators eased from their highs, but remain within positive levels. In the 4-hour chart, the par is below its 20 SMA, which anyway lacks directional strength, but holds above the larger ones, which retain their bullish slopes. The Momentum indicator heads firmly lower below its midline while the RSI stands around 44, favouring another leg south, mainly on a break below 0.7140, the immediate support level.

Support levels: 0.7160 0.7115 0.7070  

Resistance levels: 0.7195 0.7240 0.7285 

GOLD

After inching its all-time high to 2.075$, Gold retreated with the help of better than expected NFP data in the US last Friday. On the other hand, despite the better than expected readings, the data set started to show a flattening in its curve which will not create a shift in the risk sentiment. The USD index DXY benefited from the data and managed to lift itself over the 93.00 level. This break gave Gold a much needed technical correction opportunity before heading north further. Apart from the current monetary policies that support Gold, also, political uncertainties like the clash between the US and China and upcoming elections in the US will continue to support Gold for the long run.     

The week will start with inflation data set from China early on Monday and then from the US on Wednesday. On Friday markets will follow the Chinese retail sales data to measure the normalisation period performance and the same data from the US as a market mover along with Michigan Consumer Sentiment Index(Aug) (PREL).  

Over the 2.000$ level, next targets upside can be followed at 2.100$ 2.200$ and 2.400$. Below the 2.000$ threshold, 1.980$, 1.950$ and 1.920$ levels can be followed as supports.

Support Levels: 1.980$ 1.950$ 1.920$

Resistance Levels: 2.100$ 2.200$ 2.400$    


SILVER

Data-driven correction seen in the USD dragged Silver lower on Friday along with other non-yielding assets such as Gold. Silver gained almost %23 only in August itself with an impressive rally. Therefore, a technical correction was imminent sooner or later as RSI readings hit extremes. On the other hand, as industrial production still not fully recovered globally, the demand for Silver is still fragile underpinning the white metal’s rally. At this point, Gold to Silver ratio is getting close to its 10-year average which stands at 60.00 level. So there is more room for Silver to catch-up with Gold in the coming days.     

If Silver manages to stay over 27.00$, next targets upside might be followed at  29.28$ (March 2013 resistance), 30.00$ and 32.00$ levels. Below the 27.00$ level, the supports might be followed at 25.00$ and 24.00$ levels.

Support Levels: 27.00$ 25.00$ 24.00$

Resistance Levels: 29.28$ 30.00$ 32.00$


CRUDE WTI

WTI failed to keep its advance over the 42.00$ on Friday and retreated back. The NFP data reading was a tick over the estimates but the momentum up faded after the June reading which did not impress the markets. As the curve flattens in the labour data, demand worries pressured WTI. On the other hand, a declining number of oil rigs limited losses for WTI. The weekly data published by Baker Hughes Energy Services showed that the number of active oil rigs in the US dropped to a record low of 176 this week from 180. In general, WTI needs a much bigger catalyst to resume its move up after the historic price crash seen in last March-April.   

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

Better than expected NFP data set lifted the USD from its two-year lows. As the USD gained traction, Gold retreated and Wall Street printed gains. The US gained 1,763 million jobs in July, 1.462 million in private payrolls, both better than expected but a significant deceleration from June's 4.791 million jobs showed the momentum is fading. Overall, there are still around 10 million people who have not returned to work and some rely on the stimulus packages. Against the backdrop of the coronavirus cases topping 5 million cases and two-week of US fiscal wrangling, US President Donald Trump signed four executive orders on Saturday, partly restoring enhanced unemployment payments to the Americans affected by the coronavirus pandemic while the Democrats and the Republicans failed to reach an agreement. The orders would provide an extra $400 per week in unemployment payments, less than the $600 per week passed earlier in the crisis. Also, the orders would suspend the collection of payroll taxes till December, with people earning up to $100,000/ annually.    

This week the inflation data set will be in focus on Wednesday in the US and on Friday both retail sales with Michigan Consumer Sentiment Index(Aug) (PREL) data readings will be followed.

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


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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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