Daily Market Outlook, July 07, 2020
Asian equity market performance was mixed this morning with China up strongly again but other markets are down or showing more modest gains. Threats from the White House of potential actions against China were reported as causing unrest. US Labour Secretary Scalia said the economic recovery has been "better than expected so far", and it "won't be necessary" to extend the emergency unemployment program when it expires at the end of this month. Meanwhile, Californian Covid-19 hospitalisations are reported as having risen by 50% over the past two weeks.
In Australia, as expected the central bank left monetary policy unchanged after its latest update. It commented that so far the economic rebound was proving stronger-than-forecast but also noted risks. A six week lockdown of the Melbourne metropolitan area has meanwhile been announced in reaction to a surge in Covid-9 cases.
Today’s economic data calendar is very light and it is hard to see the releases having any real impact on financial markets. In Italy, May retail sales are expected to have posted a sizeable rebound as lockdown restrictions were eased. Yesterday data for the Eurozone as a whole showed a sharp pickup in retail sales during May.
In the US, the JOLTS (Job openings and labor turnover survey) will provide some further information on labour market trends. In particular it help explain the rebound in employment from its April low. However, today’s data is for May a month earlier than last week’s labour market data. So its lack of timeliness limits its usefulness.
Bank of England Chief Economist Haldane will make a speech by webex this evening. He was the only member of the BoE’s Monetary Policy Committee not to vote for a further increase in asset purchases at the June meeting. Last week he explained that he did so because he wanted to monitor developments for now considering recent economic data had been stronger-than-expected. It seems unlikely that he will have much more to add on monetary policy today.
A number of US central bank policymakers are also scheduled to speak today. Recent comments from Fed officials have suggested that after the considerable policy actions undertaken in recent months they now intend to pause and monitor the pace of the economy’s rebound. Today’s speakers seem unlikely to add much to that. However, they may say a little more about what policy moves may be considered next.
Today’s Options Expiries for 10AM New York Cut (notable size in bold)
- EURUSD: 1.1250 (400M), 1.1265-75 (1.5BLN). 1.1335-45 (1.4BLN) 1.1320-30 (500M). 1.1235-45 (1.7BLN)
- GBPUSD: 1.2300 (400M), 1.2650 (250M)
- USDJPY: 107.00 (401M), 108.00 (250M)
- AUDUSD: 0.6900-05 (550M), 0.6915 (633M), 0.6990-0.7000 (900M)
Technical & Trade Views
EURUSD Bias: Bullish above 1.1150 targeting 1.15
From a technical and trading perspective, as symmetry swing support at 1.1170 supports there is a window for fresh demand to take prices higher again to retest cycle highs above 1.14 enroute to an ultimate retest of year to date highs at 1.15. Price is testing intraday range resistance at 1.13 a failure to close above here could see a move back to test range support at 1.12 before attempting another run at 1.1350. NOTE DTCC option reported data shows 40 billion euros evenly spread between 1.1200 and 1.1400 over the next fortnight.
GBPUSD Bias: Bullish above 1.24 targeting 1.2650
GBPUSD From a technical and trading perspective, 1.2324 equality downside objective achieved, buyers have stepped in again as of writing to defend the equality objective. The close back through 1.2440 suggests a more meaningful low is in place for another attempt to take out stops above 1.2650. A close back through 1.24 would concern the bullish bias, however as 1.2350 attracts bids there remains an opportunity to test the 1.2650 upside objective
USDJPY Bias: Bullish above 107.50 Bearish below
USDJPY From a technical and trading perspective, anticipated test of the equality objective at 108.13 saw bearish reversal patterns, setting up a move for another test of 106 enroute to a pivotal 105 test
AUDUSD Bias: Bullish above .6830 targeting .7100)
AUDUSD From a technical and trading perspective, as 6830 attracts buyers there remains scope to retest and break prior cycle highs en route to a .7100 test. On the day expect bids towards .6900 to act as intraday support
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High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 76% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!