Daily Market Outlook, August 14, 2020
Asia market moves have been reasonably subdued overnight. Global rates have continued to push higher. The S&P500 made an all-time high overnight, a landmark moment after it tumbled more than 35% in February and March. It has given up those gains over the past few hours and is now down slightly on the day. Tech stocks are outperforming again, with the NASDAQ up 0.3%.
US jobless claims fell below 1 million for the first time since mid-March, pointing to a continued recovery in the US labour market (although the level of jobless claims remains very high, above that seen after the GFC). There is still no breakthrough in sight in negotiations between Democrats and Republicans but the market is trading like a new fiscal package will eventually be agreed. The rate of new COVID19 cases continues to trend lower in the US, albeit from very high levels.
US data releases today include July advance retail sales (Bloomberg Est +1.7% m/m from +7.5% in Jun) and 2Q 2020 Unit Labor Costs (Bloomberg Est +5.5% q/q, from +5.1% in 1Q). Then US July industrial production (Bloomberg Est +2.7% m/m from +5.4% in June) will be released, followed by the preliminary University of Michigan consumer confidence survey for August (Bloomberg Est 71, from 72.5 in July).
Separately, two key events of note include the progress (or lack thereof) on the negotiations between the US administration and Congress for additional fiscal support for the US economy, as both sides entered into a stalemate for the 6th straight day; as well as the fact that trade negotiators from the US and China will be discussing over video conference, the implementation of the phase one trade deal, although the timing has not been confirmed, with China likely to bring up issues surrounding the banning of Chinese apps in the US, according to a Bloomberg News report on Wednesday.
Today’s Options Expiries for 10AM New York Cut (notable size in bold)
- EURUSD: 1.1750 (1.1BLN), 1.1770-85 (900M), 1.1800 (564M), 1.1825 (1.1BLN), 1.1850 (1.1BLN), 1.1900 (2.1BLN), 1.1920-25 (450M), 1.1950 (650M)
- USDJPY: 105.85 (452M), 106.00 (907M)
- AUDUSD: 0.7100 (712M)
Technical & Trade Views
EURUSD Bias: Bullish above 1.1820 Bearish Below
EURUSD From a technical and trading perspective, as 1.1810 acts as resistance anticipate another corrective leg lower to test bids back towards 1.16. A daily close back through 1.1820 would negate the corrective thesis, opening a retest of 1.19 UPDATE 1.19 retest played out now there is a potential for a double top to develop, will need to see a H4 close sub 1.1850 to open a retest of 1.17 support UPDATE momentum divergence addressed, as 1.18 acts as as resistance look for a test of 1.1650 UPDATE continuing battle around the 1.18 handle, through 1.1770 should encourage bearish bets looking for price to test the expiry today at 1.17 UPDATE 1.18 continues to hold as such stops above 1.19 are starting to look vulnerable en route to a 1.20 battle as discussed in yesterday’s live session
GBPUSD Bias: Bullish above 1.30 targeting 1.3250
GBPUSD From a technical and trading perspective, price tested pivotal trendline resistance at 1.3166, anticipated profit taking pull back playing out. As 1.30 continues to attract buying interest look for a test of 1.3250. UPDATE as 1.13160 acts as resistance potential for 1.2860 before higher UPDATE as 1.30 is defended stops above 1.32 look vulnerable for a test and breach
USDJPY Bias: Bullish above 105.50 targeting 107.50
USDJPY From a technical and trading perspective, anticipated test of the equality objective at 104.50 attract big bids, printing a key reversal pattern on Friday, as discussed in today’s Chart Hit, as 105.50 acts as a support look for a test of the equality objective to 107.50.
AUDUSD Bias: Bearish below .7170/90 targeting .6950
AUDUSD From a technical and trading perspective, test of stops and offers above .7220 has delivered the anticipated corrective phase, as .7170/90 now acts as resistance look for a test .6950 as ascending support. UPDATE potential double top in place to deliver the test of ascending trend channel support now at .7000
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