👉 The souring US-China diplomatic ties over the Hong Kong and South China sea issues also dampened the market mood. The US has denounced China’s claims to the South China Sea as unlawful. China accused US of ‘inciting confrontation’ after Washington rejected expansive claims in disputed sea for the first time.
👉 More pain for businesses as Covid-19 cases rise. Meanwhile, California Governor Newsom ordered a shutdown of indoor restaurants, bars, movie theatres and other businesses across the state. Technology stocks led the fall in US markets as California goes back to lockdown. With mobility data also showing lower foot traffic and consumer activity, what’s the outlook for businesses?
👉 The sentiment soured in the NY trading after the state of California imposed new restrictions on businesses as coronavirus cases and hospitalizations soared. The shutdown reignited concerns over the growing virus risks on the economic recovery prospects.
👉 Oil tumbles as California returns to lockdown. Prices of oil plunged overnight as California goes back to lockdown. With more Covid-19 cases being reported, investor sentiment is being dampened. What’s the outlook for oil this month?
👉 Around 35% of jobs lost in Australia since the start of Covid-19 related lockdowns in March have now been recovered, according to government data. Still, NAB says signs of a moderation in jobs growth are worrying and the recently reinstated lockdowns in Melbourne (which will last until August 19) are likely to weigh on the economic recovery in July and August. Melbourne is Australia’s second largest city and accounts for about 20% of the national economy.
👉 Most Asian currencies weaken against the dollar as fresh U.S.-China tensions sparked a risk-adverse mood. “Sentiment turned on news that the U.S. rejected China’s new claims in the South China Sea,” says Michael McCarthy, chief market strategist at CMC Markets. “This marks a substantial change from the previous policy of staying out of regional territorial disputes, and raises investor concerns about increasing U.S.-China hostility.”
👉 Goldman Sachs says it now has more confidence in a sustained euro appreciation. “From a financial market standpoint, the US has outperformed Europe for nearly a decade,” Goldman Sachs says. But amid the pandemic, “certain positives about the European system–e.g. the capacity of its health care infrastructure, the stickiness of firm/employer relationships, and arguably aspects of its politics and media–and revealing related negatives about the US.” The dollar still has many strengths “and we could only envision the Euro displacing aspects of the Dollar’s global role over long periods of time. But we are not confident that the US asset market dominance over the last ten years will continue–and at least from a GDP growth standpoint our economists think Europe will actually outperform.”
👉 Speculators reduced bets against sterling last week but the overall tone remains a far cry from the strength seen after December’s U.K. general election, Rabobank says. Net short sterling positions–bets the currency will fall–declined in the week to last Tuesday, according to the latest data from the Commodity Futures Trading Commission. “Brexit uncertainty, a high mortality rate from Covid-19 and criticism of the government’s handling of the crisis have been GBP negative,” Rabobank FX strategist Jane Foley says. “However, fiscal stimulus and a gradually re-opening U.K. economy have been supportive recently.” GBP/USD falls 0.1% to 1.2623 and EUR/GBP rises 0.7% to 0.9010.
👉 UK will reportedly ban UK telecom companies from purchasing Huawei equipment by year-end and will remove Huawei from all 5G networks by 2027
👉 Later today, we are looking ahead on the economic highlights including UK GDP (Estimate), Swedish CPIF, German ZEW, EZ Industrial Production, US CPI, UK Huawei Decision & OBR Forecasts, OPEC Monthly Oil Market Report, Fed’s Brainard, Bullard & SNB’s Jordan.
July 2020 is still a shaky season for the Forex Market as this week is Jam-packed big economic events as scheduled in the economic calendar. And here are the important news that we need to watch out for this whole week:
High Impact Events for July 15:
High Impact Events for July 16:
High Impact Events for July 17:
INTRADAY MARKET INSIGHTS
USD/JPY Intraday:
Further advance. The pair keeps trading on the upside while being supported by the ascending 20-period moving average. In fact it is striking against the upper Bollinger band holding the intraday outlook as bullish. Unless the key support at 107.10 (around the 50-period moving average) is breached, the pair should advance toward 107.40 and 107.60 on the upside.
We triggered a SELL signal for USD/JPY and this is the current chart as of 11:30 am.
EUR/USD Intraday:
Under pressure. The pair remains on the downside after retreating from an intraday high of 1.1374 seen yesterday. The relative strength index has declined to levels below 50 indicating a lack of upward momentum for the pair. A further decline should bring the pair toward 1.1320 and 1.1300 on the downside. Only a return to the key resistance at 1.1375 would bring about a bullish reversal.
AUD/USD Intraday:
Watch 0.6910. The pair is showing strong downward momentum as the relative strength index is subdued in the 30s. Upon reaching the immediate support at 0.6920 (around the low of July 10), the pair should then sink toward 0.6910 on the downside. The trailing key resistance has been lowered to 0.6950.
NZD/USD intraday:
Under pressure. The pair has broken below a rising trend line drawn from July 3. In fact, it is trading at levels well below both the 20-period and 50-period moving averages, while the relative strength index has dropped below 30, signaling a bearish bias. Below the key resistance at 0.6567, expect a decline to 0.6503 and 0.6485. Alternatively, a break above 0.6567 would trigger a rebound to 0.6597.
GBP/USD Intraday:
Downside prevails. The pair has sunk further after losing the key level of 1.2600. Strong downward momentum is evidenced by the relative strength index, which is subdued in the 30s. A break below the immediate support at 1.2530 would trigger a further fall toward 1.2505 (around the low of July 8). Key resistance is located at 1.2590.
USD/CHF Intraday:
Bullish bias remains. The pair is trading within a bullish ascending triangle. Currently, support is provided by the 20-period moving average, which stays above the 50-period one. The relative strength index stands above the neutrality level of 50, suggesting a bullish bias. Above the key support at 0.9395, expect an advance to 0.9425 and 0.9440. Alternatively, a break below 0.9395 would open a path to 0.9380 on the downside.
USD/CAD Intraday:
Target 1.3650. The pair remains on the upside as it has formed a higher-low. In fact, the 20-period moving average has crossed above the 50-period one, and the relative strength index has climbed to the 60s, signaling a bullish bias. As long as the key support at 1.3575 holds, the pair should target 1.3625 and 1.3650 on the upside. Alternatively, a break below 1.3575 would trigger a pull-back to 1.3555.
The following is a forecast for USD/CAD in its 4 hour chart perspective:
EUR/JPY Intraday:
Further upside. The pair has formed a V-shaped rebound. Currently, the 20-period moving average has moved further above the 50-period one, while the relative strength index stands above the neutrality level of 50, indicating continued upward momentum. Unless the key support at 121.26 is violated, the pair should proceed to 122.33 and 122.59 on the upside. Alternatively, below 121.26, expect a pull-back to 120.81.
EUR/GBP Intraday:
Upside prevails. The pair has accelerated to the upside after breaking above a bearish trend line drawn from June 29. Currently, support is provided by both the ascending 20-period and 50-period moving averages, while the relative strength index stays in 70s, suggesting a bullish bias. Above the key support at 0.9007, expect an advance to 0.9071 and 0.9088. Alternatively, a break below 0.9007 would trigger a return to 0.8979 on the downside.
