The UK is in an official recession, the country’s statistics authority confirmed on Wednesday. GDP fell by 20.4% in the second quarter of 2020, the biggest fall on record, according to figures from the Office for National Statistics. The fall marks the second consecutive quarter of retraction, a widely-used definition of a recession. It is a stark sign of the economic ruin caused the the coronavirus pandemic and the lockdown measures used to combat it.
👉 Gold has been extending its spectacular crash from the all-time high of $2,075, completing a $200 fall. US ten-year bond yields jumped to 0.65%, making the precious metal less attractive. However, the vast majority of the fall seems to be profit-taking. Silver prices, which nearly hit $30, are down below $25.
👉 The US dollar is rising alongside yields and amid growing economic concerns. The White House dropped its demand that states participate in providing additional unemployment benefits, leaving them at $300/week, half the previous level.
👉 It remains unclear if President Donald Trump’s executive orders pass legal muster. Democrats and Republicans have yet to resume talks. Every day that passes means the economy has less government support.
👉 Trump announced the US will be buying 100 million coronavirus vaccine candidate doses from Moderna before the firm completed its Phase 3 trial. Russia’s President Vladimir Putin decided to skip the broad testing phase and register the world’s first COVID-19 vaccine, saying his daughter also received it.
👉 EUR was little changed at 1.1739, battling around the 23.6% retracement level, with the German ZEW economic sentiment rising to a 16-year high. GBP decreased to 1.3047. UK Jobless claims disappointed in July, while the unemployment rate came at 3.9% against 4.2% expected.
👉 US politics: Presumptive Democratic nominee chose Senator Kamala Harris as Vice President candidate after a long vetting process. It is unclear if his pick, priced in by betting markets, has an impact on investors. Trump trails Biden by around eight points according to recent polls.
As we have observed earlier in the Currency Monitoring Chart, we discovered that NZD/USD lines are separated with the farthest distance.
The following is EUR/CAD looking at 4 hour chart:
INTRADAY MARKET INSIGHTS
Watch 106.90 upside. The pair remains on the upside after rebounding from a low of 105.89 yesterday. Currently it has returned to levels above the ascending 20-period moving average, which stands above the 50-period one. A return to the overhead resistance at 106.70 (around the high of yesterday) would trigger a further advance toward 106.90 on the upside. The trailing key support has been raised to 106.25.
👉 Trading closer to 1.17 amid dollar strength. Germany’s health minister has called his fellow citizens to remain vigilant amid rising COVID-19 cases in the country.
👉 Towards 1.1695 downside. The pair keeps trading on the downside after retreating from a high of 1.1808 yesterday. It remains capped by the descending 20-period moving average, which has crossed below the 50-period one. A break below the immediate support at 1.1720 (around the low of yesterday) would call for a further drop toward 1.1695 on the downside. Only a return to the key resistance at 1.1775 would bring about a bullish reversal.
Watch 0.7110. The pair retreated from 0.7190 and struck to the lower Bollinger band. Besides, the death cross between 20-day and 50-day moving averages has been identified. To conclude, as long as 0.7170 holds on the upside, look for a further decline with targets at 0.7130 and 0.7110 in extension. In an alternative scenario, a break above 0.7170 would bring a rebound with 0.7190 and 0.7210 as targets.
👉 The pair is falling sharply after the Reserve Bank of New Zealand enlarged its bond-buying scheme from NZ$60 billion to NZ$100 billion, releasing a dovish statement. New Zealand put Auckland under strict restrictions following the emergence of four coronavirus cases, the first ones in over 100 days. The elections are set to be held on September 19, unchanged.
👉 Under pressure. The pair is holding on the downside and is under pressure below both declining 20-period and 50-period moving averages. The relative strength index is locating at the selling zone between 30 and 50, indicating a bearish outlook. To conclude, unless the resistance level at 0.6594 is violated, the pair should reach 0.6546 and 0.6532 on the downside. Alternatively, a break above 0.6594 would open a path to 0.6617 on the upside.
👉 The pair is holding up above 1.30 after the UK reported a fall of 20.4% in second-quarter Gross Domestic Product, better than expected. The economy shrank 21.7% on a yearly basis.
👉 Downside prevails. The pair retreated from 1.3130 and crossed below both 20-period and 50-period moving averages. The relative strength index is locating at 30s, suggesting the downside momentum for the prices. In this case, as long as 1.3080 acts as the resistance level, intraday bearish bias remains with down targets at 1.3030 and 1.3010 in extension. On the other hand, crossing above 1.3080 would trigger a technical rebound with 1.3100 and 1.3130 as targets.
Further upside. The pair posted a sharp rebound and crossed above both 20-day and 50-day moving averages. The relative strength index is locating at the buying zone between 50 and 70, suggesting a bullish outlook. Therefore, as long as 0.9150 is not broken, expect a further upside with targets at 0.9185 and 0.9200 in extension. Alternatively, a break below 0.9150 would trigger a return with 0.9135 and 0.9120 as targets.
Towards 1.3350. The pair maintains a bullish bias above the key support at 1.3270. Currently, it has broken above the 20-period moving average, which is turning upward. The relative strength index has climbed above the key neutrality level of 50, suggesting a bullish bias. As long as the key support at 1.3270 holds, expect an advance to 1.3320 and 1.3350. Alternatively, a break below 1.3270 would trigger a decline to 1.3250.
Target 124.46. The pair has retreated sharply after reaching the day-high of August 7. Currently, it has broken below the 20-period moving average, while the relative strength index has dropped below the neutrality level of 50, signaling a bearish bias. Below the key resistance at 125.31, expect a decline to 124.64 and 124.46. Alternatively, a break above 125.31 would open a path to 125.61 on the upside.
Rebound. The pair has potentially formed a rounding bottom pattern. In fact, the 20-period moving average has crossed above the 50-period one, and the relative strength index stands firmly in the 50s, indicating a bullish bias. Unless the key support at 0.8972 is violated, the pair should rebound to 0.9023 and 0.9036. Alternatively, below 0.8972, expect a drop to 0.8950.