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Bitcoin soared to $44860 on Monday as Tesla announced they invested $1.5…

Bitcoin soared to $44860 on Monday as Tesla announced they invested $1.5 billion in the leading cryptocurrency

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Market Focus

The US equity market is refreshing highs on brightening prospects for a robust stimulus package. The S&P 500 Index once hit 3900 after Treasury Secretary Janet Yellen said the US can return to full employment in 2020 with a robust federal paycheck. Meanwhile, Dow Jones Industrial Index extended its rally to six days, also breaking a record high of 31263 points. House Democrats released their first draft for the relief bill on Monday. The first committee vote on elements of Biden’s $1.9 trillion relief package begins on Tuesday.

Coronavirus infections continued to slow as countries are pushing for their vaccine rollouts across the globe, more than 131 million shots were given worldwide. There appears to be another virus mutation in South Africa, patients suffer mild symptoms from the new variant. AstraZeneca Plc said they are working on a new shot to combat the South African strain.

Bitcoin gained huge traction and soared to $44860 on Monday as Tesla announced they invested $1.5 billion in the leading cryptocurrency. More importantly, it also said that it will accept Bitcoin as a form of payment in the future.

Market Wrap

Main Pairs Movement

Euro-dollar is a little motivated at the start of the week, closed the day up 0.05%. The US greenback was on the back foot against most of its G-10 peers, the dollar index slipped 0.11%. US 10-year treasury yield once hit 1.2%, its highest levels since March 2020.

Gold extended its recovery after investors dumped 2.2% last Thursday, rallied 0.92% near market close. Last week’s plunging has prompted some dip-buying around $1806. Surging copper price also help the precious metal to regain some ground, copper’s future spiked 3.34% in the past two trading days.

Cable pared all of its loss after the North America session started price was essentially unfazed. Denial of the negative interest rate from BoE continues to underpin the Sterling. It also benefited from a successful vaccination rollout program compare to other developed nations. So far, the country has vaccinated 17% of its population, nearly doubling the US figure.

The Canadian dollar gained 0.18% against the US dollar amid rebounding oil price, the Brent oil advanced above $60 a barrel for the first time in more than a year.

Aussie and Kiwi were the best performers in the G-10 space, rallied 0.31% and 0.35% respectively. The antipodean currencies were supported by renewed risk appetite and rising commodity prices. Iron Ore futures have spiked 5.2% in the past four trading days. Meanwhile, the Bloomberg commodity index climbed to the highest level since December 2018.

Technical Analysis

GBPUSD (Daily Chart)

The cable is running into a stubborn resistance around 1.376, which it has failed to conquer in the last three weeks. The pair may struggle to find demand amid recovering the US dollar. The intersection between the long term ascending trendline and horizontal support line at 1.352 looks like a good place to retreat if the bulls run out of steam. On the upside, UK’s leading vaccine rollouts could probably lend some strengths to the Pound to break the immediate resistance. Some follow-through buying power will push the price to 1.3807, the highest price not seen since April 2018.

Resistance: 1.376, 1.3087

Support: 1.352, 1.322

EURUSD (Daily Chart & Monthly Chart)

Euro-dollar bounced upon touching the yellow ascending trendline but failed to overcome the previous resistance of 1.206. It will be interesting to see how the price could maneuver in such a narrow range. If bidders could manage to regain 1.206, then this pair will find itself back into the bullish trend. However, failure to defend the upward trendline will open doors for wide downside space, which has not been touched since last November. MACD on the daily chart favors the bears, which in turn boost possibilities for a bearish run.

Zooming out to the monthly chart, a retreat towards 23.6% Fibonacci at 1.167 looks quite plausible. Such a healthy retreat could be beneficial to long-term bidders as more money printing from Biden’s administration will continue to favor the so-called reflation trades in 2021.

Resistance: 1.2803, 1.2835, 1.2873

Support: 1.2765, 1.2741, 1.2714

XAUUSD (Daily Chart)

Gold preciously formed a double-top pattern on the daily chart, which usually points to a bearish trend. Price has successfully breached the support band between $1839 and $ 1823 but did not quite reach the 50% Fibonacci level of $1765. Then some dip buying drives the price back to test whether the neck-line resistance is valid. It is currently trapped inside the support band, but judging from Monday’s trading, it’s highly likely this resistance level could block the further north move. On the downside, sellers will be eyeing the aforementioned $1765 horizontal support. MACD on the daily chart continues to underpin a sustainable bearish trend.

Resistance: 1839, 1872, 1930

Support: 1823, 1765

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The recovery in the U.S. labor market disappointed for a second month,…

The recovery in the U.S. labor market disappointed for a second month, Nonfarm payrolls increased by just 49,000

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Market Focus

Stocks extended their weekly rally after weaker-than-forecast US jobs data bolstered the case for President Joe Biden’s $1.9 trillion coronavirus relief package. The dollar fell.

The House adopted the budget resolution that cleared the Senate early Friday, paving the way to pass a stimulus bill with only Democratic votes. The S&P 500 climbed to another record in its best week since Nov as every major group, but technology rose. The surge in GameStop Corp. after Robinhood Markets Inc. removed limits on buying the stock did little to repair the videogame retailer’s weekly plunge of 80%. Two-year Treasury note yields matched an all-time low amid a drop across shorter-dated rates.

The recovery in the U.S. labor market disappointed for a second month as modest job growth highlighted the persistently difficult prospects for millions of unemployed Americans. Nonfarm payrolls increased by just 49,000 after a downwardly revised 227,000 Dec decline. President Biden gave the strongest indication yet he’ll push for stimulus without Republican support, saying Friday’s weak economic data show the risk of doing “too little”.

Incorporate news, Pinterest Inc. surged as the digital scrapbooking and search company reported sales that topped estimates. In the meantime, Peloton Interactive Inc. sank after saying it can’t keep up with surging demand for its exercise machines and warning that profit will be squeezed.

Market Wrap

Main Pairs Movement

EURUSD is trading around 1.20, up from the lows after the US reported an increase of only 49,000 jobs in January, worse than expected. Investors are eyeing stimulus news from Washington.

USDJPY ran into a widely tracked technical resistance on Friday. The pair tested the 200-Day SMAVG for the first time since June 2020. The SMA located at 105.59 was breached with a move to 105.64, however, the breakout was short-lived.

The AUDUSD is having on Friday the best day in weeks boosted by a broad-based slide of the US dollar and also on the back of recovery of the Aussie. The pair is about to end the week hovering above 0.7665, at the highest level in a week.

It’s been a rough end to what would otherwise have been an excellent week for the US dollar. After soft NFP data, the DXY has fallen back to the key 91.00 level.

WTI is having a strong finish to the week, having rallied as high as $57.00 on Friday. Higher stock prices, US bond yields, and a lower US dollar are all providing tailwinds to the crude oil complex.

Technical Analysis

GBPUSD (Four-hour Chart)

GBPUSD advances above the 1.3700 price zone and is trading comfortably around 1.3730 at the time of writing. Given that the US economy only gained 49K new jobs, which is below the market expectation, this Non-Farm Payrolls reading undermines the demand for the greenback and gives a boost to the GBPUSD bulls.

From a technical perspective, a bearish pressure continues to be supported by the 60-Day SMAVG, but with the recent advances of the Cable pair, a golden-cross is staging. Consider the BoE has dished out hawkish signals on Thursday and the continuation of vaccine rollouts, the bullish trend of GBP is likely to extend. Not to mention the fact that the RSI is currently hovering around 60, indicating there is still room for the pair to advance. If the Cable can find acceptance above the 1.3740 resistance, the next resistance can be seen around 1.3760. On the flip side, if the Cable reverses its ongoing upward momentum, the most immediate cushion is 1.3657, then 1.3606, followed by 1.3568.

Resistance: 1.3740, 1.3761

Support: 1.3657, 1.3606, 1.3568

USDCAD (Four-hour Chart)

After successfully breaking the 3-month bearish trend on 1/27, the Loonie pair has been trading between in a confined range within 1.2835 and 1.2765.

On the last day of the week, the Loonie dipped low despite a disappointing Canadian labor market data as the strength in crude oil and the worse-than-expected US labor data supported the CAD and reversed the bullish trend of the pair, which subsequently pulled the pair back down to around 1.2765 at the time of writing.

Technically speaking, the 15-Day SMAVG is supporting the USDCAD, but the 40s RSI is suggesting the market is currently tilted to the seller’s side. If the Loonie can break below 1.2765, the next cushion would be 1.2741 and 1.2714. Conversely, when the pair resumes its bullish run, the buyers must find acceptance above 1.2803 before further advancing towards 1.2835.

Resistance: 1.2803, 1.2835, 1.2873

Support: 1.2765, 1.2741, 1.2714

XAUUSD (Four-hour Chart)

Bouncing back from the three-consecutive day loss, the yellow metal finally regained some upward momentum on Friday, reclaiming $1812 at the time of writing. After the downbeat US labor data was released, the Gold regained some positive traction. However, if the precious metal fails to break above the $1812, the bearish pressure on XAUUSD could persist as indicated by both the MACD and 60-Day SMAVG.

Looking ahead, the US Consumer Price Inflation numbers for Jan and a speech from Fed Chair Powell in the upcoming week are closely eyed. If the precious metal can find acceptance above $1812, the next resistance can be found at $1825 and $1834. On the flip side, if the bears outplay the bulls, the most immediate support is seen at $1789, then $1769.

Resistance: 1812, 1825, 1834

Support: 1789, 1769

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Thursday’s initial jobless data indicated 779,000 Americans applied for unemployment benefits in…

Thursday’s initial jobless data indicated 779,000 Americans applied for unemployment benefits in the week ended Jan. 30

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Market Focus

US stocks market extended its rally into the fourth consecutive day as corporates continue to deliver handsome earnings. The S&P 500 Index is looking to close at a record high at 3855, climbed 0.83% on Thursday. Meanwhile, the Nasdaq Index and the Dow Jones Industrial Index gained modest 0.86% and 0.84% respectively. Ebay Inc. and PayPal Holding Inc. are leading the gain amid upbeat forecasts. GameStop Corp. plunged nearly 40% as traders are flocking to other stocks.

The White House reinforced President Joe Biden’s call for a minimum wage hike amid rising uncertainty it can get through Congress as part of his $1.9 trillion stimulus package. The Senate is set to start voting Thursday on a budget resolution of 2021. Treasury Secretary Janet Yellen reiterated her call for a large-scale bill to help Americans battered by the pandemic.

Thursday’s initial jobless data indicated 779,000 Americans applied for unemployment benefits in the week ended Jan. 30, marked the lowest level since the end of November. Although the number remains high, it is a good sign that layoffs related to the pandemic are starting to heal. Restaurants in New York City can now reopen indoor dining at 25% capacity on Feb.14, Governor Andrew Cuomo said.

Here are the key takeaways from BoE meeting minutes:

  • BoE is telling banks to start preparing for negative interest rates as a contingency but says that message shouldn’t be seen as a signal the policy is imminent.
  • UK economy is heading for a rapid pickup thanks to vaccination efforts.
  • Benchmark interest rate and QE are left on hold by unanimous vote, while policy maker Dave Ramsden says a slower pace of bond-buying could take hold later this year.
  • Will reconsider its sequencing for unwinding stimulus.

Market Wrap

Main Pairs Movement

Euro was under sieged on Thursday, surrendered 0.6% against the US greenback. The pair is down for a fourth consecutive day as investors are growing confident for a new US stimulus package. Surging Treasury yields are also supporting the dollar.

Cable experienced a volatile day, plunged 0.55% ahead of EU market session, but quickly pared all of its loss when BoE releases its December meeting minutes, the pair ultimately gained 0.18% on Thursday. BoE is projecting GDP to recover rapidly towards the pre-pandemic level throughout 2021, and expecting inflation to pick up. More importantly, the central bank pushed back expectations for negative interest rates, which prompted a large amount of short-covering.

Aussie has outperformed its rival Kiwi, AUDNZD plunged 0.5%. The commodity-linked Aussie staged a corrective pullback amid broad US dollar strength. The market will be eyeing for the RBA Monetary Policy statement on Friday.

Gold was heavily subdued amid rising US Treasury yield, erased 3.75% in the past three trading days. The safe-haven metal appeals to be unattractive to investors in an upward trending equity market. Moreover, the reviving bond market further drives demand away from precious metal.

Technical Analysis

EURUSD (Daily & Monthly Chart)

Euro-dollar was put back to sub 1.2 level, the pair plummeted 0.6% to 1.1965 on Thursday. After breaking the long-standing horizontal support of 1.206, the price is meeting with the yellow ascending trendline. The Euro is having a tough fight against the US greenback, failing to defend this trendline will leave the downside wide open, possibly falling onto 1.163 support.

Zooming out to the monthly chart, a retreat towards 23.6% Fibonacci at 1.167 looks quite plausible. Such a healthy retreat could be beneficial to long-term bidders as more money printing from Biden’s administration will continue to favor the so-called reflation trades in 2021.

Resistance: 1.206, 1.233

Support: 1.193, 1.163

USDJPY (Daily Chart)

USDJPY has overcome the long descending trend line that kept price subdued since last March. Bidders cheered the bullish reversal and ramped up 1.9% in the past seven consecutive days. The bulls are clinging to the 38.2% Fibonacci retracement of 105.4. We previously predicted price will at least touch this level before falling back down. That being said, the retreat looks more prominent given RSI is stepping into the overbought region. On the south, DMA100 could be supportive if the bulls lose steam. MACD on the daily chart is indicating a sustainable bullish trend.

Resistance: 106.72, 108.02

Support: 104.4, 103.84

XAUUSD (Daily Chart)

It took sellers two months to break the support band between $1839 and $1823, closed the day down 2.2%. After breaking the strong support, the bears are strengthening their downward momentum from here. Price now eyes for 50% Fibonacci retracement at $1765, the lowest level in three months. We do not expect the price to reach $1765 in the near term given the magnitude of the previous drop. That being said, there is no obvious resistance level between $1765 and $1823, it could be possible that Gold will consolidate above $1765. MACD is giving bearish signs since January 8th and will continue to support this trend.

Resistance: 1823, 1839

Support: 1765, 1691

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