A report from home financing giant Fannie Mae showed Americans’ record-low willingness…
A report from home financing giant Fannie Mae showed Americans’ record-low willingness to buy home
US equity market was mixed as investors remain clueless about Fed’s upcoming move given last Friday’s Non-Farm Payroll data miss. The S&P 500 and Dow Jones Industrial Average closed in the red, down 0.08% and 0.36% respectively. On the other hand, the Nasdaq 100 climbed 0.23% as Biogen Inc. soared on its Alzheimer’s drug approval. Real Estate shares led the gains within S&P 500, while Industrials and Materials performed the worst.
The G-7 nations struck a deal on Saturday to push for a minimum 15% corporate tax. The accord requires large companies to pay more in countries where they operate rather than just where they’re headquartered. “It gives tech companies much more certainty, which is as valuable as lower tax rates, now companies can model out how the tax is going to impact them. It’s much harder to respond to a patchwork of digital taxes and tit-for-tat trade disputes,” commented Andrew Silverman, government analyst at Bloomberg.
A report from home financing giant Fannie Mae showed Americans’ record-low willingness to buy home. The percentage of consumers who believe now is a good time to purchase a house dropped to 35% in May, the lowest since Fannie Mae began the survey a decade ago. Although the jobs market is improving in the US, consumers fear that rising house prices may not be affordable to them in the near term.
The amount of cash parked at the Federal Reserve’s reverse repo facility is at a record high of $486.1 billion on Monday. The money lends to the US central bank is earning a 0% interest rate. This reveals commercial banks are in a dire situation by holding a ton of cash, but few investment options.
Main Pairs Movement
The macroeconomic calendar had little to offer today. Investors are waiting for first-tier events to be out later this week, including the release of US CPI figures and the European Central Bank (ECB) statement on monetary policy.
The dollar index is falling for the second day in a row. Market participants seem to continue to digest the NFP disappointment. The Treasury Bond yield is still lingering below 1.6%, while the Dow Jones dropped around 0.4%.
EURUSD has increased 0.52% since last Friday, while GBPUSD levitates few pips below the 1.42 figure. The Japanese pair approaches the 109 level, and commodity-linked currencies like AUDUSD and NZDUSD remain their uptrend, both gained around accumulated 1% in the past two trading days.
Gold once touched $1900 soon after the end of the North America Session, and then declined due to the lack of buying power.
Loonie pair closed positive due to the decrease in oil prices, both WTI and Brent fell at the start of the week.
USDCAD (Daily Chart)
Loonie has consolidated between the 1.20 to 1.215 interval for 3 consecutive weeks. After the disappointing NFP data, the pair lost nearly half of its gain from the previous day last Friday, and the dimming hope of rebound seemed shattered. The MACD histogram shows a bullish trend ongoing, while RSI suggests that USDCAD faces selling pressure. Amid the mixed market sentiment, maybe the BoC Rate Statement on Wednesday will provide investors a better view of the pair’s future movement.
Resistance: 1.215, 1.225, 1.237
Support: 1.20, 1.192
XAUUSD (Daily Chart)
XAUUSD has fully recovered from its steep decline last Thursday, traded at $1899.57 as of writing. Benefit from the lower Treasury yield and absence of U.S. tapering policies, gold may keep its bullish momentum in the short run. Also, the RSI indicator is holding above 60, suggesting that the buyers still have the upper hand. The first resistance for the pair may appear at $1930, followed by $1960, the yearly high; for the downside, the latest floor $1860 may be supportive, then $1809 if breached.
Resistance: 1930, 1960
Support: 1860, 1809, 1756
USDCHF (Daily Chart)
Just boosted by the upbeat ADP research report last Thursday, USDCHF then experienced a severe decline the next day after the released NFP data failed to catch up. As swiss was again unable to break the 38.2% Fibonacci resistance, bears are likely to prevail in the short run. The pair now trades below 0.9, as well as the RSI indicator fell below 50. The instant support for swiss may appear at 0.8926, where 23.6% Fibonacci lies, and for the worse cases, the yearly low 0.8758 was its last barricade against further depreciation.
Resistance: 0.9031, 0.9115, 0.92
Support: 0.8926, 0.8758
Canada’s labor market weakened for a second month, lost 68,000 jobs in…
Canada’s labor market weakened for a second month, lost 68,000 jobs in May amid the third wave of COVID-19 virus spread
US equities advanced albeit disappointing Non-Farm Payroll data. Technology shares led the gains on Friday with the Nasdaq 100 index up 1.8%. Meanwhile S&P 500 and Dow Jones Industrial Average climbed 0.9% and 0.5% respectively. Traders struggle to find clues on the Fed’s next moves amid soft jobs data. The 10-year US Treasury yields fell to 1.56%.
The G-7 group is reaching a deal to implement a minimum corporate tax of 15% in international negotiations. Finance ministers are due to meet in London this weekend. The discussion includes topics like how to divide levies on multinational tech giants such as Facebook Inc. and Amazon.com Inc. French Finance Minister Bruno Le Maire said on Friday that “clearly 15% is only a starting point, and if it is higher, it is better to have a level of the rate that is higher than 15%.”
Bitcoin slipped as much as 9% after Elon Musk’s tweet implied about ‘breaking up’ with Bitcoin. The decline dented the leading crypto’s recovery from $33,500, dragged down other coins as well. Speculators are puzzled by Musk’s motives for sending out these tweets, especially when his missives are contradicting each other.
Main Pairs Movement
The dollar index dropped 0.4% after Friday’s Non-farm Payroll came lower than expected. The world´s largest economy gained only 559,000 jobs in May, below 664,000 expected. Concerns of sooner than expected tapering have been eased given the underperformance in the jobs market. However, it does not imply inflation is slowing down in the US. The month-on-month average weekly earnings grew at 0.5%, more than doubled from the forecast. Given the shortage in labor, employers are left with no choice but to offer higher pay to attract workers. In the long term, wage growth should push inflation higher, but when inflation is running hot by stimulus injection, we wonder where this number may land as more people are returning to the workforce.
USDCAD dipped 0.25% despite disappointing Net Change in Employment in Canada. The labor market weakened for a second month, lost 68,000 jobs in May amid the third wave of COVID-19 virus spread. However, drags in the macro figure were offset by rallying oil price, which is one of Canada’s major exports. WTI and Brent crude oil futures continue to make new highs, gained 0.83% and 0.45% respectively.
XAUUSD (Daily Chart)
With the help of downbeat NFP data, Gold recovered more than half of yesterday’s slump. Early in the day, downward pressure managed to drive the price to contest a rather steep ascending trendline, which could be interpreted as a validation of the current bullish trend. Worth noting that daily RSI is cooled off by yesterday’s plunge, helping to alleviate some of the friction to move price further north, For now, gold buyers will keep the rein until it hits much tougher resistances like $1960 and $2000.
Resistance: 1960, 2000
Support: 1854, 1822, 1790
USDJPY (Daily Chart)
After two days of disruptive data releases from the US, USDJPY is back to its previous downward trajectory. Price is about to kiss the five-month ascending trendline, which survived multiple breakouts attempts since April but will be under stress as the 10-year US treasury yield failed to put a solid footing above 1.6%. A breakdown from this dynamic support line could open doors to further downside gain, and a bearish reversal would be more convincing if we see USDJPY making a lower-low around 108.62. In the south, bears could revisit support at 107.9 in the near term, followed by distant 106.72.
Resistance: 109.7, 111, 112.1
Support: 107.9, 106.7
GBPUSD (Weekly Chart)
The cable is still trapped within a consolidation zone between 1.411 and 1.424, and it has gone nowhere in the past three weeks. In the weekly chart, GBPUSD looks to snap its four-consecutive win and marks a third rejection from 2018’s high of 1.424 in recent weeks. More importantly, the construction of a Doji pattern could signal a potential correction in this pair. Looking to the downside, the immediate support sits around 1.41, followed by a big psychological level at 1.4.
Resistance: 1.42, 1.437, 1.464
Support: 1.41, 1.4, 1.382
President Joe Biden proposed a 15% minimum tax on US corporations along…
President Joe Biden proposed a 15% minimum tax on US corporations along with strengthening IRS enforcement efforts as a way to fund a bipartisan infrastructure package
US equities fell amid upbeat economic data, and investors are growing concern that strong data may push the Federal Reserve to withdraw from the easy monetary policy sooner than expected. Tech shares led the decline with the Nasdaq 100 index dipped 1.07% on Thursday. In the S&P 500, Utilities and Consumer Staples stocks both gained around 0.5%, while Consumer Discretionary had even worse performance than Techs.
President Joe Biden proposed a 15% minimum tax on US corporations along with strengthening IRS enforcement efforts as a way to fund a bipartisan infrastructure package. The new proposal sets aside his previous plan to raise corporate income from 21% to 28%. The offer does not mean that Biden is ditching his larger ambitions to raise taxes on corporations, the proposal is simply a bid to find common ground in the Capito talks, according to a person familiar with the discussions.
Russia may move away from dollar-dominated oil contracts if President Joe Biden’s administration continues to impose sanctions on the oil-rich nation. Meanwhile, Russia is said to reduce its $186 billion National Wealth Fund to 0. Russian Finance Minister Anton Siluanov told reporters on Thursday that instead of investing in dollar assets, the NWF will seek alternatives like Euro, Yuan, and gold assets. These changes are expected to take place next month. Once completed, the share of euro assets in the fund is expected to stand at 40%, the yuan at 30%, and gold at 20%.
Main Pairs Movement
The dollar soared 0.65% to 90.49 amid strong US economic data on Thursday. ADP research report showed there were 978,000 new jobs in the US, beating the expectation of an increase of 650,000 jobs. The ADP figure finally came above economists’ forecasts, which have been downbeat for three months in a row, therefore rising the prospect for upcoming official Non-farm Payroll on Friday. Jobless claims in the US were declining in the last week of May, the figure came slightly better than anticipated 390,000, printed 385,000. Lastly, the ISM Services PMI came out at 64, refreshed the highest number in decades, the reopening is bringing the crowd back from lockdowns and social restrictions as CDC announced on May 13th that fully vaccinated people don’t need to wear a face mask in most areas.
Multiple forex pairs are finally stepping outside of their consolidation zones, such as EURUSD, AUDUSD, and USDJPY. However, they are not completely out of the woods yet, we still need to see NFP numbers to get a clear picture of where the Fed might be heading. If the US jobs market is improving in line with or exceeds Fed’s expectation, then monetary officials will soon kick off their talks in tapering. If not, then we are back in the wait-and-see game, where the US government needs to find a fix for the labor shortage caused by the decreased incentive to work and lack of child-care resources.
Gold plummeted nearly 2%, the largest one-day loss since late February where the selloffs were brutal. Traders are exiting their positions in an early indication of the better jobs market in the US. Rumors suggest the Basel III update on June 28th may potentially remove non-allocated gold as a tier-1 asset, which could cause a squeeze on bullion banks, and benefits large physical gold holders like central banks. If this event were to materialize, Gold should be on an upward trajectory in the long run.
XAUUSD (Daily Chart)
Much to our surprise, XAUUSD stumbled and fell under its upward trajectory before the NFP release, as the U.S. ADP Employment Change data well beat Wall Street’s consensus. Gold fell around $30 earlier today, traded at $1871.75 as of writing. Despite the massive chaos caused by the previous data, the incoming Fed’s Chair Powell speech and NFP are still the main dishes, providing us about the Fed’s attitude toward tapering and the U.S.’s pace of recovery.
The pair now encounters a fork in the road. On the upside, gold may surge back to $1900, and challenge resistances like $1930 and $1960; on the downside, however, the instant defense will be at $1860, and once breached, gold may experience a severe adjustment, leading it back to mid-May’s level at $1810, even worse at $1756, the price level in late April.
Resistance: 1900, 1930, 1960
Support: 1860, 1809, 1756
USDCHF (Daily Chart)
Swissy broke its two-week silence right after the U.S. upbeat macros and solidly breached the 0.9 fences that the pair failed to take down in past attempts. The rebound may seem unexpected, but there have been several hints from the technicals. RSI suggests a rekindled buying power since May 7th, while MACD histogram just formed a golden cross last week.
Looking to the Fibonacci, the pair has just hit the 23.6% level and is challenging 38.2% as of writing. In cases of accelerating inflations and delayed Fed’s tapering or other serious macro incidents, Swissy may plunge to its 2-week low at 0.893, or worse, yearly low at 0.876.
Resistance: 0.903, 0.92, 0.947
Support: 0.893, 0.876
AUDUSD (Daily Chart)
Aussie just plummeted over its lowest price since mid-April, traded 0.7654 as of writing. Before that, the pair have stocked in a relatively small interval, 0.767 to 0.79, for about one and a half months, with not much exciting news between the two countries. The main reason for this breakthrough still springs from the abovementioned cheering US data and the following speculation of about-to-come tighter monetary policy.
Compared to that, the dull economic performance of Australia seems to provide downside tractions as technical indicators appear bearish. RSI is at its monthly low of 40.84, while MACD is negative. The estimated support line for the pair may be it’s previous lower bound of 0.767 and the yearly low of 0.756, whilst the resistance awaits the unlikely rebound at the monthly high of 0.79, followed by the yearly high of 0.8005.
Risk Warning: Contracts for Difference (CFDs) trading carries a high level of risk to your capital and can result in losses, you should only trade with money you can afford to lose. CFDs trading may not be suitable for all investors, please ensure that you fully understand the risks involved and take appropriate measures to manage them. Please read the relevant Risk Disclosure document carefully, available here Legal Documentation.
Pacific Union Limited is registered in Seychelles and located at 102 on Ground Floor of House of Francis, Ile Du Port, Mahe, Seychelles. Pacific Union Limited is authorised and regulated by the Financial Services Authority of Seychelles with License No. SD050.
The information on this website is not directed to residents of certain jurisdictions such as United States, Singapore, Australia, Iran, Cuba and some other regions, and is not intended for distribution to, or use by, any person in any countries or jurisdictions where such distribution or use would be contrary to local law or regulation.
The website can be accessed globally and is not specific to any entity. Your actual rights and obligations will be determined based on the entity and jurisdiction that you choose to be regulated.