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Daily Market Report - 6th Jan 2021

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Daily Market Report - 6th Jan 2021

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EURUSD

The EUR/USD pair has recovered some ground on Tuesday to settle around the 1.2300 figure, up for the day. The market sentiment flipped from coronavirus-related fears to US election´s caution. Georgia is in a Senate runoff and will decide who will lead the organism under Joe Biden’s presidency.


Data was supportive, as it came in better than anticipated. Germany published November Retail Sales, which beat the market’s expectations, up by 1.9% MoM and 5.6% YoY. The unemployment rate in the country held steady at 6.1% in December, as expected. As for the US, the country released the December ISM Manufacturing PMI, which came in at 60.7, much better than anticipated.


On Wednesday, Markit will publish the final readings of its December Services PMIs, while Germany will release December inflation figures. The US macroeconomic calendar will include the December ADP survey, with the private sector expected to have added just 88K new jobs. Later in the day, the FOMC will unveil the Minutes of its latest meeting.


The EUR/USD pair trades just below the 2020 high at 1.2309. The short-term picture is neutral-to-bullish as the price has recovered above a flat 20 SMA, while the longer moving averages continue heading higher below it. Technical indicators recovered into positive territory but quickly lost directional strength. The bullish case can gain momentum on a break above 1.2310, the immediate resistance level.


Support levels: 1.2260 1.2210 1.2170

Resistance levels: 1.2310 1.2345 1.2390

Daily Market Report - 6th Jan 2021


USDJPY

The USD/JPY pair reached a fresh multi-month low of 102.60 this Tuesday, as US traders resumed selling the greenback. Equities’ behavior failed to impress, as European indexes closed mixed around their opening levels, while Wall Street posted a modest recovery after Monday’s slump. US Treasury yields ticked higher, reflecting a better market mood. However, it was not enough to push the USD/JPY higher. Meanwhile, Japan reported 4,670 new coronavirus cases on Tuesday.


Japan published December Monetary Base, which resulted at 18.3% YoY, beating expectations. This Wednesday, the country will release the December Consumer Confidence Index, foreseen at 38.5 from 33.7 previously, and the Jibun Bank Services PMI for the same month, foreseen at 47.2.


The USD/JPY pair trades near the mentioned daily low, still heading towards March 2020 monthly low at 101.17. The 4-hour chart shows that the pair accelerated south after meeting sellers on another approach to a bearish 20 SMA. This last remains well below the longer ones, which also head south. Technical indicators remain within negative levels with uneven bearish strength, anyway signalling further declines ahead.


Support levels: 102.30 101.95 101.60

Resistance levels: 102.90 103.30 103.70

Daily Market Report - 6th Jan 2021


GBPUSD

The GBP/USD pair recovered from a daily low of 1.3553 and surged past 1.3600 as market players dumped the greenback mid-US session. The pound rose within range, undermined by coronavirus developments in the country. The UK reported 60,916 new cases in the last 24 hours, while the death toll hit 830, more than doubling the previous figure. UK Prime Minister Boris Johnson offered a speech but made no new announcements.


 The UK calendar had nothing to offer in the last few sessions but will include the November BRC Shop Price Index this Wednesday, and the December Markit Services PMI foreseen at 49.9. Also, BOE’s head Andrew Bailey is due to testify about the Financial Stability Report before the Treasury Select Committee.


The GBP/USD pair peaked at 1.3631 and is now trading around 1.3630. The pair has a limited bearish potential, as the 4-hour chart shows that it remains unable to surpass the 20 SMA, which anyway maintains its bullish slope. Technical indicators lack directional strength, the Momentum just below its 100 level and the RSI at around 55. Support will keep coming from the dollar’s weakness, and the pair can retest its recent highs in the 1.3700 price zone.


 Support levels: 1.3565 1.3515 1.3470 

Resistance levels: 1.3660 1.3710 1.3750

Daily Market Report - 6th Jan 2021

 

AUDUSD

The AUD/USD pair reached a fresh multi-year high of 0.7772 this Tuesday, ending the day a few pips below it. The Aussie surged during the American afternoon, as a mild improvement in the market’s sentiment resulted in another greenback’s sell-off. Commodity-linked currencies were among the best performers, finding support in oil prices, as WTI surged to $50.00 a barrel after the OPEC+ reached a deal on production cuts. Meanwhile, gold surged to $1,950.00 a troy ounce, its highest in two months.


Australia will publish this Wednesday the December Commonwealth Bank Services PMI, foreseen unchanged at 57.4, and the Composite PMI for the same month, previously at 57. Later into the session, China will release the Caixin Services PMI, expected at 51 from 57.5 previously.


The AUD/USD pair keeps pressuring the daily high, and could extend its rally once above 0.7812, April 2018 monthly high. The 4-hour chart shows that the pair met buyers around a bullish 20 SMA, while technical indicators have lost their bullish momentum, but hold well above their midlines. Beyond the 0.7810 price zone, the pair has quite a clear path towards the 0.7900 level.


 Support levels: 0.7740 0.7700 0.7660

Resistance levels: 0.7780 0.7815 0.7850  

Daily Market Report - 6th Jan 2021


SILVER

Silver also extended its lead on Tuesday on its way to test 2020 highs. The decline was seen in the USD index DXY supported the precious metals while the traders are focused on the elections in Georgia which will shape the Senate. Silver tends to outperform Gold in bullish sessions generally and Tuesday's session was not an exception. Gold to Silver ratio retraced back to mid-70.00 levels indicating the better performance from Silver.   


If Silver manages to stay over 27.00$, next targets upside might be followed at 29.28$ (March 2013 resistance) and 30.00$ levels. Below the 27.00$ level, the supports might be followed at 25.00$, 24.00$ and 23.38$ levels.


Support Levels: 25.00$ 24.00$ 23.38$

Resistance Levels: 27.00$ 29.28$ 30.00$


Daily Market Report - 6th Jan 2021


CRUDE WTI

WTI tested an important physiological level of $50.00 on Tuesday supported by the decline seen in the USD, risk appetite and positive news from OPEC+. After failing to reach a deal yesterday, oil-producing countries led by Saudi Arabia and Russia reached an agreement to cut production until at least March, sending West Texas Intermediate (WTI) crude prices to its highest level since February 2020. Russia and Kazakhstan will increase production by a total of 75K barrels per day, but Saudi Arabia is voluntarily cutting its production by a full 1M BPD through February and March, leading to a net production cut of over 900k BPD. On the other hand, better than expected ISM manufacturing data reading in the US also supported WTI. At this point, a surprise Republican win in Georgia might only weigh on commodity prices turning the tide down.   


If WTI stays below 50.00$ level, the support levels can be followed at 46.96$ and 44.66$ levels. Over the 50.00$ level, the upside targets can be followed at 51.03$ (October 2019 low) and 53.00$ levels.


Support Levels: 46.96$ 44.66$ 44.47$

Resistance Levels: 50.00$ 51.03$ 53.00$

Daily Market Report - 6th Jan 2021


DODODODOWWW

After starting the new year with a surprise decline, Dow Jones tried to erase some of its losses on Tuesday as all eyes are on the elections in Georgia. At this point, markets are favouring a Democrat win which will end up with a blue wave which will make Biden administration’s job easy to implement their politics. From the market point of view, a clear Democrat win might have some cons like higher taxes and stronger regulations. On the other hand, bigger and faster aid packages might be on the table under the Biden administration. On the data side, despite the surge seen in the coronavirus cases, the business activity in the US manufacturing sector expanded at its strongest pace since August 2018 with the ISM Manufacturing PMI rising to 60.7 in December from 57.5 in November. This reading beat the market expectation of 56.6 by a wide margin. The USD index DXY continued its decline to its lowest level since April 2018 around mid-89.00 while precious metals had a net bullish session. 


As elected president, Biden is getting ready to take over the Duty, the NYSE announced that they will no longer delist the three Chinese telecom giants. China Telecom, China Mobile, and China Unicom all surged over 5% on the delisting reversal. The NYSE U-turn appears to suggest that the big three telecom giants do not meet the Office of Foreign Assets Control FAQ 857 requirements, thus rebuking the Trump administration’s accusation the companies are tied to China’s military.  

From the technical point of view, if the index stays over 29,000, 29,500 and 30,000 levels can be followed as new targets high while below the 28,400 level, 28,000 and 27,770 can be followed as supports.


Support Levels: 28,400 28,000 27,770

Resistance Levels: 29,500 30,000 30,500  

Daily Market Report - 6th Jan 2021


XAUU

The USD index DXY started another leg down in the eve of the elections in Georgia which will determine the fate of the senate. The USD index DXY tested its lowest level since April 2018 to mid-89.00 levels despite the better than expected ISM Manufacturing index reading. On the other hand, the US 10-year yields lifted to 0.960% with 4.68% gain on a daily basis. Markets at this point tend to price a Democrat win which will be in favour of precious metals while Gold benefited from the decline seen in the USD testing an important resistance level of $1,950. With a possible blue wave Senate, Gold will most likely to extend it’s lead testing new all-time highs in 2021.   


If Gold tests $1,950, the targets upside can be followed at $1,980, $2,000 and $2,040 levels. Below the $1,950 the supports can be followed at $1,920, $1,900 and $1,825 (2011 August close) levels.


Support Levels: $1,920 $1,900 $1,825

Resistance Levels: $1,980 $2,000 $2,040


Daily Market Report - 6th Jan 2021


MACROECONOMIC EVENTS

Daily Market Report - 6th Jan 2021

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