Daily Market Report by GulfBrokers 2020-2021

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Australian dollar retreated from two weeks high 0.6560 to 0.6535 after the rumours about China expected to announce tariff on some Australian agriculture products.

The Important levels to watch for this week:

Support: 0.6490 and 0.6440 Resistance: 0.6575 and 0.66
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Globally, the markets were cautious last week due to the likely collapse of phase 1 trade agreement between the US and China But, reports suggest that the meeting between officials of both countries was positive. Over the weekend China said it would continue to stimulate its economy to support its recovery from the pandemic. This week Investors will likely keep a look at the economic releases which includes RBNZ rate decision, UK GDP; US retail sales, Australia employment figures, Eurozone industrial production etc.

Last week


  • The U.S. economy lost 20.5 million jobs in April and the unemployment rate soared to 14.7% — both record highs.
  • Initial jobless claims reported 3.169M were better than the prior 3.846M but worse than expectations of 2.900M.
  • ADP private employment declined 20.236M in April versus 149K in March.
  • The UK construction PMI slumps to the record low of 8.2 in April vs. 22 expected, prior to 39.3. The data marked the lowest reading since April 1997.
  • Bank of England (BOE) leaves the benchmark interest rate unchanged at 0.10%.
  • Lyft the ride-hailing company reported better than expected Q1 #earnings. $LYFT shares rose 15% after-hours trading.
  • RBA leaves rates on hold at 0.25% after previously cutting rates on March 3 and March 19.
Stock Market

Stocks erased early gains and pointed to a negative start on Monday amid concerns about a second wave of COVID-19 infections after China, South Korea and Germany saw a rise in new cases. Northeast China and South Korea are seeing battling a second virus wave, with Mainland China has reported 17 new cases on Monday. Meanwhile, Italy, France and the UK all reported the fewest COVID-19 deaths since March. The US equities closed last week on a positive note. The Dow rallied 1.91%, as S&P500 (+1.69%) and NASDAQ (+1.58%) recorded decent gains.

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Wall Street opened lower on Monday and the Dow Jones trading 0.9% lower.

Companies due to release their results will be, Under Armour, Marriott International, and Cisco Systems will be among those reporting earnings this week.

Currencies
In the currencies market, the US dollar remains the King. The Dollar continued to appreciate to above 100 after falling nearly 1% on Friday. GBP fell on Monday after Prime Minister Boris Johnson is expected to provide further details on the easing of coronavirus lockdown measures in Britain after his statement during the weekend prompted confusion across the country. The main important events watch for GBP traders this week, GDP numbers for the 1st quarter and retail sales. EUR/USD trading slightly weaker on Monday and the main attractions for Euro this week will be Eurozone Industrial Production & GDP.

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Australian dollar retreated from two weeks high 0.6560 to 0.6470 after the rumours about China expected to announce tariff on some Australian agriculture products. Now investors waiting for Thursday employment figures as the economy are expected to shed 575K jobs in April, marking the biggest decline since the data series began in 1978. While for NZD traders the focus now shifts to the latest RBNZ monetary policy update on Wednesday.

Commodities
Gold trading steady above $1700 on Monday as the health authorities in China and South Korea warned that a new wave of infections could be starting across both countries. On Friday the yellow metal dropped by almost 1.1% after better than expected employment data from the United States. Overall technically the trend for gold is still considered as bullish because the price holding well above $1700 and the next important resistance to watch $1750. On the other side, $1680 is likely to remain a crucial support zone.


Crude oil prices started this week with a positive note after Saudi energy ministry said it had asked the kingdom's oil giant Saudi Aramco to cut its crude production for June by an extra amount of one million barrels a day, on top of the reduction already announced under the latest OPEC+ deal. This week the investors continue to follow the new updates from the US and China trade talks and Wednesday oil inventory report.
 
Gold price trading sideways supported by $1680. Any break below $1680 will open $1650 & $1630. On the other side break above $1720 opens $1735 & $1750.

Important levels to watch this week

Support: $1680 and $1660

Resistance: $1720 and $1735

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Save one life and you are heroes; save one hundred lives then you are nurses. We thank all the nurses who work so hard to keep us safe against Covid-19. Happy International Nurses Day

EQUITIES


Asian markets traded with losses on Tuesday after the release of China's inflation data for April which hit a seven-month low of 3.3% in April versus 3.7% expected. On Monday Wall Street ended mixed, the Dow Jones lost 109 points or 0.5% to 24,222. Marriott International (NASDAQ: MAR) reported a 1st quarter earnings of $31M compared to $375M in the year-ago quarter. Sales plunged in April by 90%. The stock fell 6.5% on Monday after the report.

OIL

On Tuesday, oil prices rebounded from the earlier losses after Saudi energy ministry said it had asked the kingdom's oil giant Saudi Aramco to cut its crude production for June by an extra amount of one million barrels a day, on top of the reduction already announced under the latest OPEC+ deal.

CURRENCIES

The pound continues to trade weak against Euro and Dollar Ahead of PM Johnson Statement and Wednesday GDP numbers. Euro dropped to a fresh week low of 1.0780 as concerns about the second wave of COVID-19 infections in Germany.

GOLD

The gold price trading steady above $1700 on Tuesday. The price supported by growing fears over the second wave of coronavirus, with China and South Korea has reported new infections.

Economic Outlook

On Monday, Pharmacy Company Abbott Laboratories received a second authorization from the Food and Drug Administration to move forward with a COVID-19 antibody test.

U.S. President Donald Trump said on Monday he opposed renegotiating the U.S.-China “Phase 1” trade deal. Meanwhile, the British government will set out details on how to make workplaces safer later in the day after Prime Minister Johnson announced a plan to exit the coronavirus lockdown.

Moving to the US session, traders and investors now look forward to the release of the US consumer inflation figures and FOMC members James Bullard and Patrick Harker speeches.

Coronavirus Update:

The number of people infected with the coronavirus across the world surpassed 4.25 million, of which at least 287 thousand people have died and 1.53 million people have recovered. According to recent updates, more than 1.34 million confirmed COVID-19 cases have been reported in the United States, with over 80,000 deaths. Russia has passed the UK and Italy in the number of infections and is now the third worst-affected country with over 232 thousand cases.

Technical Outlook

GOLD:
Gold price trading sideways supported by $1680. Any break below $1680 will open $1650 & $1630. On the other side break above $1720 opens $1735 & $1750.

The important levels to watch for today: Support- $1690 and $1680 Resistance- $1710 and $1720.

EUR/USD: The pair rebounded from the early session low 1.0780 and currently trading above 1.0820.

The important levels to watch for today: Support- 1.0770 and 1.0730 Resistance- 1.0880 and 1.0920.

Quote of the day: The markets are unforgiving, and emotional trading always results in losses- Alexander Elder.
 

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UK economy contracted its biggest fall since the 2008 financial crisis in the January-March period, with March GDP falling by a record pace due to the coronavirus pandemic. The GDP dropped 5.8% in March, the biggest monthly fall since the series began in 1997. While quarterly GDP beat projections, falling by 2% instead of the expected contraction of 2.5%.

EQUITIES

Asian shares tumbled as fears about the second wave of coronavirus infections gripped financial markets. Wall Street fell on Tuesday after Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases, warned Congress that a premature reopening could set back the US attempts to control the disease. The Dow Jones Industrial Average fell 1.89% on Tuesday, the S&P 500 lost 2.05% and the Nasdaq Composite dropped 2.06%.

OIL

Crude oil prices declined on worries about a possible second wave of coronavirus cases in countries starting to ease lockdowns and API data showed that US crude inventories rose by 7.6 million barrels in the latest week, a higher climb than the 4.1 million barrel build forecast by economists.

CURRENCIES


The dollar index trading unchanged after U.S. President Donald Trump again pushed the Federal Reserve to adopt negative interest rates. The New Zealand dollar slumped to a six-month low after the country's central bank doubled its quantitative easing program and said it has asked commercial banks to be ready for negative interest rates by year's end.

GOLD

Gold gained on Wednesday as concerns that the second wave of coronavirus infections may be emerging in many countries weighed on riskier assets.

Economic Outlook


On Tuesday, FOMC members – including St. Louis Fed President James Bullard and Chicago Fed President Charles Evans – commented against the idea of negative interest rates.

The RBNZ kept rates steady and expanded its QE size while leaving doors open for negative interest rates. The RBNZ said at its May meeting that is prepared to use additional monetary policy tools if and when needed, including reducing the OCR further, suggesting openness toward negative interest rates in the future.

Today the investors will closely watch the US Federal Reserve Chairman J. Powell due later on Wednesday at 1300 GMT.

Coronavirus Update:

The number of people infected with the coronavirus across the world surpassed 4.3 million, of which at least 293 thousand people have died and 1.6 million people have recovered. Russia passed the UK and Italy and has now over 242 thousand confirmed infections. Meanwhile, Beijing reported 7 new cases of the disease.

Technical Outlook

GOLD:
Gold price trading above $1700 ahead of FED Powell speech.

The important levels to watch for today: Support- $1690 and $1680 Resistance- $1712 and $1720.

EUR/USD: The pair currently testing the short term support 1.0830, any break below this level will open 1.08 and 1.0780.

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The important levels to watch for today: Support- 1.0800 and 1.0770 Resistance- 1.0890 and 1.0930.

Quote of the day: Success investing is about managing risk, not avoiding it – Benjamin Graham.
 
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After seven weeks of lockdown UK gradually lifts lockdown & returns to work. As of Wednesday, the UK recorded 33,186 deaths from COVID-19. Recently a new antibody test has been approved in the UK – the government expects this could be the key to easing the complete lockdown. On Wednesday, the UK government announced 600 million pounds ($735 million) in funding to stop coronavirus infections in nursing homes.

EQUITIES


US stocks plunge on Wednesday after Federal Reserve chairman Jerome Powell warning of the long-lasting economic consequences of the coronavirus lockdowns. The Dow Jones Industrial Average dropped 2.2%, to 23,247.97, and the NASDAQ composite lost 1.5%, to 8,863.17. US Energy sector fell -4.39% as large caps such as Exxon Mobil Corporation and ConocoPhillips took a hammering in the session down -4.96% and -4.06%.

OIL

Oil price trading slightly unchanged after the US Energy Information Administration (EIA) reported a 745,000-barrel decrease in inventories, compared to forecasts of a 4.147 million rise. Meanwhile, OPEC on Wednesday said it expects 2020 global oil demand to contract by 9.07 million barrel per day, compared with its earlier contraction forecast of 6.85 million barrel per day.

CURRENCIES

The Australian dollar trading weaker against the Dollar and Euro after Australia’s unemployment rate spiked to 6.2% in April 2020, the highest reading since September 2015. The GBP/USD is in its fourth consecutive day of losses and is the worst-performing G10 currency so far this month, having fallen more than 3% since the end of April.

GOLD

Gold climbed higher after Fed chair Powell warned that the US could experience the worst ever recession as a result of the coronavirus pandemic.

Economic Outlook


On Wednesday, the Fed Chair Jerome Powell rejected the idea of negative interest rates. Powell also said that the economic path remains uncertain and was subject to downside risks. On the other hand, the US core Producer Price Index from the United States showed a decline by -0.3% against the forecast decline by -0.1% in the month of April and weighed on the US dollar.

Moving ahead to the US session the focus shifts back to economic data releases, with US weekly jobless claims data and Bank of Canada Governor Poloz Speech.

Coronavirus Update:

The number of confirmed cases of coronavirus around the world surpassed 4.3 million, of which more than 290k died and over 1.5 million recovered. On Wednesday WHO said it is against any attempt to predict how long the virus would keep circulating and call for a massive effort to counter it. The New Zealand Government announced an additional $50bn of support and recovery measures to deal with the Covid-19 pandemic, a much larger stimulus than expected.

Technical Outlook

GOLD:
The yellow metal price trading close to one week high $1720 ahead of US weekly job claims report.

The important levels to watch for today: Support- $1708 and $1700 Resistance- $1735 and $1745.

EUR/USD: The pair breaks the short term support of 1.0830 on Wednesday and currently trading above the psychological level 1.0800.

The important levels to watch for today: Support- 1.0770 and 1.0750 Resistance- 1.0870 and 1.0910.

Quote of the day: The stock market is the story of cycles and the human behaviour that is responsible for overreactions in both directions- Seth Klarman.
 
As we know the U.S. automakers were shut down in late March due to the coronavirus pandemic. Detroit's Big Three automakers – General Motors Co, Ford Motor Co and Fiat Chrysler Automobiles all plan to reopen North American factories on May 18. Here’s we are discussing these auto manufacturers’ plans to return to work.

The companies will test workers who report COVID-19 symptoms or have fevers discovered by temperature scanners installed at factory entrances. The auto sector accounts for 6% of U.S. economic output and employs more than 835,000 Americans. Among other automakers in the U.S. Mercedes-Benz, Tesla, and Toyota already restarted production at this week. In the UK, Aston Martin, Lagonda and Rolls-Royce were the first large car producers to get back to work last week.

FORD (NYSE: F)

“One is we’ve got to have safe work environments, and the other is if we keep the economy turned off we’re going to have a fate worse than some of the things that the virus is causing,” says Jim Hackett, the president and CEO of Ford Motor Company.

Ford would restart most of its vehicle production on May 18. The plants previously operating on three shifts are to return with two shifts; most two-shift plants will return on one shift, and most one-shift plants will operate on one shift. Ford expects around 47,000 U.S. factory workers will return by next week. The company said its Plant in Essex, the U.K. and South Wales will restart on the same day. Ford also is producing face masks for its employees in the U.K. and across Europe.

GENERAL MOTORS (NYSE: GM)

“Where our coronavirus safety protocols have been in place, we have not seen a confirmed case of community spread in our facilities,” said Mary Barra, GM’s chief executive.

General Motors is targeting May 18th for reopening its U.S. and Canadian vehicle assembly plants. The company shut down these plants in March due to the pandemic. General Motors’ U.S. sales fell 7% in the first quarter from a year ago. The automaker said it will conduct extensive screening, cleaning, and social distancing strategies to keep workers safe. The company already shared its 48-page back-to-work health and safety protocols and sent fliers to its workers communicating what to expect when they return.

FIAT CHRYSLER AUTOMOBILES (NYSE: FCAU)

“We expect all plants in North America to restart the week of May 18, with the exception of Belvedere, which will open by June 1,” Fiat Chrysler CEO Mike Manley said last week. The company said every square inch of the auto plants have been cleaned and disinfected in preparation for next week’s restart. The company already implemented many new protocols to protect workers staggered work schedules and thermal imaging cameras to verify self-reported temperatures.
 
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Gold price continually rising during these days as investors weigh the economic impact of the COVID-19 outbreak. We expect the price to continue its upward path this year due to low-interest rates; economic risk and global uncertainty. Meanwhile, there are chances the price will not create a higher high and will drop down to the Demand Zone. Silver prices also performed well last week, starting at $15.51 per ounce Monday (May 11) and growing by 6.4 per cent to $16.57.

Gold has a proven history of maintaining their value even in the volatile economy. The spot price of gold hit a record $1,923 an ounce in 2011 but never climbed to the $2,000 mark. Recently Bank of America Corp. raised its 18-month gold-price target to US$3,000 an ounce and previously the bank target was $2000.

Reasons driving gold prices higher

These are the few reasons why the yellow metal price rose around 2.4% last week;

  • Global stocks selloff over disappointing economic data and US Fed chair Powell warned that the US could experience the worst ever recession as a result of the coronavirus pandemic.
  • On Thursday the price surged to a three-week high following the disappointing US jobless claims reports.
  • Gold price moved sharply higher on Friday after the US Retail sales in April tanked to a record low of -16.4%. This is the sharpest decline in retail sales ever due to the coronavirus pandemic.
  • The price also supported by uncertainty following a renewed US-China trade war after Donald Trump threatened to cut off relations with China.
  • The other main reason the gold price boosted by fears over a second wave of Covid-19 outbreak as global economies begins to reopen.
$Gold Fundamental outlook

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This week Gold traders and Investors will closely monitor the economic releases, including:

  • Federal Reserve Chairman Jerome Powell to Testify On Stimulus Programs.
  • Minutes from the Federal Reserve.
  • Weekly report on US jobless claims and housing data.
  • UK jobs reports, inflation and retail trade data.
Apart from this, the investors keep an eye on the new updates about trade tensions between the world’s largest economies as the US and China.

$Gold Technical outlook

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The technical scenario is absolutely bullish after the price breaks the triangle’s resistance that appears on the chart. Overall the movement remained bullish throughout the last week and the price settled slightly below the $1750 levels. The volatility is still strong while in the long term we expect the gold price will drop to below $1700 before the price push to above $2000. In the short term if the price breaks and closes above $1750 the next resistance will be October 2012 highs at $1,795. It should find strong resistance in the area of $1800 where the price has strong resistance. On the flip side, any pullback might now be seen as a buying opportunity. The expected trading range for this week is between $1718.00 supports and $1795 resistances.

https://gulfbrokers.com/en/gold-climbs-to-near-8-years-high-price-likely-to-pull-back-before-bounce
 
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The GBPUSD falls to fresh one month low of 1.2080 on Monday after BOE official’s comments on negative interest rates.

The price currently supported at 1.2080, any break below this level will open 1.2000 & 1.1970.
 
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