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The broad U.S. equity market rebounded last night as Federal Reserve chairman…

The broad U.S. equity market rebounded last night as Federal Reserve chairman Jerome Powell smoothed tightening fears across markets

20220112
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Market Focus

The broad U.S. equity market rebounded last night as Federal Reserve chairman Jerome Powell smoothed tightening fears across markets. The Dow Jones Industrial Average gained 0.51% to close at 36252.02, the S&P 500 gained 0.92% to close at 4713.07, and the Nasdaq composite gained 1.41% to close at 15153.45. The benchmark U.S. 10-year Treasury yield lowered slightly to 1.746%, while the 30-year Treasury yield also slid to 2.076%.

The energy sector gained an impressive 3.41% over the course of yesterday’s trading. Oil prices have risen from their year-end low and oil is currently trading at $81.343/ bbl as market participants have reassessed the Omicron variant’s impact on travel. APA Corp. and Occidental Petroleum Corp. both enjoyed more than 7% gains.

Main Pairs Movement

Federal Reserve Chair Jerome Powell’s testimony on Tuesday proved to be soothing for equity traders, but the rather mild tone by Powell brought across-the-board weakness to the Greenback. The Dollar Index lost 0.36% over the course of yesterday’s trading.

Cable gained amid a weaker Dollar. Tonight’s U.S. CPI data could fuel the Sterling’s recent upward momentum.

The Euro-Dollar pair gained 0.36% over the course of yesterday’s trading. Most of the upward price action came after the U.S. equity markets opened, and continued to rise over the early sessions of Wednesday.

Gold gained an impressive 1.1% over the course of yesterday’s trading. The precious metal is continuing its 3 days win streak, but the U.S. CPI data could bring substantial volatility to Gold.

Technical Analysis

GBPUSD (Daily Chart)

Cable gradually climbed up from Monday’s dip in the Asian and European trading hours amid the global equity markets’ rebound. The pair is now trading at around 1.3620, firmly above the past strong 1.3600 resistance. Fed Chair Jerome Powell went to his nomination hearing earlier in the day, and fortunately, didn’t mention any new tightening policies or plans during the testimony, which eased the appreciation pressure of the dollar, thus benefitting the non-US currencies, including GBP.

On the technical front, GBP/USD jumped further away from the past downtrend line and over the critical 1.3600 level. The RSI indicator is around 67, and the price action is above its 20 and 50 DMA, suggesting sturdy bullish traction pulling the pair north.

Resistance: 1.3670, 1.3830

Support: 1.3500, 1.3400, 1.3180

EURUSD (Daily Chart)

The shared currency price consolidated during the first half of the day, and surged after the Wall Street opening, especially during Powell’s hearing, as no new policies or plans were announced, and Fed’s confidence toward the US economic outlook have relieved the market’s worries about additional tightening in the coming month. However, the dovish stance of the ECB continues weighing on the euro. ECB executive board member Isabel Schnabel said in her Saturday speech that only in the circumstances that the current surging energy prices transmit to other economic fields, or the green transition policies severely jack up the energy prices, will the ECB consider taking actions to ease inflation.

On the technical side, though the Euro pair advanced quite a bit (0.41%) during today’s tradings, it is still under its 200 DMA, and hasn’t crossed over the critical 1.1400 resistance line. The RSI indicator remains around the average line, providing almost no instructions about the future route of the pair. As previously mentioned, the pair must stand firmly above the key 1.1400 resistance to claim a meaningful rebound. On the flip side, a slip below the 1.1200 support may indicate the resuming of the selling streak.

Resistance: 1.1400, 1.1620, 1.1700

Support: 1.1200, 1.1000, 1.0780

XAUUSD (Daily Chart)

Gold went up in the third consecutive day amid the weakness of the dollar, as Fed Chair Powell didn’t pull out new tightening policies during today’s testimony, easing public concerns about a potential fourth rate hike at the end of the year warned by Goldman Sach analysts. The precious metal is now trading at $1,818 per troy ounce, heading to the key $1,830 resistance where it has gotten blocked several times. The rally of the pair is expected to continue before the Fed takes further action. That’s said, the current cautious market mood is in favour of the safe-haven gold, but the looming rate hikes of the Fed acts as an obvious headwind limiting the upside of the pair.

As to technical, gold remains firmly above the $1,800 support during today’s trades. The recent dollar weakness, as well as the cautious market mood, helped gold’s price to cross all its major moving averages and begin on a short-term winning streak. The RSI for gold reads 56.21, suggesting a neutral-to-bullish sentiment in this spot. However, gold’s price action is still capped by the long term downtrend started in November 2020. A breach of that trend will need a breakthrough over the $1,860 resistance, which is almost impossible to achieve without a significant catalyst. On the flip side, if the pair failed to cling on to $1,800, a short-term support will appear at $1,785 and the next support level will be at $1,765 once it plummets further.

Resistance: 1830, 1860

Support: 1800, 1785, 1765

20220112
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Powell is scheduled to speak on the Fed’s rate hike outlook later…

Powell is scheduled to speak on the Fed’s rate hike outlook later today, and the statement is expected to bring volatility to all markets

20220111
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Market Focus

The broad U.S. equity market continues to suffer for the second week of 2022. The Dow Jones Industrial Average lost 0.45% to close at 36068.87, the S&P 500 lost 0.14% to close at 4670.29, while the Nasdaq gained 0.05% to close at 14942.83, ending a 5-day losing streak. The benchmark U.S. 10-year Treasury yield remained little changed at 1.769% while the 30-year Treasury yield sits at 2.1%.

Federal Reserve chairman Jerome Powell is scheduled to speak on the Fed’s rate hike outlook later today, and the statement is expected to bring volatility to all markets. The health care sector gained the most yesterday, as new mutations of the COVID-19 virus was discovered in Cyprus. The newly discovered “Deltacron” presents yet another hurdle to global economic and tourism recovery. Moderna enjoyed a 9.28% gain in share price as market participants reassess pandemic fears and vaccination expectations.

Main Pairs Movement

The Dollar Index, which measures the Greenback against a basket of major foreign currencies, began recovery over the course of Monday’s trading. Federal Reserve chairman Jerome Powell’s statement tonight could, however, edge the Greenback even higher as market participants expect continued tightening by the Fed.

Cable retreated 0.07% over Monday’s trading. The stronger Dollar on Monday rejected any upward movement of the Sterling. Furthermore, on the technical side, Cable faces strong resistance at the 1.36 price level.

The Euro-Dollar pair lost 0.32% during Monday’s trading. The ECB’s president Lagarde is due for a statement later today.

Gold found further upward momentum as pandemic fears reignite. The precious metal continued its two-day winning streak and sees solid support near its current price.

Technical Analysis

GBPUSD (Daily Chart)

GBP/USD consolidated at the start of the week in the Asian and early European session, even once bounced off the 1.3600 strong resistance. However, the pair plummeted at the Wall Street opening, as the fresh fears of the potential new Omicron lockdowns and early US tapering spread, damaging the US equity market and the risk-sensitive Sterling. Cable now trades at around 1.3560, waving back and forth within the 1.3500 and 1.3600 price range.

On the technical front, GBP/USD’s outlook still seems optimistic as the RSI reads 62.16 which is healthy, and the price action remains above the downward trendline. However, the strong 1.3600 threshold is still present. Cable has to stand firmly above it to prove its thorough comeback.

Resistance: 1.3600, 1.3670

Support: 1.3500, 1.3400, 1.3180

EURUSD (Daily Chart)

The euro’s price took a roller-coaster ride during Monday’s trading as the EUR/USD pair declined around 70 pips from the start of the day, but then regained over half of the losses after the US equity market opening, as the major indices dropped sharply due to the Omicron fears and rate hike worries. The pair has now settled around the 1.1325 level, and investors are all eye on Tuesday’s ECB Chair Lagarde’s speech to see if Europe will catch up on UK and US’s pace to further cut its pandemic bond-buying plans.

On the technical side, the euro pair managed to cling on its 20 DMA at the moment, eyeing the next resistance at its 50 DMA, and then 1.14. The RSI indicator remains around the average line, showing no directions amid a light trading day. As previously mentioned, the pair must breach the key 1.1400 resistance to claim a meaningful rebound. On the flip side, a slip below the 1.1200 support may indicate a resume of the selling streak.

Resistance: 1.1400, 1.1620, 1.1700

Support: 1.1200, 1.1000, 1.0780

XAUUSD (Daily Chart)

Continuing Friday’s rally, gold again stepped on the 1800 threshold during the panicking selloff at the start of Monday’s US equity tradings. The pair is now trading at $1,801 per troy ounce, advancing a mild 0.2% than its open price. The upside traction of the yellow metal is expected to last in the short term, as the fresh Omicron fears and the unstable stock markets will flock the investors back to the safe assets.

On the technical front, gold finally made it to the $1,800 level thanks to yet another day of the US markets plummeting. The fresh risk-off mood further pushes gold toward the next resistance at the 200 DMA, although which it failed to breach it later in the day as the market mood improved in the second half of the trading period. The RSI for gold remains lingering around the average line, suggesting a lack of direction in this spot. Generally speaking, a firm daily close above the $1,800 resistance, above the critical 200 DMA, would suggest more gains ahead for the XAU/USD pair. Conversely, if the pair fails to cling to $1,800, a short-term support will appear at $1,785 and the next support level will be at $1,765 once it plummeted further.

Resistance: 1830, 1860

Support: 1785, 1765, 1720

20220111
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The Bureau of Labor Statistics reported that in December, 199,000 jobs were…

The Bureau of Labor Statistics reported that in December, 199,000 jobs were added, the lowest number since December 2020

20220110
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Market Focus

U.S. equities continued to edge lower on Friday, as market participants continue to pull back from the technology sector. The Dow Jones Industrial Average retreated 0.1% to close at 36231.66, the S&P 500 lost 0.41% to close at 4677.03, and the Nasdaq composite slid 0.96% to close at 14935.9. All three major U.S. equity indices closed lower on the first week of 2022, in part, due to the recent release of the FOMC minutes and a continued hawkish Fed, which is expected to raise interest rates no later than the end of Q1 of 2022. The 10-year Treasury yield has risen to 1.767%, while the 30-year Treasury yield edged above 2.11%.

The energy index gained the most over Friday’s trading, while the consumer discretionary index suffered losses. The service and entertainment industry enjoyed gains over Friday, as stocks such as Norwegian Cruise Lines and Carnival Corporation both enjoyed more than a 3% boost in share price. Over the course of last year’s trading, growth and technology stocks have been in favour. However, with monetary tightening just over the horizon, market participants are beginning to shift into cyclical stocks over growth stocks as they anticipate stronger and more stable growth under the tightening environment.

Main Pairs Movement

Disappointing Nonfarm Payroll data from the U.S. dragged the Greenback lower against other currencies on Friday, but the dollar remains relatively strong as the DXY was able to maintain some of its weekly gains. This week’s important events on the economic docket include Fed chair Jerome Powell’s statement on Tuesday, U.S. CPI data on Wednesday, and U.S. initial jobless claims on Thursday.

Natural gas remains depressed around the $4 per MMbtu level and is trading sideways between the $3 price level and $4 price level.

The Euro gained an impressive 0.58% over the Greenback on Friday, as the dollar weakened across the board. The Euro finally snapped a four-day losing streak, but bearish sentiment remains strong around the Euro.

Gold rebounded slightly against the Dollar on Friday, however, rising bond yields and the Fed’s imminent rate hike will continue to pressure the precious metal.

Technical Analysis

Natural Gas (Daily Chart)

In light of preliminary readings from CME Group for natural gas futures markets, traders scaled back their open interest positions by around 1.3K contracts on Thursday, reversing three consecutive daily pullbacks. Meanwhile, volume shrank for the second day in a row, now by 2.7K contracts. The shrinkage on liquidity may be due to the fact that prices of natural gas again approaching the $4.00 per MMBtu mark, where the symbol was capped several times in the past weeks, and investors have no confidence that it will get through that resistance level without new catalysts.

On the technical front, natural gas prices have consolidated between the two key points of $3.55 and $4.0 since its last dip in Nov. 2021. The price action is now below its 50 and 200 DMA, and slightly above the 20 one. The RSI reads 477.43, still slightly below the average line but is improving, showing a potential upside advance. The recovery of the spot gas price will be more convincing if it closes above the $4.0 threshold for a decent number of days.

Resistance: 4.0, 4.2, 4.8

Support: 3.66, 3.55, 3.35

EURUSD (Daily Chart)

The EURUSD pair traded 0.5% higher during the US session on Friday as investors sold the dollar after the recent labour market updates. The Bureau of Labor Statistics reported that in December, 199,000 jobs were added, a huge miss to expectations of 400,000 and the lowest number since December 2020. The November payrolls data was revised higher, rising 39,000 from 210,000 to 249,000. Still, the unemployment rate improved markedly, falling to 3.9% from 4.2% and below the estimate of 4.1%, which should still be enough for the Fed to hike rates in March.

On the technical front, the Euro pair has regained its 20 DMA in today’s trades, and is just one step behind the 50 DMA. The RSI indicator jumped above the average line, showing neutral-to-bullish market sentiment. As previously mentioned, the pair must breach the key 1.1400 resistance to prove a convincing comeback. On the flip side, a slide below the 1.1200 support may indicate a continuation of the bearish trendline.

Resistance: 1.1400, 1.1620, 1.1700

Support: 1.1200, 1.1000, 1.0780

XAUUSD (Daily Chart)

Spot gold fell sharply on surging US Treasury bond yields on Thursday and struggled to stage a convincing rebound amid the disappointing Nonfarm Payrolls data on Friday. The pair is now trading at $1,796 per troy ounce, slightly higher than its open price. However, the selling pressure for the yellow metal is still strong, as the overall job data were not too bad, meaning the potential for a rate hike in March remains high, thus the US yields are expected to keep going up.

As to technical, the pair is hovering around moving averages, taking efforts to regain $1,800 before the end of the day. The short-term risk-off boost for the pair seems to lack energy, as the upside pressures are getting stronger and stronger as the pair approaches the resistance level. A bounce back above $1,800 before the end of the day would suggest more gains ahead for the XAU/USD pair. Conversely, if the pair fails to climb above $1,800, then a short-term support will appear at $1,785 and the next support level will be at $1,765 once it plummets further.

Resistance: 1800, 1830, 1860

Support: 1785, 1765, 1720

20220110
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