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The Nasdaq 100 was headed toward its biggest drop in two weeks,…

The Nasdaq 100 was headed toward its biggest drop in two weeks, with losses in mega caps including Apple Inc. and Facebook Inc. contributing most to the decline

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Market Focus

U.S. equities retreated as investors reassessed valuations in light of global economic risks including the spread of the Covid-19 delta variant and reductions in central bank stimulus.

The Nasdaq 100 was headed toward its biggest drop in two weeks, with losses in mega caps including Apple Inc. and Facebook Inc. contributing most to the decline. The S&P 500 fell for a third day since it closed at a record on Sept. 2. The Dow Jones Industrial Average extended its retreat from last month’s all-time high to more than 1.5%. Europe’s Stoxx 600 dropped to a three-week low. Cryptocurrency-exposed stocks slumped as a selloff in Bitcoin continued.

Wednesday’s declines came as money managers from Morgan Stanley to Citigroup have turned cautious on U.S. equities. Many investors have begun to see relative U.S. valuations as excessive even as growth elsewhere suffers from renewed Covid lockdowns and travel curbs. They doubt the world is ready for an eventual tapering of the central-bank stimulus even as inflation accelerates due to supply shocks. End-of-year seasonality and valuation concerns are adding to the gloomy mood.

In Europe, growth concerns were compounded by speculation that the European Central Bank is getting ready to slow down emergency stimulus. Meanwhile, the continued spread of Covid-19 is curbing economic activity around the world. The Philippines backtracked on easing curbs in the capital region, while Japan may extend the state of emergency orders. Taiwan identified a delta variant outbreak in New Taipei City.

Main Pairs Movement

The recent rebound witnessed in the US dollar continued on Wednesday, as the greenback reached the highest level since August 27 during the American session. The US dollar’s strength was mainly caused by the broader market risk sentiment, investors worried that the surge in delta variant cases around the world could obstruct the global economic recovery, therefore benefitted the safe-haven US dollar. The DXY index is at 92.662 as of writing, rising 0.15% daily. The greenback finds demand amid the souring market mood. Furthermore, US JOLTs Job Openings released on Wednesday gave a better-than-expected reading. And Fed’s John Williams also suggested that it’s appropriate to start tapering this year.

EUR/USD and GBP/USD both declined on Wednesday amid a stronger US dollar across the board, trading at 1.1823 and 1.3780, respectively. EUR/USD was trading lower on Wednesday, once falling under the 1.1805 level and posted a 0.12% loss on the day as of writing. The market focus now shifts to the European Central Bank’s interest rate decision on Thursday.

USD/JPY edged lower today, as the pair failed to preserve its upward traction in early trade and took a hit right after the European session began. The pair is trading at 110.23 and posted a 0.02% loss on the day as of writing.

Gold slipped on Wednesday, as the bearish momentum last for the third consecutive day. The rising demand of the US dollar and a risk-off environment keep putting selling pressure on gold. The precious metal is now trading at 1788.82, losing 0.29% daily. WTI Crude Oil, on the contrary, soared more than 1.4% on Wednesday.

Technical Analysis

GBPUSD (4-hour Chart)

The GBP/USD pair declined on Wednesday, touching a fresh weekly low during European trading hours. Despite trying to bounce back above 1.3790, it is still lower for the day. The cable was last seen trading at 1.3777, losing 0.06% on the day as of writing. The recent rally in the US dollar keeps weighing on the British Pound. Meanwhile, British Prime Minister Boris Johnson plans to introduce a new 1.25% health and social-care levy on earned income, which also limits any meaningful recovery for the GBP/USD pair.

For the technical aspect, RSI indicator 42 figures as of writing, suggesting tepid bear-movement ahead. The MACD indicator also shows a negative histogram which indicates a bearish signal. In conclusion, we think the market will be bearish. But for the Bollinger Bands, the price seems to rise back inside the band after falling out of the lower band, therefore, investors should look for signs of a trend reversal.

Resistance: 1.3857, 1.3892, 1.3958

Support: 1.3731, 1.3680, 1.3602

USDCAD (4- Hour Chart)

The USD/CAD pair advanced on Wednesday, reaching the highest level since August 23 for a time. The pair rallied after the BoC interest rate decision was released, but then slipped deeper back to 1.2648, eliminating most of its profits. The pair is trading at 1.2670 at the time of writing, posting a 0.19% gain daily. The Bank of Canada decided to keep its overnight rate unchanged at 0.25% and the QE program is also maintained at C$ 2 billion per week. The dovish monetary policy provides some positive momentum for the USD/CAD pair.

For the technical aspect, RSI indicator 68 figures as of writing, suggesting the buying power is relatively stronger. The MACD indicator also shows a positive histogram which indicates a bull market. In conclusion, we think the market will be bullish as the pair heads to test the 1.2708 resistance, a break above that level will open the door for additional near-term profits. The next resistance sits at 1.2834.

Resistance: 1.2708, 1.2834, 1.2949

Support: 1.2581, 1.2520, 1.2494

AUDUSD (4- Hour Chart)

The AUD/USD pair was trading higher in early trade on Wednesday, but the bullish momentum didn’t last long. The pair dropped to a fresh seven-day low and dipped further during the American session. A stronger US dollar across the board leaves the AUD/USD pair in the negative territory. On top of that, the RBA released its interest rate decision on Tuesday, as they kept the benchmark interest rate at 0.1%, the same as the market’s forecast. But the delta outbreak made the central bank decide to extend the bond purchases, which weighed on the Australian dollar. At the time of writing, the pair is trading at 0.7379, losing 0.06% on the day.

For the technical aspect, RSI indicator 43 figures as of writing, suggesting tepid bear-movement ahead. The MACD also falls below the signal line, which means the pair is likely to experience downward momentum. In conclusion, we think the market will be bearish as the pair is now testing the 0.7356 support. For Bollinger Bands, the price is now sitting between the moving average and the lower band, which also indicates a bear market.

Resistance: 0.7468, 0.7534

Support: 0.7356, 0.7285, 0.7222

20210909
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Bitcoin plunged as El Salvador became the first country to adopt it…

Bitcoin plunged as El Salvador became the first country to adopt it as legal tender

20210908
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Market Focus

The S&P 500 and Dow Jones Industrial Average declined, while gains in heavyweight tech stocks including Netflix Inc., Amazon.com Inc., and Apple Inc. pushed the Nasdaq 100 higher even as about seven out of every 10 stocks in that gauge dropped. European markets slipped as investors speculated that euro-zone policymakers may get ready to roll back stimulus. The greenback strengthened for a second day amid rising bond yields and softer commodity prices. Bitcoin plunged as El Salvador became the first country to adopt it as legal tender Tuesday.

The largest cryptocurrency fell as low as $43,050 in New York Tuesday, before paring losses. Bukele said his country had taken advantage of the crash to “buy the dip”, adding 150 coins to take its total holding to 550, worth about $26 million.

El Salvador’s plan represents the biggest test for Bitcoin in its 12-year history. Both enthusiasts and detractors of cryptocurrencies are monitoring the experiment to see if a significant number of people want to transact with Bitcoin when it circulates alongside the U.S. dollar and whether it brings any benefits to the violent, impoverished Central American nation.

If the experiment is a success, other countries may follow El Salvador’s lead. Its adoption will get an initial boost from the government’s Bitcoin wallet Chivo, which comes pre-loaded with $30 worth of the currency for users who register with a Salvadoran national ID number.

Businesses will be required to accept Bitcoin in exchange for goods and services and the government will accept it for tax payments. The plan is the brainchild of El Salvador’s 40-year-old president, who says it will draw more people into the financial system and make it cheaper to send remittances.

“This is brave new world stuff,” said Garrick Hileman, head of research for the London and Miami-based Blockchain.com. “We are in unchartered waters with this launch, but I’m glad to see this experiment happen overall, and I think we’ll learn a lot from it.”

Main Pairs Movement

The US dollar traded higher after a surge in delta-variant infections weigh on risky currencies, the dollar index climbing 0.37% on Tuesday. According to Reuters’ data, there were more than 20,800 people died from the coronavirus in the United States in the last two weeks, which is a 67% increase from the prior two weeks. Situations in Australia and New Zealand are not so encouraging as both governments look to extend lockdowns further in the second half of 2022.

USDCAD surged 0.9% amid weaker oil prices. The Bank of Canada will announce its interest rate decision on Wednesday. Though Governor Tiff Macklem hinted at their intention to lift the interest rate in the second half of this year, investors doubt that they will act in September. That said, BoC is likely to path its way toward a rate hike during tomorrow’s meeting.

Euro was the most resilient currency against the dollar greenback during Tuesday’s session albeit dropped 0.25%. The shared currency was underpinned by market optimism surrounding ECB’s meeting on Thursday. Analysts expect ECB to undergo a debate to cut its current PEPP weekly purchase of 80 billion euros to 60 billion euros. Given ECB’s past unpleasant experience at failing to achieve the 2% inflation target, July’s overshoot of 2.2% Harmonized Index of Consumer Index marked a milestone for policymakers. And with the PEPP comes to an end on March 22, 2022, central bankers need to the afterlife of an ultra-loose monetary policy.

Technical Analysis

EURUSD (Daily Chart)

Eurodollar was restrained from advancing beyond 1.189, retreated mildly on Tuesday. It successfully capitalized on decent upside gains after conquering a dynamic resistance at SMA20. However, the stubborn roadblock at 32.8% Fibonacci of 1.189 continues to ward off bulls’ attempt to break above.

We expect the single currency to trade marginally lower against the dollar before ECB’s critical policy announcement on Thursday. With market participants look to hear a less dovish tone from the ECB, a lower price could provide some leeway for an upward surge.

On the downside, the nearest support line sits around 1.18, followed by 1.166. Up in the north, bulls could contest 1.198 and 1.1207 if they could take out 1.189.

Resistance: 1.189,1.196, 1.2

Support: 1.18, 1.166

NZDCHF (Daily Chart)

NZDCHF remains bullish despite snapping a ten-winning streak. This pair broke above a seven-month downward tunnel with robust buying bias. Though some may think the current price is overstretched, and some sort of pullback should unfold soon. But we believe bulls could at least challenge resistance at 38.3% Fibonacci of 0.6567 before it could stage a retreat toward 0.65 or 0.644. The RSI indicates the price is on the cusp of stepping into the overbought zone, which provides an incentive for buyers to continue to drive price higher, and as soon as the price is overheated, they could exit current longs.

The fact that NZDCHF had a convincing breakthrough on SMA20 on the weekly chart has signaled a bullish reversal. All in all, we see further upside gains in NZDCHF in a longer investment horizon. A modest retreat could be very healthy to sustain such a bullish trend.

Resistance: 0.6567, 0.6645, 0.677

Support: 0.65, 0.644, 0.6353

XAUUSD (Daily Chart)

Gold plunged to two weeks low at $1795 after failing to surpass a stern resistance at $1835. The current retreat could be seen as a validation of $1795 support, which acted as a neckline for a previous double-top pattern. This horizontal support could also collaborate with dynamic SMA20 to eke out Gold price.

That said, the odds are favoring buyers, and we expect another contest of $1835 to take place soon.

However, it is still unclear whether it could gather enough momentum for a solid upward breakout in the near term. We would not be surprised if the yellow metal enters consolidation mode for the rest of September given the lack of price movers in the market. Investors already knew the Federal Reserve will not taper until November or December.

Resistance: 1860, 1910, 1950

Support: 1797, 1768, 1728

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Aluminum hit a decade high amid political unrest in Guinea

Aluminum hit a decade high amid political unrest in Guinea

20210907
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Market Focus

Global stocks rose for the seventh day and U.S. equity-index futures rallied as investors bet slower hiring in the world’s largest economy may delay a tapering of Federal Reserve stimulus. Aluminum hit a decade high amid political unrest in Guinea.

MSCI Inc.’s gauge of world stocks gained for a fourth day even as U.S. markets were closed for Labor Day. In Europe, the Stoxx Europe 600 Index rose the most in six weeks, led by technology shares. Contracts on the S&P 500 Index climbed 0.2%. Aluminum supplier Norsk Hydro ASA jumped to a 13-year high in Oslo. Gold bounced between losses and a gain of 1.9%.

The latest U.S. jobs report threw traders’ calculations awry after they braced for an announcement of tapering at the Fed’s September meeting. The world’s largest economy added only 235,000 jobs in August — the smallest gain in seven months — boosting chances of a delay in that announcement.

“Expectations of a delay in Fed tapering as well as a new administration in Japan is supporting equity markets and we expect this to continue,” said Sebastien Galy, senior macro strategist at Nordea Investment Funds. “Buy-on-dip is as robust as ever, taking negative news such as U.S. nonfarm payrolls as good news which is typical of an advanced carry trade.”

Aluminum hit the highest in over a decade as political unrest in Guinea fueled concerns about oversupply of the raw material needed to make the metal. A unit of the military seized power and suspended the constitution, raising the possibility of disruption to bauxite shipment from the key global supplier.

Main Pairs Movement

After slumping to a three-week low last Friday, the US dollar rebounded back on the first day of the new trading week. The strong selling pressure on the US dollar last Friday was caused by disappointing Nonfarm Payrolls data, as the report missed the market expectation of 750,000 by a wide margin. The DXY index is at 92.222 as of writing, rising 0.11% daily. Trading conditions remain thin due to the Labor Day holiday in the US. But concerns about slowing global growth supported the safe-haven currency, therefore, lifted the greenback to post a moderate comeback.

EUR/USD and GBP/USD both declined on Monday amid a stronger US dollar across the board, trading at 1.1868 and 1.3834, respectively. EUR/USD was trading lower on Monday, once falling under 1.1860 level and posted a 0.08% loss on the day as of writing. The European Central Bank will release its interest rate decision on Thursday.

USD/JPY advanced today, as the pair gained positive traction first, then steadily hovering around 109.8 level during the American session. The pair is trading at 109.84 and posted a 0.014% gain on the day as of writing.

Gold slipped on Monday, as the rising demand of the US dollar weighed on the metal throughout the day. Gold’s movement seems to be a correction of last Friday’s upsurge. The precious metal is now trading at 1822.94, losing 0.17% daily. WTI Crude Oil, in a similar way, dropped more than 0.4% on Monday.

Technical Analysis

GBPUSD (4-hour Chart)

The GBP/USD pair declined on the first day of a new trading week, dropping below the 1.3820 level at one time. The pair were surrounded by selling pressure and failed to bounce back during American trading hours. The cable was last seen trading at 1.3828, losing 0.25% on the day as of writing. The bearish movement witnessed in GBP/USD is the result of the rising demand for the US dollar. Meanwhile, looming Brexit concerns between the UK and the European Union over the Northern Ireland protocol also weighed on the British Pound. For the technical aspect, RSI indicator 55 figures as of writing, suggesting tepid bull-movement ahead. But the MACD indicator shows a negative histogram and a death cross, which indicates a bearish signal.

In conclusion, we think the market will be bearish as long as the 1.3892 resistance line holds. As for the Bollinger Bands, the price is falling from the upper band and crossing above the moving average, as a result, the lower band becomes the loss target.

Resistance: 1.3892, 1.3958

Support: 1.3767, 1.3731, 1.3680, 1.3602

USDCAD (4- Hour Chart)

The USD/CAD pair was trading higher on Monday, then failed to climb higher during the European session. The pair is trading at 1.2530 at the time of writing, posting a 0.05% gain daily. Following the last two week’s slips, USD/CAD rebounds slightly amid the stronger US dollar and the selling pressure witnessed in crude oil prices. For the technical aspect, RSI indicator 39 figures as of writing, suggesting bear-movement ahead. For the Bollinger Bands, the price is now sitting between the lower band and the moving average, which also indicates a bear market.

In conclusion, we think the market will be bearish as the pair is heading to retest the 1.2494 support, a break below that level will open the door for additional near-term losses. And the next support is at 1.2453. On top of that, the Bank of Canada will announce its interest rate decision on Wednesday, as the market expects BoC to raise rates in the second half of 2022 when inflation consistently hits 2%.

Resistance: 1.2559, 1.2638, 1.2708

Support: 1.2494, 1.2453, 1.2422

AUDUSD (4- Hour Chart)

The AUD/USD pair retreated on Monday and took a hit in early trade during Asian trading hours. It has been hovering around 0.7435 since then. The rising demand of the US dollar and concerns about Delta cases are both putting pressure on AUD/USD. Victoria and New South Wales remain under lockdowns as Covid cases continue to rise. At the time of writing, the pair is trading at 0.7433, losing 0.22% on the day. For the technical aspect, RSI indicator 66 figures as of writing, suggesting that the market is near the overbought zone, investors should note for possible selling signals. The MACD also falls below the signal line, which means the pair is likely to experience downward momentum.

In conclusion, we think the market will be bearish as long as the 0.7478 resistance line holds. For Bollinger Bands, the pair is now falling from the upper band after touching it, which indicates a bear market. Furthermore, the Reserve Bank of Australia will release its interest rate decision on Tuesday, the focus will be whether the RBA delays its tapering plans due to the Covid-19 epidemic.

Resistance: 0.7478, 0.7534

Support: 0.7395, 0.7356, 0.7285

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