Daily Market Analysis

Market Focus

US stocks market advanced amid dropping Treasury yield after a 10-year note auction. The Dow Jones Industrial Average refreshed record high, closed above 32,000 for the first time. Energy stocks and Financial stocks led the gains in the S&P 500 index, while Tech shares slipped.

President Joe Biden’s $1.9 trillion stimulus bill cleared its final congressional hurdle on Wednesday. The house passed the bill with a 220 to 211 vote, sending it to the president for his signature. The bill marked a major political victory for President Biden, displaying his influence over a Democratic Party in control of Congress by a thin margin.

Biden’s administration will hold its first high-level meeting with Chinese officials in Alaska next week. Secretary of State Antony Blinken and his counterparty will be in discussion over a range of issues, such as human rights and the ongoing military coup in Myanmar.

Key takeaways from RBA Governor Philip Lowe speech:

Market Wrap

Main Pairs Movement

Dollar extended its retreat amid downbeat CPI data. US Core Consumer Price Index for February printed 1.3%, slightly missed expectation of 1.4%. The 10-year treasury yield also pulled back 0.45% on Wednesday, further weighing down on the US greenback.

The euro appreciated 0.2% against the greenback. Speculators now look to trade on Thursday’s ECB headline, but they might be disappointed. ECB’s Chief Economist Philip hinted the central bank will keep its current tone, saying “any excessive tightening in financial conditions would be inconsistent with the bank’s goal of getting inflation back to target.”

Aussie intially plunged 0.49% in early Asian session after RBA Governor said market pricing for a rate hike is too early. However, it manged to over loss into gain later thanks to dollar weakness. Iron ore futures continued to edge lower, entered a fourth consecutive lost. Kiwi followed a similar trajectory as Aussie, gained 0.36% and 0.26% respectively.

Gold continued to heal amid a modest pullback in dollar and Treasury yield, rallied 0.51% near closing. The approval on Biden’s relief package also lend support to gold. However, there little sign that ETFs are stepping on a break on the selloff.

Technical Analysis:

XAUUSD (Daily Chart)

Gold is extending its recovery toward 50% Fibonacci resistance after the long standing upward support line held off bears attack. On the upside, red descending trendline will add considerable friction to the precious metal. Price has been capped by this trendline since January, further rejections will put bulls on the defensive once again. And iff the previous is true, then it would be intersting to see how price could maneuver inside the highlighted zone. By giving up the downside support zone between $1673 and $1690, it would open doors to test $1600 and essentially mark the death of Gold. MACD on the daily chart seems to be in transitory towards a bullish trend.

Resistance: 1765, 1839

Support: 1690, 1673, 1600

EURUSD (Daily Chart)

Euro dollar is crawling its way back to 1.195 handle. This pair was hampered down fairly quickly from 1.22, lost 2.7% in just seven trading days. Upcoming trading days will be crucial to determine whether the single currency could preserve it long term bullish bias against the US greenback. Failing to reclaim 1.195 and possibly the ascending trendline will offer bears a chance to retake the driver seat. On the downside, sellers look to contest 1.178 before finding a more resilient support around 1.163. MACD continues to eke out a bearish trend.

Resistance: 1.195, 1.22

Support: 1.178, 1.163

USDJPY (Daily Chart)

USDJPY has skyrocketed from 105 to 109.2, an jaw droppping 4% appreciation. This in turn drove RSI deeply into overbought region, reached as high as 83, and marked the highest daily RSI figure since December 2016. But what goes up must come down, this pair is poised to retreat as bond yield cooled off in the last two days. In the near term, 61.8% Fibonacci of 108 could act as a weak support, but the bears probably eye for a larger retracement toward 106.7. Note that the bullish run could have been a eleven-day winning streak if it did not lost around 106.7, thus proving the signifiance of this price level. RSI is still sticking out in the overheated zone, currently printing 73.8.

Resistance: 109.6

Support: 108, 106.7, 105.4

Economic Data

Daily Market Analysis

Market Focus

US stocks jumped sharply today after US Treasury bond yields declined, causing investors to pour back into the equity markets, especially the beaten- up technology shares, which dipped badly yesterday. Nasdaq Composite climbed as much as 4%, the best day since November 2020, led by Tesla, soaring 20%. The majority of technology shares bounced back as bond yields stabilized, easing worries from a potential overshoot in the economy will bring inflation. Moreover, for the recap, the Dow Jones Industrial Average rose around 1% while the S&P 500 gained around 1.5%.

Specifically, shares of Tesla jumped as much as 20% today, erasing most of losses in the past five trading days. A steady stream of positive news, such as an upgrade from New Street Research, a rally in Bitcoin, which has close relationship with Tesla, are luring investors back to Tesla. Notably, after the surge, New Street Research analyst raised the recommendation on Tesla from neutral to buy, with a price target of $900.

The first bond auction of the new monthly cycle went smoothly, with the sale of $58 billion for three- year bonds stopping at 0.355%, which was slightly lower than the issued yield of 0.359%. With this outcome, it encouraged for those worried about more bond market mayhem. Today, US bond yields fell, which tempered the equity markets a little bit.

Market Wrap

Main Pairs Movement

Gold rose the most in two months as a weaker dollar boosted gold, resulting from more stable US bond yields. Gold’s bullish rebounded from a nine- month low with the dollar falling from the highest since November and after the first bond auction. Gold’s positive move might extend as the passage of a massive US stimulus plan will potentially make a slide for the US dollar.

Oil retreated further from recent high, staging a deep correction. Futures dropped toward $64 a barrel today in choppy trading as the US government is expecting domestic crude production to rise drillers take advantage of oil’s prices. Even though oil prices dipped today, further price gains seem to be expected as OPEC+ outputs cuts are seen holding the marker over until demand comes back.

GBPUSD climbed for the first time in five days as the successful vaccination roll-out in the UK and a weaker US dollar. Moreover, the Pound rose as investors reflected on the lack of dovish comments from BOE Governor Andrew Bailey. A less dovish remarks from Bailey seemed to encourage the blurring of lines between the reflation trade and the vaccine trade, boosting the GBPUSD pair.

Technical Analysis:

XAUUSD (Daily Chart)

Gold witnessed some short- covering today and bounced back from nine- month lows, 1676ish. Aftering dipping to the nine- month lows and reaching the resistance level at 1676.89, gold bounced back sharply to 1720 as the RSI indicator has reached the oversold condition, below 30. However, technical indicators, including the MACD and the 50 SMA, on the daily chart are still holding deep in the bearish territory. In the meanwhile, gold remains downside as it still falls within the descending trend. On the flip side, current resistance 1676 mark seems to protect the immediate downside. If the pair can sustain its current bullish momentum toward 1746.91, and break further north, penetrating 1761, where the midline of Bollinger Band, then the pair might potentially turn into a positive mode in the near- term.

Resistance: 1676.89

Support: 1746.91, 1790.23, 1825.24, 1860.26

GBPUSD (Four- Hour Chart)

GBPUSD turns green as the mix of weaker US yields, weakening the US dollar. According to the MACD indicator, GBPUSD has flipped from bearish to bullish as the MACD line crosses the signal line. Bulls are eyeing the next resistance level at 1.3952, where the 100 Simple Moving Average hits has been converging with the price; if the pair can hit above 1.3952, which will confirm a more bullish momentum. In the near- term, the pair is still to the downside as the pair still trades below the majority of the SMA. At the moment, immediate movement for the pair cannot be determined as the RSI indicator is neither toward overbough nor oversold.

Resistance: 1.3952, 1.4006, 1.4061

Support: 1.3776

BTCUSD (Daily Chart)

Bitcoin has consolidated around $50,000 in the past few days, suggesting that it is in a more stable market recently. Today, it has finally broken the condolidated mode, reaching $54000 intraday. On the daily chart, Bitcoin remains bullish mode as it continues to fall within three- month ascending channel as well as above the 50- Simple Moving Average. Bitcoin is expected to keep up its trend in the positive territory until it contests the next signicant resistance level at $58,350.41, all- time high. It will probably confront a corrected period as the RSI indicator will most likely reach the overbought level and the pair will reach the upper band of Bollinger Band. That being said, in the near- term, Bitcoin is still in the bullish mode.

Resistance: 58350.41

Support: 46972.95, 39934.35, 34245.62

Economic Data

Daily Market Analysis

Market Focus

US stocks were mixed as the Dow Jones Industrial Index made record high of 32,117 whilst the Nasdaq 100 index plunged 2.16% on Monday. It seems like investors were taking a breather from technology stocks and fled into cyclical stocks. Materials and Industrials stocks were leading the gains in the S&P 500, and tech section was the only one left behind.

President Joe Biden’s $1.9 trillion stimulus is poised to reach the House after passing the Senate on Saturday. A vote will be held on Tuesday on the so-called American Rescue Plan Act. Economists have boosted forecasts for growth thanks to the long-eyed stimulus package, along with recent evidence that the economy is already picking up pace. Democrats expect Biden to sign his first victory bill by March 14.

Key highlights of National People’s Congress from China Macro Economy:

Market Wrap

Main Pairs Movement

The US greenback appreciated against all of its G-7 peers, and the dollar tracking index gained 0.41%, settled around 92.35. Higher treasury yield continue to eke out the dollar as media was revealing banks are shorting bonds in the long end of the yield curve. Yahoo.com reported that the US 10-year repo rate was at -0.5% last Friday, implying banks are forgiving and even paying interest to lend money in order to collect borrower’s collateral, which in this case are US treasury bonds. This might explain the recent disconnection between equity and bond market, the Down Jones Industrial index is making record new highs while the 10-year yield spiked beyond 1.6%. The yield rate itself has lost track of its conventional purpose; the distorted interest rate is temporarily not acting as a benchmark for valuing stocks.

Cable held considerably well against the US dollar despite dipping 0.14% on Monday. BoE Governor Andrew Bailey continue to fuel optimism on the Sterling, saying the outlook is positive but with large doses of cautionary realism, and expects inflation to rise in the short term.

Safe-haven currencies continues to underperform against the greenback, both Japanese Yen and Swiss Franc suffered their largest weekly losing streak since last March, depreciated 3.73% and 4.88% in the past four weeks.

Gold is probing lower to sub $1680 level, threatened to breach below last June’s key support line. It would be tempting for big players to dive price below $1670 to take out all these stop-loss levels layered beneath prior to releasing the subdued precious metal back to normal levels.

Technical Analysis:

XAUUSD (Daily Chart)

Gold is falling onto a support zone between $1691 and $1674, where the bears failed to overcome back in last June. It is also close to kissing the ascending trendline started from May 2019. Given the recent strong bearish run, the relative strength index is signaling oversold in the daily chart. It seems like now is good chance for the bulls to stage a decent rebound at these support levels, and the red downward trendline should be a modest ceiling for the recovery if prices are willing to bounce at all. On the downside, selling momentum could accelerate after breaching the support zone, and possibily eyes for $1600 handle.

Resistance: 1765, 1823

Support: 1691-1674, 1600

EURUSD (Daily Chart)

Euro dollar is extending its bearish run for a four-consecutive day, erasing nearly 2% of this year’s gain, and settle around 1.1855. The overall bullish bias since last June has ended as price plunged blow 1.19 without much hesitation, indicating pressure on the shared currency remain rebust. That being said, the bears would take a break once hiting November low of 1.178. RSI is on the edge of oversold zone, but will likely to travel a bit further south on the daily chart. Movement in this pair is somewhat puzzled as investors are trying to figure out what is happening in the backdrop, most are giving rallying US yield the credit for strong greenback.

Resistance: 1.193, 1.221

Support: 1.178, 1.163

GBPUSD (Daily Chart)

Cable struggled to find solid demand amid strengthening US greenback, but it managed to put up some resilient defense line. The overvalued Sterling couldn’t resist gravity, and was dragged down shortly after peaking 1.416. The pair closed with a long lower wick last Friday, indicating previous support at 1.38 handle is indeed valid in the short run. In confluence with DMA50 provide sound reasons to stop further selling momentum. However, MACD on the daily chart is still favoring a bearish trend, and we don’t expect a bullish reversal unless seeing weakened MACD bears.

Resistance: 1.416, 1.43

Support: 1.38. 1.352

Economic Data

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Daily Position Report

 Market Focus

In the beginning of the US trading hour, a selloff continued in some of the world’s largest tech companies brought down the whole equity markets while Treasury yields surged to near 1.6. However, big turnaround for all three major indices as dop buyers emerged, fueling an afternoon rebound in mega- cap technology shares. Today’s dramatic turnaround in equity markets, resulted from more stable Treasury yields after hitting 1.6%.

Treasury yields hit a one- year high today after the US economic reports, while a key part of the curve signaled wagers that the Fed will potentially raise interest rates as early as late next year. The benchmark 10- year yield rose as much as to 1.6% as a good Nonfarm payrolls data reinforced the perspective that the economy is heading to a rebound. However, the 5- year yield was the part of the curve that led the day’s losses, reflecting medium- term expectations for the Fed policy, rose along with bets on a sooner- than- expected tightening by the Fed.

China’s national legislature opened its annual session today. China’s government set a conservative economic growth target for the year, shifting the focus to longer- term challenges, such as reducing technological dependence on the US. The growth target is more moderate, setting at above 6%, which is well below the forecasts, while the budget deficit expected to reduce to 3.2% of GDP. In contrast to the US, where the US government is pushing a new stimulus plan, China is targeting on a normalize policy under a bounced back economy. The information shown below are China’s economic rebound and outline.

Market Wrap

Main Pairs Movement

EUR/USD fell toward 1.19 level after a robust US Nonfarm Payrolls data. The pair extended its negative stance after the US economy created 379k jobs in February, crushing estimates for a 182k increase. With the view on the economy heading to a rebound, the US dollar boosted. Moreover, with the surge in the US bond yields, also lifted the strength of the US dollar, pushing the EUR/USD pair downward.

WTI surged to $66 for the first time since 2019. Oil prices continued to take advantages from the afterglow of the bullish OPEC+ meeting on Thursday. OPEC+ has announced that they would be holding output largely steady. Markets have expected that OPEC+ to decide to bring back online as much as 1M barrels daily in supply, suggesting a bullish outcome.

Gold swung as markets weigh falling stocks market against gain in jobs. Gold has plummeted more than 10% this year amid the expectation of the economic rebound. Gold has suffered from the seventh time in eight sessions, slumping near $1700 after the Fed refrained from pushing back against the recent rise in US bond yields. On the other hand, the recent negative trend on Gold can also be seen from ETF investors’ holding. ETF backed by the metal have been seen protracted outflows in recent days, sending the holding levels to the lowest since June 2020. That being said, gold’s bullish wager is reduced.

Technical Analysis:

EURUSD (Daily Chart)

EUR/USD extends loss toward 1.1900 level in response to the US Nonfarm Payrolls. On the daily chart, the pair remains bearish as it continues to stay in the ascedning channel and the 50 and 100- SMA. The pair is looking to extend further south as the RSI indicator has not reached the oversought condition while the pair has successfully broken through the support level at 1.1945, heading toward the next support at 1.1695. For the upside, a rise to 1.20 will potentially open a path for a bearish to bullish trend.

Resistance: 1.1945, 1.2349

Support: 1.1695, 1.1492, 1.1290

GBPUSD (Four- Hour Chart)

In the near- term, GBP/USD suffers from the downside momentum, and continues to fall below the 100 and 50- SMA. Additionally, the bearish momentum is expected to continue as the RSI indicator is still above 30, which is outside the oversold sitiuation. In the next trading days, the price fluctuation is expected to fall in the range of 1.3851- 1.3748. In the bigger picture, the outlook for GBP/USD stays cautiously bullish even though it is deeping now as it is still in the monthly ascending channel.

Resistance: 1.3851, 1.4000, 1.4180

Support: 1.3748

XAUUSD (Daily Chart)

After dropping below $1700, gold is staging a rebound amid profit taking ahead of the weekend. In the near- term, gold is due to a pullback as the RSI indicator has reached an oversold condition and the MACD is getting weaker, implying a bearish- to- bullish trend; moreover, the pair has reached the lower band of Bollinger Band, also suggesting a retreat. However, in the big picture on the daily chart, gold remains bearish trend as it stays in the 6- month descending trend and it is located below the 50 SMA. To the downside, if gold fails to rebound, and breaks below the descending channel; it will confirm the accelerated downside pressure toward the next support at $1687.34.

Resistance: 1754.90, 1796.69, 1830.47

Support: 1687.34

Economic Data

Daily Market Analysis

Market Focus

US equity market took a hit after Federal Reserve Chairman Jerome Powell refused to push back recent spike in Treasury yields. The Nasdaq 100 index extended losses from February high to almost 10%. Meanwhile S&P 500 index dipped 1.17% on Thursday, with Energy and Utility stocks led the gain, and Financials and Materials stocks lagged behind.

Here are Bloomberg’s main takeaways from Jerome Powell’s speech:

Market Wrap

Main Pairs Movement

Euro dollar bleed badly on Thursday after Fed chairman Jerome Powell declined to push back on rising bond yield, thus lending strength to the US greenback. He noted that the economic outlook is becoming more positive, and the central bank won’t hike rates until inflation runs above 2% for some time. The US 10-year treasury yield surged another 3.7% after yesterday’s 6.67%, settled the day around 1.541.

Aussie and Kiwi came under pressure during NA session, dropped 0.62% and 0.76% respectively. The dual pairs may experience relatively large volatility from China National People’s Congress and US Nonfarm Payroll event on Friday.

Cable dipped 0.46% albeit upbeat PMI figure. UK’s Construction PMI jumped to 53.3, beating forecast of 51. The encouraging data suggest recovery is very much on track. Meanwhile Chancellor Rishi Sunak put off steps to tackle the UK’s record budget deficit, focusing instead raising more cash for a recovery.

Gold refreshed eight-month low at $1691 after Powell’s speech, and closed the day around $1700. The non-yielding metal 10.7% since January mainly due to fading COVID-19 pandemic, vaccine rollout, and the recent spike in bond yield. Moreover, holdings in large gold ETFs dropped for a 13^th straight day on Wednesday, the longest stretch since December 2016.

Crude oil was the ultimate winner of the day, WTI and Brent Crude futures gained 4.4% and 4.5% respectively. Bullish OPEC+ headlines kept the oil price alive. The petroleum organization was on consensus to keep output unchanged in April. Brent has already recovered 30% this year to nearly $68 a barrel. OPEC+ has kept their promise to reduce production throughout the first quarter in order to drain the glut built up from last year.

Technical Analysis:

EURUSD (Daily Chart)

Euro dollar breached below its long standing ascending trendline, and look to contest horizontal support of 1.193. The blue upward trendline was under pressure recently amid reviving US dollar strength, the breakthrough suggests the long-term bullish run is coming to an end, and bears will be in charge. However, sellers need to take down 1.193 support before any significant selling power kicks in. We cannot completely rule out the possibility of a false breakout. In either case, investors would be prudent to wait for market to provide clear signals. MACD on the daily chart is in favor of the bears.

Resistance: 1.21, 1.217

Support: 1.193, 1.178, 1.163

GBPJPY (Weekly Chart)

GBPJPY is up on a twelve consecutive week, price has appreciated 7.85% since last December. More importantly it overran multiple resistance without much hesitations. The overstreched bullish trend could be facing some roadblocks since RSI is printing 76.1, a rare figure that we could see on the weekly chart, the last time that this level of overheating showed up was dated back to December 2014. That being said, we expect retreats in next week if not the week after it, likely to fall back to near support of 149.43, which coincides with previous ascending trendline.

Resistance: 152.83, 155.48

Support: 149.43, 145.9, 141.17

XAUUSD (Daily Chart)

Another sad day for Gold buyers, price is falling onto the lower bound of a descending tunnel. The value of this yellow metal is extremely subdued from soaring Bond yield across the globe, investors are somewhat skeptical about the sudden pull up. That being said, we expect price to recover toward 50% Fibonacci of $1765 as RSI overextended into the oversold zone, currently printing 27.6. Rejection from this resistance would provide strong confirmation signal to the bears to resume the south run. On the downside, 61.8% Fibonacci support of $1691 could provide some friction to recent robust selling bias.

Resistance: 1765, 1823

Support: 1691, 1600

Economic Data

Daily Market Analysis

Market Focus

US markets declined as a surge in US Treasury yield, reaching as high as 1.4859% added to concern over stretched valuation amid an uneven economic rebound. The S&P 500 continued to loss for the second consecutive day as 10- year yields surged. The Nasdaq 100 was down about 2.5%. Additionally, weak economic readings on the US labor market and service, ADP Nonfarm Employment, also contributed the negative weight on equities markets. The Dow Jones Industrial Average was the only one that did not drop too much, led by the gain from Boeing Co. and JPMorgan.   

In the US, lawmakers are heading to the final phase of enacting Joe Biden’s first pandemic- relief bill; at the same time, Joe Biden has rejected to trim extra unemployment benefits as the employment remains under water, near 2015 levels a year after coronavirus hit.    

UK Finance Minister Rishi Sunak announced that UK corporation tax is going to 25% in 2023 as pandemic support has reached around 570 USD. Moreover, according to Sunak, UK won’t allow the debt to keep rising, so the UK is going to pay high attention to its affordability; at the same time, Sunak also announced the freezing of personal tax thresholds, removing incremental benefits created has thresholds continued to increase with inflation.

Market Wrap

Main Pairs Movement

Oil price jumped after the US reported that oil inventories showed a record drop in the aftermath of a deep freeze that shuttered refineries in the US South, especially Texas. Crude futures rose as much as 3.5% today, the largest intraday gain in a week. Moreover, oil price has surged more than 25% so far this year as the OPEC+ continued its production curbs and expectations for demand to rebound as vaccines are rolling out worldwide.

Benchmark 10- year Treasury yields climbed as much as 6.8%, highest rate since last Thursday’s startling selloff in government debt. In the meanwhile, the anticipated annual inflation rate for the next half- decade has exceeded 2.5% for the first time since 2008, along with surging crude oil prices. The high inflation anticipation also came from Joe Biden’s pandemic relief package, which is likely to get passed soon. Rising yields have started to draw the attention of Feral Reserve, leaving all eyes on Thursday’s Jerome Powell’s speech.

Cable extended gain after UK Rishi Sunak announced a new budget, taxations, and other measures to support the economy. Money markets are now pricing in 10bps of interest rate increases from the Bank of England by the end of 2022. The hawkish repricing of market expectations for the BOE policy seemed to offer some support for Cable.

Technical Analysis:

GBPUSD (Four- Hour Chart)

GBPUSD has rallied a little today but gave back the gains just above the 1.40 level to continue showing the hesitation to penetrate the psychological resistance at 1.4000. The major resistance sits at the 1.4180, a barrier that has been important more than once. On the four- hour chart, the pair remains bullish as it stays in the ascending trend and the 100 SMA; in the meantime, the bullish momentum is supported by the MACD as the MACD line is above the signal line. If and when GBPUSD can successfully break above the 1.40 level, it will open the way to continue the overall uptrend and drive the market towards the 1.4180 resistance in general. To the downside, if GBPUSD breaks below the current support at 1.3851, then it will open a chance to test the three- month support at 1.3748, potentially turning the near- term trend into a bearish mode.

Resistance: 1.4000, 1.4180

Support: 1.3851, 1.3748

USDJPY (Daily Chart)

The US dollar continues to extend north against the Japanese yen amid the rising Treasury yields. In the near- term, USDJPY is likely to confront a pullback as the RSI indicator has reached the overbought situation and the pair has reached the upper band of Bollinger Band. If not, the next retreat level is expected to see at the level of 107.7, which is the next resistance. In the bigger picture, USDJPY is still staying in long term descending channel that started back in 2016.

Resistance: 107.7, 109.24, 111.14

Support: 106.16, 104.26, 101.19

EURUSD (Daily Chart)

EURUSD remains neutral on the daily chart, trading in the 1.2050 price zone; at the same time, the RSI indicator is also in the neutral position, currently at 45. On the upside, a break from 1.2349 will open a path to extend its bullish momentum as breaking upward the ascending channel. To the downside, if EURUSD penetrates its current support at 1.1978, then it will likely to head toward the next immediate support at 1.1748.

Resistance: 1.2349

Support: 1.1978, 1.1748, 1.1562

Economic Data

Daily Market Analysis

Market Focus

US stocks gave back some of yesterday’s gain, the three big indices closed the day in red. Technology stocks led losses in the S&P 500, while Material stocks prevailed. EV manufacturer giant Tesla Inc. dropped 4.46%, dragging down the Nasdaq 100 Index. Interesting to note Bitcoin’s price is somewhat synced with Tesla Inc. recently, Bitcoin is down 4.06% as of writing.

The Federal Reserve is pushing banks to abandon the London Interbank Offered Rate (LIBOR). Banks now have less than a year before the Fed has indicated it will stop allowing them to enter into new contracts pegged to Libor. The Fed is probing into banks’ Libor related exposure and possible contracts tied to the benchmark. The probing comes after the Fed warned banks in November that entering into new Libor-linked deals after 2021 would pose significant risks.

China’s President Xi Jinping will approve a five-year policy blueprint to reduce dependence on the West during an annual session of China’s legislature. Trillions of dollars will be mobilized to build self sufficient supply chain such as computer chips. Investors should pay close attention to the National People’s Congress session, which starts Friday and will last about a week.

RBA kept policy rate unchanged at 0.1%, here is Bloomberg’s main takeaways for RBA’s monetary statement:

Market Wrap

Main Pairs Movement

Euro-dollar once dipped below 1.2 in early session, but managed to gather enough strength to overturn the bearish bias. ECB president Christine Lagarde remains committed to ongoing economic recovery, saying on Monday that “ECB will ensure financing conditions will not tighten prematurely.”

Aussie reclaimed 0.78 as US greenback lost traction, and traders are back to the reflation trades. The commodity linked currency are receiving strong support from rising Iron Ore prices. Bloomberg commodity index plunged during last Thursday’s bond yield panic, but we are already seeing price recovery today. On the other hand, Kiwi is still lagging behind its antipodean peer albeit outperforming the US dollar by 0.49%, AUDNZD gained 0.3%.

Cable recovered 0.31% and snapped three losing streaks. Investors are waiting to hear UK’s budget announcement on Wednesday. The larger than expected budget could offer some bid potentials for the Sterling, possibly regaining 1.41 handle in the short term.

Gold swung between positive and negative territory on the day, ended the day up 0.63%. The precious metal furiously plunged $16 in early Asian session, hitting as low as $1707. Then bounced back to $1736 nearly EOD. Meanwhile, the 10-year US Treasury yield is clinging to 1.4% level.

Technical Analysis:

EURGBP (Daily Chart)

Euro has been defensive against Sterling since last December, the steep decline was put to a pause after RSI threatened to breach 20. It then tried to bounce back up, but the recovery did not last very long, and the bulls were capped by the upper descending trendline. Continuation to the south would give bears a chance to contest 76.4% Fibonacci support around 0.8565, if this level could hold off then price could undergo a double-bottom, gathering momentum for a bullish reversal. RSI on the daily chart is likely to resume its downward trend until hitting oversold zone before pulling up.

Resistance: 0.8744, 0.8888

Support: 0.8565, 0.8277

USDJPY (Daily Chart)

USDJPY is running into key 107 hurdle for the first time in six-month, the bears look to end the pair’s five consecutive run-up, and is currently trading around 106.74. The Relative Strength Index has been acting as decent predictive indicator on price retreats during the last month, whenever the RSI hits 70, the pair pulls back from the tops. Moreover, prices have been falling back onto the ascending support trendline. As of current, RSI is wondering around 70, and we expect this RSI-trendline synergy to kick in once again. Price will likely be traveling south toward the trendline.

Resistance: 107, 108

Support: 105.4, 104.6, 103.8

XAUUSD (Daily Chart)

Gold is still confined in a downward tunnel, but the bears were taking a breather on Tuesday, and price rebounded 0.65%. The precious metal struggled to find demand under high yield environment, consistent lower lows and lower highs on the daily chart suggest a strong selling bias. After breaching 50% Fibonacci support at $1765, which now coincides with ceiling of the descending tunnel, we expect price to come back to validate this resistance. If $1765 failed to contain the short term bulls, then we may see Gold regaining further north territories. MACD on the daily chart still heavily favors bullish trend.

Resistance: 1765, 1823

Support: 1691, 1600

Economic Data

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To provide our clients with a wealth of trading options, VT Markets will launch new products on March 8, 2021 and March 9, 2021 respectively.

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