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MARKET MOVERS

6th July

Paul Huang

US-China tensions

  • China has imposed a new security law for Hongkong which allows Beijing to override the Hong Kong judicial system.
  • In response to China’s imposition of new security law, the US house of representatives has passed a bill that penalizes banks for conducting business with Chinese officials associated with the new security Law.

US Unemployment Recovery

  • Recent federal data, released on the 2nd of July, showed US unemployment has dropped to 11.1% from 13.3% in May.
  • Despite the drop in US unemployment, the resurgence of COVID infections could hinder the efficacy of decreased unemployment and retail strength may be compromised.

Chinese Services PMI

  • Chinese services PMI hit a 10 year high of 58.4 from May’s 55 signals a strong rebound from the effects of coronavirus.

MAJOR NEWS

Optimism as U.S Unemployment figures exceed forecasts, undercut by Covid-19 outbreak
6th July

Samuel Soo
 
The U.S. non-farm payroll data released on Thursday exceeded most forecasts, with employment rising by 4.8 million in June and unemployment falling to 11.1%, from 13.3% in May. This is following a gain of 2.699 million non-farm payrolls in May. The highest gains were in the leisure and hospitality sector, reflecting restrictions being loosened in June.

Key arguments against a bullish dollar include Covid-19 hotspots in major states including Arizona, California, Florida and Texas, which have already shut down bars that had only just re-opened. The NFP is still down 14.7 million jobs since February. For the 14th week in a row, over 1 million people filed for first-time unemployment benefits, signalling a steady flow of growing unemployment.

While the unemployment gains may be a positive sign for the U.S., there are still several obstacles that prevent a swift economic recovery.

TECHNICAL ANALYSIS

EUR/USD

Samuel Soo
 
Over the past week, the EUR/USD has been consolidating into a range, consistently oscillating between a support level of 1.117 and resistance level of 1.131. The pair remains well above the 50-day moving average but has consolidated with the 15 day moving average. Expect to be able to profit off the pair using a range-bound trading strategy over the next week, but pay close attention to hourly candles in the event that an upwards or downward trend form

ANALYST OUTLOOK

Samuel Soo
BActSt (Co-op)
AUD/USD – Bullish
The AUD/USD has been going on a cautious rally over the past week, trending well above the 15-day moving average. Expect these gains to continue well into next week. A key resistance level to test will be the 0.698 level, which has been tested twice over the past month. Support levels to fall back on include the 0.689 level (which the 15-day MA sits at currently) and the 0.683 level, the price when the reversal occurred.

Paul Huang
BSc (Biotechnology)
USD/JPY – Bullish
USD/JPY have gained the level at 107.358 and we could likely see a retest of previous support lost at 107.919. Furthermore, with the US adding a record 4.8million jobs in June decreasing unemployment by 2.2 points since May, the dollar has a positive outlook.