Daily Market Outlook, July 13, 2020
<h2><span>Daily Market Outlook, July 13, 2020 </span></h2>
<p><span><strong>Risk sentiment has started the week on the front foot with the market making strong gains across the Asia Pacific region.</strong> This follows on from Friday’s solid performance as markets continued to react to positive signs of economic recovery, despite the resurgence in Covid-19 cases, especially across a number of US states. </span></p>
<p><span><strong>In what is an otherwise busy week for data releases, today’s calendar is noticeably light,</strong> aside from a joint event hosted by the Bank of England and the Federal Reserve titled, “Libor: Entering the End Game”, at which BoE Governor Bailey is due to speak at around 16:30BST. Releases over the coming week, however, should provide the first official insights into the pace of the economic recoveries across the UK and Eurozone with activity reports for May due over the coming few days. The lack of any data releases today means that the market focus is likely to remain centred on the interplay between the number of new Covid-19 cases and the gradual resumption in economy activity following lockdown. </span></p>
<p><span><strong>Risk sentiment was more mixed last week</strong>, mainly on concerns that continued rises in US Covid-19 cases will dampen the economic recovery. Reports suggest the White House is aiming for an addition $1trn stimulus package to be passed by Congress before the summer recess. </span></p>
<p><span><strong>In the UK, the Office for Budget Responsibility will tomorrow release a report containing three economic scenarios for the UK economy,</strong> which are likely to incorporate the recent stimulus measures announced by Chancellor Sunak in his Summed Economic Statement. The scenarios are likely to form the basis for further fiscal responses in the Autumn Budget. Early tomorrow morning, UK monthly GDP figures for May are expected to show the economy on the road to recovery. After plunging 20.4% in April, we forecast an increase of 5.5%, reflecting the gradual reopening of the economy, as lockdown restrictions continued to be eased. The pickup in activity is likely to have continued into June, going some way to soften the overall extent of the decline in Q2 GDP (which is still likely to be a very bad quarter, but not as bad as the Bank of England or the OBR had feared). </span></p>
<p><strong>Meanwhile, the overnight release of June trade data from China will be watched for signs of a broadening in the global economic recovery and domestic demand in China, ahead of Wednesday’s Q2 GDP release. </strong></p>
<p><span><strong>Speculative sentiment reflected in the latest CFTC positioning data indicates a slow move back against the USD</strong> in aggregate after the week ahead of the July 4th weekend saw USD-bearish positioning trimmed back. Overall positioning in the major currencies reflected an increase of USD420mn in the aggregate USD short, lifting the bearish positioning to USD14.8bn. This is well shy of the late June peak USD-bearishness of USD17.35bn, however.</span></p>
<h3><b>Today’s Options Expiries</b><span> for 10AM New York Cut (notable size in bold)</span></h3>
<ul>
<li><span>EURUSD: 1.1225-35 (450M), 1.1245-50 (530M), 1.1315-20 (710M)</span><b>, 1.1340-50 (1BLN), </b><span>1.1375 (622M), 1.1400 (850M)</span></li>
<li><span>USDJPY: </span><b>106.50-60 (1BLN), 106.75-85 (1.3BLN),</b><span> 106.90 (220M), 107.50 (550M)</span></li>
<li><span>GBPUSD: 1.2640-50 (300M)</span></li>
<li><span>AUDUSD: 0.6900 (670M), 0.6940-55 (800M), 0.7055 (432M)</span></li>
</ul>
<h3><span>Technical & Trade Views</span></h3>
<p><b>EURUSD Bias: Bullish above 1.1150 targeting 1.15</b></p>
<p><span>EURUSD From a technical and trading perspective, as symmetry swing support at 1.1170 supports there is a window for fresh demand to take prices higher again to retest cycle highs above 1.14 enroute to an ultimate retest of year to date highs at 1.15. As 1.1366 contains the upside look for a move to test bids back towards 1.12 before another upside attempt </span><span>NOTE </span><a href="https://www.linkedin.com/feed/update/urn%3Ali%3Aactivity%3A6685831276143886336/"><span>DTCC option reported data shows 40 billion euros evenly spread between 1.1200 and 1.1400 for the week ahead.</span></a></p>
<p><img class="aligncenter size-full wp-image-46935" src="http://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-13-08.27.45.png" alt="" width="2149" height="1200" srcset="https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-13-08.27.45.png 2149w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-13-08.27.45-300×168.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-13-08.27.45-1024×572.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-13-08.27.45-768×429.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-13-08.27.45-1536×858.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-13-08.27.45-2048×1144.png 2048w" sizes="(max-width: 2149px) 100vw, 2149px" /></p>
<p><b>GBPUSD Bias: Bullish above 1.25 targeting 1.28</b></p>
<p><span>GBPUSD From a technical and trading perspective, as 1.25 attracts sufficient demand, look for a grind higher to test offers and stop at 1.28. A closing breach of 1.25 suggest return to range and a test of range support at 1.2250</span></p>
<p><img class="aligncenter size-full wp-image-46936" src="http://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-13-08.30.59.png" alt="" width="2144" height="1201" srcset="https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-13-08.30.59.png 2144w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-13-08.30.59-300×168.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-13-08.30.59-1024×574.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-13-08.30.59-768×430.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-13-08.30.59-1536×860.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-13-08.30.59-2048×1147.png 2048w" sizes="(max-width: 2144px) 100vw, 2144px" /></p>
<p><b>USDJPY Bias: Bullish above 107.50 Bearish below</b></p>
<p><span>USDJPY From a technical and trading perspective, anticipated test of the equality objective at 108.13 saw bearish reversal patterns, setting up a move for another test of 106 enroute to a pivotal 105 test UPDATE Note three billion worth of expiries at 107.45/55 today. UPDATE 107.50 remains the pivot with more sizeable expiries noted today, through 107.10 opens equality objective at 106.87 UPDATE equality objective achieved as 107.30 caps the upside look for a retest of 106.30’s</span></p>
<p><img class="aligncenter size-full wp-image-46937" src="http://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-13-08.31.27.png" alt="" width="2148" height="1200" srcset="https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-13-08.31.27.png 2148w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-13-08.31.27-300×168.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-13-08.31.27-1024×572.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-13-08.31.27-768×429.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-13-08.31.27-1536×858.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-13-08.31.27-2048×1144.png 2048w" sizes="(max-width: 2148px) 100vw, 2148px" /></p>
<p><b>AUDUSD Bias: Bullish above .6830 targeting .7100)</b></p>
<p><span>AUDUSD From a technical and trading perspective, as 6830 attracts buyers there remains scope to retest and break prior cycle highs en route to a .7100 test. Expect bids towards .6900 to act as support. A closing breach of .6900 opens another test of bullish appetite at .6880</span></p>
<p><img class="aligncenter size-full wp-image-46938" src="http://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-13-08.33.49.png" alt="" width="2148" height="1206" srcset="https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-13-08.33.49.png 2148w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-13-08.33.49-300×168.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-13-08.33.49-1024×575.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-13-08.33.49-768×431.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-13-08.33.49-1536×862.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-13-08.33.49-2048×1150.png 2048w" sizes="(max-width: 2148px) 100vw, 2148px" /></p>
<p><i><span>Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.</span></i></p>
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