Daily Market Outlook, July 16, 2020
<h2><span>Daily Market Outlook, July 16, 2020 </span></h2>
<p><span><strong>Asian equity market is down this morning despite yesterday’s rises in Europe and the US, which seemed to be driven by hopes of progress on Covid-19 vaccines.</strong> China posted a strong 11.5% rebound in Q2 GDP following the Q1 drop. However, June data while showing a 4.8%y/y rise in industrial production noted retail sales down 1.8%y/y. In Australia, the June unemployment rate rose to 7.4% (7.1% in May) but employment grew by a larger-than-expected 211k. The UK unemployment rate was unchanged at 3.9% in the three months to May as the government’s support scheme helped stem off a rise. Employment fell by a smaller-than expected 125k. Jobless claims fell by 28k in June. </span></p>
<p><span><strong>Today’s European Central Bank meeting is not expected to lead to any changes in monetary policy</strong>. After announcing an increase to its Pandemic Emergency Purchase Programme (PEPP) of €600bn, raising the total size of the programme to €1,350bn at last month’s meeting, the message from the ECB is likely to be that they are watching developments before deciding on any further action. Indeed as it has so far bought less than €400bn of public and private sector bonds under PEPP it still has plenty of scope to provide further stimulus with the already announced measures. ECB President Lagarde’s press conference is also unlikely to produce any surprises. She will probably stress that monetary policy will remain supportive of economic growth but also say that further fiscal action is very important. </span></p>
<p><span><strong>US retail sales data for June are expected to report a second successive monthly rise following last month’s 17.7% increase</strong>. Anecdotal updates point to a pickup in motor vehicles sales in particular as lockdown restrictions were eased. Consequently we look for a 5.5% rise in headline sales. Despite the rebound in US economic data for May and June some Federal Reserve officials are expressing concerns that the recovery may be faltering. The July New York Fed manufacturing survey surprised on the upside yesterday. However, New York is not one of the states that has seen a marked recent acceleration in Covid-19 cases. The Fed’s Beige Book of anecdotal reports on the economy gave a more mixed picture noting that the outlook remains “highly uncertain”. </span><span>Today’s Fed Philly survey and NAHB index for housing activity will provide more timely updates for July. Meanwhile, weekly initial jobless claims will be watched for any signs that the rebound in the labour market is slowing. </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: </span><b>1.1350 (2BLN), 1.1375-80 (1BLN)</b><span>, 1.1400 (850M) </span><b>1.1430-40 (1BLN)</b><span>, 1.1450 (711M)</span></li>
<li><span>GBPUSD: 1.2510 (368M)</span></li>
<li><span>AUDUSD: 0.6980 (573M)</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><span> UPDATE price is testing prior cycle highs, any profit taking pullback should find support at 1.13 ahead of the anticipated 1.15 test.</span></p>
<p><img class="aligncenter size-full wp-image-47175" src="http://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-16-08.39.18.png" alt="" width="2147" height="1199" srcset="https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-16-08.39.18.png 2147w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-16-08.39.18-300×168.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-16-08.39.18-1024×572.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-16-08.39.18-768×429.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-16-08.39.18-1536×858.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-16-08.39.18-2048×1144.png 2048w" sizes="(max-width: 2147px) 100vw, 2147px" /></p>
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<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 suggests return to range and a test of range support at 1.2250. UPDATE 1.25 test underway, a failure to regain 1.26 will open a move to test 1.24 UPDATE a close through 1.26 will flip the daily chart bullish and open 1.28, a failure to sustain trade above 1.26 opens a retest of 1.24 before higher.</span></p>
<p><img class="aligncenter size-full wp-image-47176" src="http://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-16-08.34.06.png" alt="" width="2150" height="1203" srcset="https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-16-08.34.06.png 2150w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-16-08.34.06-300×168.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-16-08.34.06-1024×573.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-16-08.34.06-768×430.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-16-08.34.06-1536×859.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-16-08.34.06-2048×1146.png 2048w" sizes="(max-width: 2150px) 100vw, 2150px" /></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-47177" src="http://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-16-08.34.48.png" alt="" width="2155" height="1202" srcset="https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-16-08.34.48.png 2155w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-16-08.34.48-300×167.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-16-08.34.48-1024×571.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-16-08.34.48-768×428.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-16-08.34.48-1536×857.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-16-08.34.48-2048×1142.png 2048w" sizes="(max-width: 2155px) 100vw, 2155px" /></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-47178" src="http://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-16-08.35.28.png" alt="" width="2151" height="1202" srcset="https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-16-08.35.28.png 2151w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-16-08.35.28-300×168.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-16-08.35.28-1024×572.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-16-08.35.28-768×429.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-16-08.35.28-1536×858.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/07/Screenshot-2020-07-16-08.35.28-2048×1144.png 2048w" sizes="(max-width: 2151px) 100vw, 2151px" /></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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