A variety of crosscurrents continued to challenge markets!

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Daily Outlook – 21 July 2020

By: Andria Pichidi

A variety of crosscurrents continued to challenge investors: optimism over vaccine and therapeutic developments, the rebound in growth as economies more fully reopen, and massive monetary and fiscal policy supports were bullish. On the bearish side, the surge in U.S. virus cases and subsequent rollback in reopenings has raised the risk that the momentum of the recovery can’t be maintained
EU leaders’ summit closed in on a historic agreement on the proposed EU 750 bln recovery fund! RBA still says negative rates are “extraordinarily unlikely” – “no case for intervention in the foreign exchange market, given its limited effectiveness when the exchange rate is broadly aligned with its fundamental determinants. “
The Nasdaq reached a record high yesterday – companies such as Amazon and Zoom benefit from lockdowns, and a general willingness to stay at home during the pandemic. – Goldman and Jefferies both boosted their price targets.
Tesla rallies 7% as Wall Street awaits carmaker’s June earnings, USA500 inclusion

EUR – steady at PP 1.1438 – R1 at 1.1475
GBP – spiked to 1.2690 (above R1 at 1.2681) . PP at 1.2600 and R2 at 1.2726
USDIndex – weak – 95.70
JPY – flattened at 107.30 after rebounded from 107.13
AUD – strengthened after RBA minutes, – RBA’s Lowe also repeated in a speech that the AUD is broadly in line with fundamentals, which mirrored the sentiment of the minutes. Lowe also said he welcomes the government’s plan to extend income support – albeit at reduced and tiered rates.
CAD – strengthened – retesting the 1.3500 barriers again.

GOLD – extends to 1810after rebounding from R1 at 1805.10
USOIL – rebounded to $41 as risk-taking levels improved. – more positive news of the vaccine front. (Shares of AstraZeneca are rising sharply on expectations for good results on a vaccine. Pfizer and BioNTech announced early positive updates from vaccine study.)

TODAY: Canadian Retail sales and ECB Guindo speech.

Biggest mover – AUDJPY (UP by 0.37%). The pair extended to 75.60 (a breath away from R2), breaking the latest up fractal in the 1-hour chart. Next resistance area sets at 75.50-76.50 (76.4% FIB and June’s peak). In the 1-hour chart, the asset is traded outside the upper BB area, with fast MAs aligned higher. The momentum indicators are positive, with RSI at 76 and MACD extending its lines. ATR for H1 at 0.108 and Daily ATR at 0.521


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