Daily Market Outlook, July 1, 2021

Daily Market Outlook, July 1, 2021 Overnight Headlines Investors still diving into US equities with valuations at record highs – FT • BOJ Tankan -Japan business mood improves in Q2 to 2-1/2-year high as COVID hit eases • JP Q2 Tankan Big Mfg DI +14, +15 f'cast, +5 prev; Big Non-Mfg +1, +3 f'cast, -1 prev • JP Q2 Tankan Big Mfg Sept DI eyed at +13, Non-Mfg DI +3, FY ‘21/22 CAPEX +9.6%, USD/JPY 106.71 • Japanese buy net Y22.7 bln foreign stocks, sell Y1.0265 trln foreign bonds, Y110.2 bln bills June 26 week • Foreign investors sell net Y147.1 bln Japan stocks, Y281.5 bln JGBs, Y120.3 bln bills June 26 week • Japan government to judge need for stimulus with eye on economy – top spokesperson • Japanese land prices post first annual fall in 6 years in 2020 – tax agency • Japan June factory activity sees slowest growth in 4 most but well above 50, Mfg PMI 52.4, 51.5 prev • China June factory growth slows on COVID-19, supply chain snags, Caixin PMI 51.3, 51.8 f'cast, 52.0 prev • Xi warns against foreign bullying as China marks party centenary • China advances in challenge to dollar hegemony – FT • Australia May Trade Balance A$9.681 bln, A$10 bln f'cast, A$8.028 bln prev • Australian job vacancies surge to record, firms struggle to find workers • Australia's NSW state says Delta outbreak grows despite lockdown • BoE’s Andy Haldane warns over inflation complacency in parting shot – FT Looking Ahead – Economic Data (GMT) • 07:55 DE Jun Mfg PMI 64.9 f'cast, 64.9 prev • 08:00 EZ Jun Mfg PMI 63.1 f'cast, 63.1 prev • 08:30 GB Jun Mfg PMI 64.2 f'cast, 64.2 prev • 09:00 EZ May Unemployment Rate, 8.0% f'cast, 8.0% prev Looking Ahead – Events, Auctions, Other Releases (GMT) • 07:00 ECB Lagarde, Enria parliamentary testimony • 07:30 Riksbank policy announcement, Monetary Policy Report • 08:00 BOE Bailey Mansion House speech • 09:00 Riksbank Ingves press conference • 09:30 ECB Elderson at Nordic Banking Associations seminar • 10:30 BOE Woods in Q&A on climate-related financial regulation • 12:00 Irish CB DepGov Donnery speaks at online eventG10 FX Options Expiries for 10AM New York Cut(Hedging effect can often draw spot toward strikes pre expiry if nearby)EUR/USD 1.1850 (202M), 1.1900 (202M) 1.1940-50 (835M)USD/JPY 110.45-50 (310M), 110.75 (395M), 111.00 (580M)111.40 (350M). EUR/JPY 131.25 (1.23BLN)EUR/GBP 0.8570 (330M). EUR/NOK 10.20 (202M)AUD/USD 0.7500 (500M), 0.7605-20 (475M)NZD/USD 0.6900 (552M), 0.7000 (352M), 0.7200 (315M)USD/CAD 1.2475 (320M), 1.2745 (500M)USD/CHF 0.9200 (302M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.21 Bullish aboveMaintains heavy tone ahead of key support • EUR/USD opened 0.36% lower at 1.1855 after USD broadly firmed in US session • After trading 1.1860 it traded with a heavy tone through the morning • Heading into the afternoon it is at the session low at 1.1847 • Support is at 1.1845/50 where it has bottomed on three occasions • More support at the 76.4 0f the 1.1704/1.2266 move at 1.1836 • A break below 1.1835 targets the 2021 low at 1.1704 • Resistance is at the 10-day MA at 1.1905and break eases pressure • EUR/USD likely to remain offered ahead of Friday's US jobs dataGBPUSD Bias: Bearish below 1.4080 Bullish above.Heavy with key support under pressure and USD firm • -0.1% towards the base of a 1.3812-1.3838 range with plenty of interest • UK's Sunak to sharpen City of London's competitive edge • Bank of England Governor Bailey speaks at Mansion house – text at 9am • Charts; daily momentum studies, 5, 10 & 21 daily moving averages fall • 21 day Bollinger bands slide – bearish setup suggests further losses • 10 DMA capped repeatedly, currently at 1.3879 and pivotal resistance • Downtrend targets a test of key 1.3756 support, 61.8% of the 2021 rise • Key sterling support vulnerable, as the USD climbs USD bulls run risk of U.S. jobs disappointment The U.S. dollar index's rally to a 2-1/2-month high on Wednesday, triggered in part by a better-than-expected ADP National Employment Report, could prove to be a bull trap yet againUSDJPY Bias: Bullish above 108 targeting 112Consolidates above 111.00, JPY crosses better bid • USD/JPY consolidates gains to 111.12 overnight, Asia 111.03-16 EBS • Some bidding into Tokyo fix, eases back post-fix • Some chunky nearby option expiries help contain action • 111.00 strike $580 mln, 111.20-55 total $819 mln, larger tomorrow • Upside capped for now by Japanese exporters, option players • Bouncing US yields supportive, Tsy 10s @1.474%, Nikkei -0.5% @28,641 • Eyes on strong US NFP after strong ADP • Fed-BoJ policy divergence, US-Japan rate divergence back in playAUDUSD Bias: Bearish below .7790 bullish aboveHolds support after early dip – but remains heavy • AUD/USD opened -0.20% at 0.7499 after USD moved broadly higher • After trading at 0.7501 it slipped to 0.7485 where it ran into bids • Move lower in part due to some analysts saying RBA will push back against early hikes • Heading into the afternoon the AUD/USD is settled around 0.7490 • Support is at double-bottom formed at 0.7478 with buyers at 0.7480/85 • Break below 0.7475 targets the 61.8 of 0.6990/0.8007 at 0.7378 • Resistance is at the 10-day MA at 0.7540 and close above would ease pressure

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USDJPY reversing from swing high, potential pullback

USDJPY is reversing from swing high, where we could see a reversal at Pivot, in line with 38.2% Fibonacci retracement, 50% Fibonacci extension and horizontal pullback resistance. We could see a further drop towards 1st Support, in line with 100% Fibonacci extension and horizontal pullback support. RSI is also holding below descending trendline resistance.

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Cathie Wood’s ARK Invest to launch bitcoin ETF

• SEE MORE What the FCA’s “ban” on Binance means for cryptocurrencies

Cathie Wood, the veteran fund manager behind ARK Invest, is launching a bitcoin ETF – the ARK 21Shares Bitcoin ETF – in partnership with Switzerland-based 21Shares. 

What is the fund and what could it mean for cryptocurrencies?

The ARK 21Shares Bitcoin ETF’s objective is to “track the performance of bitcoin, as measured by the performance of the S&P Bitcoin Index”, says a filing with the Securities and Exchange Commission (SEC), the US regulator.

Until now, ARK has been piling into companies with heavy exposure to digital currencies, including the likes of Coinbase Global and Grayscale Bitcoin Trust. But launching a crypto ETF is big news even for a prominent crypto-bull like Wood.

The ARK ETF is still pending approval from the SEC, so the fund may not launch for some time yet. But it’s not the only one in the pipeline. As Bloomberg points out, 14 cryptocurrency ETFs are currently awaiting approval from the SEC.

News of ARK’s ETF comes just days after the SEC postponed a decision on whether to scrap or accept a bitcoin ETF application from asset manager VanEck and from Valkyrie Digital Assets.

So what is the US stance on crypto ETFs?

As with the UK’s Financial Conduct Authority, the SEC is worried about the risks surrounding cryptocurrencies (cryptocurrency exchanges in the US are regulated by a variety of agencies at both state and federal level).

Last month, the SEC issued a scathing notice to investors last month warning them about the risks of bitcoin futures held in mutual funds (which are the only investment vehicles that are allowed to hold bitcoin futures). It urged investors to consider “the risk disclosure of the fund, the investor’s own risk tolerance, and the possibility, as with all investing, of investor loss”.

The SEC’s warning has led analysts to speculate that it may become more difficult for US ETFs to get the green light.

So could Wood’s bitcoin ETF persuade the FCA to lift its ban on ETFs?

In the UK, the Financial Conduct Authority does not regulate cryptocurrencies, but it has banned the sale, marketing and distribution of all crypto derivatives, including contracts for difference, options, futures and exchange-traded notes that reference unregulated transferable crypto assets by firms acting in or from the UK.

The ban which came into effect in January was prompted by extreme “volatility of underlying assets,” the FCA said. This effectively closes the door –for now – for any UK-listed bitcoin ETFs.

Any change in its stance depends on whether the backlog of ETFs is approved by the SEC or not. If they are not approved, it could ultimately seal the fate of crypto ETFs both in the US and the UK. But of course if the US does start approving more crypto ETFs, it theoretically raises the chance of crypto ETFs becoming accepted here in the UK

Until regulators don’t change course, cryptocurrencies remain a highly speculative investment.

While UK investors can’t buy crypto ETFs, they can still speculate on the currencies themselves. So educate yourselves on the subject, but treat them with extreme caution –cryptocurrencies remain a highly speculative and volatile investment.

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Graphic: Boom, bust and bewildered - Bitcoin's year so far

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Midweek Market Podcast – June 30

A busy week concludes with NFP as June moves into July and Q2 moves into Q3, the Dollar holds its gains, Gold remains pressured and Oil awaits the OPEC meeting.

HotForex · Midweek Market Podcast – June 30

The Market Week – June into July    

The Dollar holds on to gains, Equities hit new all-time highs, and gold slipped again. Still to come this week is more PMI data, more central bank speeches, the OPEC meeting and to top it all the key NFP data on Friday.

Jobs, Earnings and Unemployment remain very much in focus. The weekly US unemployment claims missed expectations yet again last week, coming in at 411,000, a 30,000 jump higher, with 388,000 expected this week.  Headline NFP is expected at 700,000 with dips for the Unemployment rate but also for Earnings.

The vaccine rollouts continue to drive sentiment, but the virus variants remain a significant concern and evidence of 3^rd or 4^th waves is growing. Extended restrictions are in place across many Asian countries and over 11 million Australians are now in lockdown again.  Over 3 billion doses of vaccines have been administered globally but many low-income countries have less than 5% vaccination rates.

This week FX volatility was evident again but less than last week. The USDIndex tested 91.50 before moving over 92.00 again ahead of month end and NFP.  EURUSD spiked to 1.1965 but slipped below 1.1900, June highs were at 1.2250. USDJPY could not hold the breach of 111.00, declining under 110.50, while Cable spiked to 1.4000 ahead of the BOE but has since slipped under 1.3850 and even re-tested the 1.3800 zone.

Global stock markets pushed higher to post more new all-time highs. The tech and cyclical stocks led the latest move higher, with industrials lagging. The USA500 and USA100 rallied to highs at 4,300 and 14,609 respectively, whilst the USA30 topped at 34,526.

The Gold price slipped again this week, following dollar and equity gains, and traded as low as $1750. The key precious metal opened trading in June at $1915, but the decline this month  has wiped out all the gains in May and threatens to test the 1^st quarter low under $1700.

USOil prices continue to rally, but this week spiked lower before recovering ahead of the OPEC meeting. This week prices topped at $73.70, 20 cents shy of recent highs, but still hold north of $73.00 ahead of expected OPEC production increases to be announced on Thursday.

The yield on the US 10-Year Treasury Note, very much in focus last week, spiked to 1.545%, then slipped to 1.47% lows before settling around 1.48% but remaining anchored under the key support level at 1.60%.

Click here to access our Economic Calendar

Stuart Cowell 

Head Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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What the FCA’s “ban” on Binance means for cryptocurrencies

Binance, the world’s largest cryptocurrency exchange came under fire from the UK’s Financial Conduct Authority last week when it said the company is not authorised to carry out any regulated activity in the UK. 

The move is the latest measure by a regulator aimed at suppressing digital currencies, which have been growing at breakneck speed. 

So what may this mean for you and your money?

The FCA said Binance’s UK subsidiary – Binance Markets Limited – is not currently permitted to “undertake any regulated activities without the prior written consent of the FCA”. 

Binance was hoping to launch its digital asset market place in the UK but withdrew its application to register with the FCA in mid-May after it fell short of meeting all of the necessary anti-money laundering requirements. 

The FCA’s latest action against Binance will force it to display a warning on its website – effective from 30 June – telling investors that it doesn’t have permission to operate in the UK. 

Separately, Binance customers suffered a long outage which saw many of them unable to cash out their cryptocurrency gains following a move by Binance to suspend bank cards.They found themselves locked out of the Faster Payments network – a UK payments system that speeds up transfers between the banks of various countries – due to what Binance says were “maintenance issues”. Binance also suspended bank card deposits and withdrawals. 

While Binance says that Faster Payments were back online on Tuesday afternoon, the Financial Times reported that they were still unavailable. Issues relating to debit card withdrawals persisted. 

But aren’t crypto derivatives banned in the UK anyway? 

Buying and selling cryptocurrencies is not a regulated activity in the UK, so most firms that promote selling and investing in cryptoassets are not backed by the FCA. Investors who buy cryptocurrencies will not have access to the Financial Ombudsman Service, nor the Financial Services Compensation Scheme if things go haywire.

But, while the FCA doesn’t regulate cryptocurrencies themselves, it does regulate derivatives (eg, futures contracts, contracts for difference and options), as well as crypto assets that it considers to be securities.  

The extreme volatility of the underlying assets, says the FCA, means that any derivatives have “no reliable basis for valuation”, so trading such derivative assets would place retail consumers “at a high risk of suffering losses”.

And so, in October last year, the FCA said that it would ban “the sale, marketing and distribution to all retail consumers of any derivatives (ie contract for difference – CFDs, options and futures) and ETNs that reference unregulated transferable crypto assets by firms acting in, or from, the UK”. 

That ban came into effect in January this year. 

So the FCA’s latest move isn’t entirely significant in this context. It is, in effect, merely enforcing an existing ban. But while Binance Markets Limited is banned from offering regulated services in Britain, non-registered firms can still engage with UK consumers to provide unregulated services – such as buying and selling cryptocurrencies. In order words, Binance can still offer UK-based investors crypto trading via its website. 

That is exactly what the FCA said in its statement when it announced Binance isn’t fit to carry out regulated activity in the UK: “The Binance Group appear to be offering UK customers a range of products and services via its website, Binance.com.

So given this isn’t exactly a “ban”, will this have any impact on investors at all? 

Investors may think twice about investing in cryptocurrencies not necessarily because of the FCA’s measures, but more because this signals how regulators are simply not able to digest digital currencies and are making it harder for them to operate and investors to engage with them. 

Binance also faced the wrath of Japan’s Financial Services Agency, which warned last week the crypto exchange was operating in the country without permission. 

And last month China banned crypto “mining” in the country, which up until now was a major producer and as such more than 65% of cryptocurrency mining comes from China. 

While the FCA’s recent warning about Binance is more symbolic, it is likely a catalyst for further regulatory action to come in the space. 

Governments are rushing to build central bank digital currencies (CBDCs) and they are unlikely to want competition. 

As the FCA recommends, investors should do extensive research on the firm they are considering investing with. Often taking simple steps such as checking if the company is registered with the Companies House or searching online for the firm’s name or director’s name can help flag any concerns early on. 

And, as the FCA warns: “be wary of adverts online and on social media promising high returns on investments in crypto asset or crypto asset-related products.”

“Any firm offering these services to retail consumers is likely to be a scam.”

So, while it is  definitely worth paying attention to crypto, you should expect a lot of volatility ahead. And the Faster Payments and bank card suspensions may lead investors to question just how useful bitcoin is in the first place, and how a blip can result in them being locked out of funds for days or even longer. Even if regulators don’t officially ban crypto, if financial institutions make it difficult to deposit and withdraw funds, retail investors are going to find it increasingly difficult to play.

from Moneyweek RSS Feed https://moneyweek.com/investments/alternative-finance/bitcoin-crypto/603481/what-the-fcas-ban-on-binance-means-for
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EURUSD H1 below pivot, potential for drop

EURUSD H1 facing bearish pressure below pivot where we may potentially see a drop towards the 1st support level, in-line with 78.6% Fibonacci retracement and 200% Fibonacci extension. If price bounce from the pivot, we may see it swing towards 1st resistance, in line with 38.2% Fibonacci retracement and 127.2% Fibonacci extension.

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Aussie Under Pressure Over Fresh Lockdowns

AUD Back Under PressureThe Australian Dollar has come back under heavy selling pressure this week as a result of news of the fresh lockdowns in place there. With the Delta variant spreading, the Australian government has placed four key cities under fresh lockdowns, imposing stay at home restrictions on around 12 million citizens. Given the country having bene one of the more effective in handling the initial outbreaks of the virus, the news is disappointing for citizens and AUD bulls alike and has caused a shift in expectations ahead of next week’s RBA meeting.RBA Views 2024 Lift OffThe tone of recent RBA meetings has been decidedly optimistic. While the bank itself has stuck to the view that rates will remain on hold until at least 2024, the netter jobs data seen recently had caused a lift in market expectations with some players forecasting a lift as early as next year. However, news of the fresh lockdowns this week is a strong reminder of the residual downside risks and heightened uncertainty the RBA has continued to highlight within its outlook.RBA To Highlight Remaining RisksGiven the latest developments there, the upcoming RBA meeting is likely to see the bank refraining from any hawkish signals. While the bank’s message is likely to reiterate the need to be vigilant and to continue with the easing program currently in place. The weight of the RBA’s message around the lockdowns will be key to how AUDUSD reacts. Given that AUD has been one of the weakest performers since the FOMC, a more severe message of warning from the RBA next week will likely keep AUDUSD on a downward path over the medium term. Given the move in rates markets that have occurred since the better employment data released this month, some push-back from the RBA here is likely to be a heavy selling catalyst for AUD.Technical ViewsAUDUSDThe sell off in AUDUSD as per the Market Spotlight trade, is continuing towards the .7413 target. Price has recently turned back under the .7564 level and with RSI and MACD both negative, the focus is firmly on a continuation lower for now.

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Inflation? A Covid relapse? Markets are trying to work out what’s coming next

We’ve come a long way over the past 18 months.

We’ve seen a global pandemic erupt, the economy locked down, markets crash as a result, and governments and central banks pile in to react.

Weirdly enough, those extremes were the points at which investment decisions were easiest. (Terrifying, maybe – but easy.)

Now markets have rebounded strongly. But no one knows if inflation is transitory or here to stay. And the re-opening has been worryingly stop-start in nature.

So what should investors do now?

Markets predict the future (or at least they try)

No one in markets has a crystal ball. And yet markets themselves are arguably the closest thing we’ve got to functional clairvoyance.

It’s the whole point of markets. We trust and incentivise the wisdom of crowds to bring their best opinions to market and thus allocate resources in a way that profits everyone – the best ideas get funded, the worst don’t, and so labour and capital get employed in the best possible manner.

(This is the ideal, obviously, but markets appear to have served better as a mechanism for this than anything else that have been tried on a big scale so far.)

Anyway, that’s one reason why equity markets started pricing in a recovery almost from the minute that we all woke up to the fact that this was really serious.

There is also, of course, the fact that as soon as we all realised that this was really serious, the developed world’s central banks, led by the Federal Reserve in the US, started to take unprecedented (there’s that word again) action to prevent a complete meltdown. The Fed went as far as buying junk bonds – effectively abolishing bankruptcy for a wider layer of companies than ever before.

Meanwhile, governments relied on the largesse of central banks to prop up public spending packages on a scale that hadn’t been seen in peacetime, ever.

So there was basically no reason not to invest. And, what with investors having been trained over the last decade to buy on central bank action, it’s no wonder we saw such a rebound.

However, just as markets priced in the recovery before it actually happened, you have to accept that they’ll try to price in whatever comes next before it actually happens too.

We’re at the stage now, and have been for a while, where investors believe the recovery is real. But we’ve seen the big rebound on the back of that. So what’s next?

The two big questions the market is trying to answer

As far as I can see, the market is now waiting on the answers to a couple of key questions.

One is: how inflationary is all this really? Is this all transitory? It’s pretty clear on this front that investors are willing to give central banks the benefit of the doubt here. But this belief that inflation is transitory has also been given credence by the Fed nodding towards being a bit more worried about inflation than it had suggested.

It’s all a bit “zen” – but if the Fed has dialled back on the “we don’t care about inflation” rhetoric then that in turn implies that inflation really is more likely to be transitory, because if it’s not, the Fed will be more responsive than its previous attitude had implied.

So I’d say the market currently doesn’t expect inflation to get out of hand. You can see that in the fact that the Nasdaq is doing so well (doesn’t like rising inflation), and bond yields have dropped back, while some of the energy has gone out of commodities, and gold in particular.

Two – and this is arguably the more important question: are we ever getting back to “normal” and if we do, what will it look like? The Indian or Delta variant has caused a resurgence of concern.

The situation in India is now improving, and it so far looks as though vaccines are pretty effective at stopping the worst outcomes, but the number of school kids being sent home in the UK shows that Covid is still a serious issue and a disruptive one (even if that’s down to over-testing and therefore lots of false positives, the point stands).

The second question is at least as complicated as the first to answer. You have two factors: there’s the actual fear of a genuine resurgence in a nasty variant that puts back a lot of the progress we’ve made, and then there’s the question of whether we can roll back the tendency to retreat to lockdown at the drop of a hat.

The thing that concerns me about emergency measures is that they have a habit of outlasting the emergency. They then become a standard measure, rather than an emergency one.

We’ve seen it with central banks; now we’re seeing it with governments. We know what the market crash playbook is – print money. We now know what the pandemic playbook is – lockdown, print money. What’s the threshold now? Can we expect this sort of thing with every bad flu season? What does that mean for the economy?

These questions are really hard to answer. From a financial markets point of view, investors are frankly probably not too concerned to have a question mark over future growth because it means they can go back to “business as usual” – an OK-ish economy accompanied by low interest rates, semi-permanent money printing, and a “buy the dip because there’s nothing else to do” mentality.

That’s the “Goldilocks” scenario. That does still seem to be what markets are tentatively pricing in. Inflation being stronger than expected or a nasty global resurgence in Covid would demolish that scenario in very different ways.

All I can say is: watch the data. I’m in the “inflation will be stronger than expected” camp – partly because I think central banks and governments will push it to be if it shows signs of faltering. But we just need to wait and see.

On that front, one thing to watch is the US jobs data this Friday. Payrolls data seems to have regained its former importance in the market’s eyes. Strong results will imply a stronger recovery, but also higher interest rates; weak results will imply the opposite. Whatever the market believes after that data release will quite possibly shape the tone for the rest of the month.

And to stay on top of what’s going on in one easily digestible read every week, subscribe to MoneyWeek magazine. You get your first six issues free – sign up now.

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Will the Delta variant become a growth catalyst for vaccine concept stocks?

The outbreak of the Delta virus variant in many countries around the world once again caused the market to turn its attention to vaccine concept stocks. According to Bloomberg, the Moderna vaccine “produced a neutralizing titer for all tested variants, including the latest Delta variant.” On the other hand, in the UK, test reports show that a combination of one dose of Pfizer and one of AstraZeneca seems to provide better protection against the virus compared to two doses of the same vaccine. According to the report, the AstraZeneca-Pfizer combination has the best effect, followed by the Pfizer-AstraZeneca combination, and both have a better effect  than  two AstraZeneca vaccinations. The results of this report are exciting, because this will help to increase flexibility and support countries that need to further promote vaccines and that are experiencing supply difficulties.

At present, at least 3.01 billion doses of coronavirus vaccines have been administered globally. Among them, Bloomberg’s vaccine tracker also shows that China has the fastest vaccination rate, and it is expected that in the next month, 75% of the country’s people will have received two doses of vaccine. If the next test report confirms the effectiveness of different vaccine combinations, then this may bring another wave of gains for vaccine concept stocks. In addition, the researchers also tested the effectiveness of the mixed dose inoculation interval, ranging from 4-weeks and 8-weeks to 12-weeks. From the current available data, the 8-week vaccination interval is more effective than the 4-week vaccination interval, and the effect of the 12-week vaccination interval will be revealed next month.

The longer the vaccination interval, the better the effect, however, it may also mean that it will take longer for countries to reach herd immunity (and the economy to return to normal levels). During the period from the first dose to the second dose of vaccine and the formation of effective immunity,  the active cooperation of the government and the people and the observance of epidemic prevention measures is needed to avoid infection before the formation of antibodies.

Boosted by recent positive factors, #Moderna (left) and #AstraZeneca (right) performed exceptionally well. Overnight, the former closed up about 7% to $234.18, while $238.36 was a new high since June 7 this year; the latter has continued its upward pattern after rebounding from the low of US $60.00 on March 19 this year. It is currently closed  above $85.40 (61.8% Fibonacci retracement level). For #Moderna, the recent resistance is the top line of the ascending channel and the 61.8% Fibonacci extension level ($245.40). The break of the resistance will mean that the stock price is expected to continue to test the 277.65 resistance. On the other hand, the near-term support is $193.25 and the bottom line of the ascending channel. Both the Relative Strength Index (RSI) and Stochastics indicator show that the #Moderna stock price is in the overbought zone.

As for #AstraZeneca, its recent resistances are $89.21 (the high seen on July 30 last year), $92.30 (the 78.6% Fibonacci retracement level) and the historical high of $101.10 seen in July last year. In addition, #Pfizer (middle) is relatively weak compared to the other two vaccine stocks, and is currently trading in a narrow range in the wedge-shaped area. As of yesterday’s close, the stock price is at the 23.6% Fibonacci retracement level ($39.25) and the wedge-shaped bottom line area. If the bears break through this area, then its stock price may continue the downward pattern and test the $38.15 support, or the 38.2% Fibonacci retracement level. However, if the stock price stabilizes at $39.25, the near-term resistance is $40.30 and the wedge-shaped top line resistance. Similar to #Moderna, the Relative Strength Index (RSI) and Stochastics show that the #AstraZeneca stock price is in the overbought zone; #Pfizer stock price momentum meanwhile appears to be relatively weak, and its Stochastics  has formed a death cross and is still running downwards.

Click here to access our Economic Calendar

Larince Zhang

Regional Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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Market Spotlight: Trading The EIA Crude Inventories

Crude Sitting at HighsThe latest set of EIA crude oil inventories are due later today and given the impressive run of drawdowns the EIA has highlighted over the last month, traders are keen to see whether it will be more of the same. On the back of the prior week’s 7.6-million-barrel drawdown, the market is this week looking for a further -4.2 million barrel reading. With crude oil prices holding near highs, confirmation of a further drawdown could see crude prices breaking out to fresh, record highs. On other hand, a weak reading today could see a sharp correction lower in oil given the weakness in technical indicators at the last test of highs.Technical ViewsCrude oil prices are holding just below the 74.46 level, following the buying that kicked in as price retested the 69.53 level. While the focus is on further upside for now, given the negative turn in the MACD and bearish divergence on the RSI, there are risks of a downside move on any disappointment in today’s release. To the downside, 69.53 and 65.52 are the key levels to watch.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/market-spotlight-trading-the-eia-crude-inventories"
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Market Spotlight: AUDJPY Breakdown Trade

AUDJPY Turning LowerThe heavy selling AUD this week, as a result of the fresh lockdown announcement there, has seen the Aussie weakening against a broad basket of currencies. Given the high-beta nature of the Aussie, the move has been more pronounced against safe haven currencies such as USD and JPY. With fears over the delta variant growing, the risk of further safe-haven strengthening of the Yen presents downside opportunities in AUDDJPY.The decline from the 85.43 level highs has seen price moving below the rising trend line and subsequently dropping below the 83.94 level to test support at 82.02. This is a big support level for the pair and with RSI and MACD both bearish here, the focus is on a further drop lower with a break of that level targeting 80.69 initially and 79.57 thereafter.Key Data to WatchBoth AUD and JPY have manufacturing data due this week. However, the pair is more likely to trade in closer alignment the general risk themes which have developed this week, keeping price geared towards further downside. The US labour reports at the top of the week could also be a downside catalyst for AUD on any upside surprise.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/market-spotlight-audjpy-breakdown-trade"
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NIKKEI holding below descending trendline

Nikkei holding below descending trendline resistance and also below moving average as well. A further drop below our pivot zone where we have multiple 61.8% Fibonacci retracement lining up could be possible. -27.2% Fibonacci retracement and 1st support zone is a possible downside target level as well.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/nikkei-holding-below-descending-trendline"
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DAX H1 is at pivot, potential for drop further

Dax H1 is at pivot, where we may potentially see a drop towards the 1st support level, in-line with 50% Fibonacci retracement and 100% Fibonacci extension.If price bounce from the pivot, we may see it swing towards 1st resistance, in line with 78.6% and 100% Fibonacci extension.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/dax-h1-is-at-pivot-potential-for-drop-further"
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