Daily Market Review July 05

UK construction PMI data falling to a reading of 46.0 from a previous reading of 51.2 ended in triggering a bearish GBP. ‘Brexit’ fears still looming around is causing investors to shy away from UK markets and refraining to trust UK Bank stocks. A fall in construction PMI data below the 50 level was not seen since April 2013, which comes to add more woes to an already battered UK economy. However, as BOE Governor Mark Carney gets ready to speak at 09:30 GMT, markets may either move towards slight correction or remain bearish.

As ‘Brexit’ continue to influence the mood of the markets, UK stocks end on a lower note with the FTSE 100 losing around 0.8 percent being hit by losses in the real estate market. The Bank of England might opt for a monetary easing policy which explains why the Pound Sterling is heading more towards the lows. By the side of the U.S., investors are advised to keep an eye on earnings reports as well as crude gains, as indices might rise slightly after the Independence Day holiday.

The Dow Jones Industrial Average rose by 13 points yesterday, rising to 17,897 points which was a good start of the week. Trending on a good note, was also the S&P 500 which rose by 0.1 percent and the surprisingly the NASDAQ followed the trend by posting 3 added points. The intraday volatility has seen a considerable rise on the global market which is due to lack of clarity on how things will proceed now that Britain has left the European Union.

Technical Analysis:
Eurozone’s Services PMI data is expected for release today, which might give an indication on the current situation of different companies in the Eurozone. Usually this report is a sum up of surveys carried out for different business purposes in the Eurozone, which can in turn reflect the actual impact on the total contribution of these companies in the area. However, with trade regulations to change soon as ‘Brexit’ occurs, the market will have to wait and gauge its impact. The reading is expected to rise and give a nice indication while the EURUSD stays put around the 1.112 level, maintaining gains. Yesterday, the pair managed to reach to the 1.115 level but came back around the 1.112 level. Keep an eye on this pair.
After the Independence Day celebrations, the markets in U.S. opened on a quiet note which has also dragged down the USD. The pair lost around 0.46 percent of its value with the Yen seen trying to gain momentum over the USD, as investors look a little hesitant to back up the U.S. dollar since they remain uncertain of the possible effects of ‘Brexit’. Yesterday, the pair USDJPY got entangled in a bearish position starting the session at the 102.4 and slightly moving up to the 102.7 level. Later during the day, the pair was dragged down to the 102.3 level due to low momentum of the market. Earlier today, the pair was seen dropping below the 102.0 level of support which definitely signals towards a bearish session.

Mark Carney’s speech scheduled for today at 09:30 GMT, combined with a negative outcome obtained for the UK construction PMI yesterday, may not help the pair today. The pair actually moves to extreme lows around the 1.320 level and may continue to dwell in the same position. The Ichimoku cloud indicator hovers above the trading candles which is an obvious signal of a bearish trade for the pair while the candles look likely to move below the support level of 1.320 level. However, some changes are to be noticed around the 1.329 level scheduled for today, which could be due to Carney being the highlight today and UK services PMI data awaited later. Keep an eye on this pair to trade safely here.


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