Daily Market Review July 06



Markets today get ready for yet another speech from the President of the European Central Bank, Draghi at 07:00 GMT, while the FOMC meeting minutes will also grab much attention at 18:00 GMT today. Draghi is expected to raise his concerns about the aftermath of ‘Brexit’ while at the same time he may also announce an extension of ECB’s monetary easing policy. The Euro may fall if so does happen, while for the time being the EURUSD pair has moved to new lows around $1.105.

As currencies stagger on the trading market, the GBPUSD pair was also seen to be adopting another downtrend, around the 1.280 level. Moving away from currencies, commodities are also depicting some nice rallies with Gold prices seen extending previous gains rallying by more than two-year highs while crude oil prices take a downtrend. Spot Gold advanced to $1,371.40 a troy ounce while Brent crude slipped by 0.4 percent as fears of aftermath ‘Brexit’ surged back on the market.

Global indices were also seen wary amidst the growing tension on the market caused by several mood swings of investors due to ‘Brexit’. Risk aversion is very much present on the Asian, UK, European and U.S. market, as investors were seen confused not knowing how the European Union would react after the ‘Brexit’ decision. Japan’s Nikkei slumped by 2.5 percent while the U.S. index S&P 500 fell by 0.5 percent. By the side of Europe, German stocks like the DAX started by 1.2 percent lower this morning.

Technical Analysis:
Keep a close eye on the EURUSD pair today as the European Central Bank President, Draghi is expected to speak at 07:00 GMT. He may warn about a possible extension of the monetary easing policy which was adopted some time back but the results were meagre, however, as most central banks follow the same trend, the ECB might think about an extension. This may well cause the Euro to go down if this does occur, as monetary easing policy is expected to bring the Euro down and facilitate business and overall purchase. Ahead of the meeting today, the EURUSD was dragged to the lows at the around 1.105 level, with the RSI indicator signaling an oversold session for the pair earlier today.
If the pair USDJPY has to show some momentum, today is the day as an array of economic indicators await to be released. Investors are expecting to see the U.S. dollar move up from the streak of lows seen over several weeks now and for that the Japanese Yen will also need to be curbed down. With the ADP nonfarm employment change, ISM non-manufacturing PMI data and FOMC meeting minutes expected today, the pair is expected to soar higher. However, the pair was not seen to be bullish despite some positive data releases previously, thus, investors are expected to remain cautious. Yesterday, the pair initiated the session around the 102.3 level and was dragged down by several pullbacks to close the session at 101.1 level. The Ichimoku cloud hovers above the candles signaling a bearish session. Get ready for PUT options.

Investors keep on analyzing the aftermath of Brexit while the rest of the market looks likely fed up with the continuous effects of UK’s exit from EU. The pair was seen crossing below the long-time support level of 1.320 level and is now seen way down around the 1.280 level. The Bank of England suggest that it is a matter of time before the UK economy actually picks up momentum and thus the Pound Sterling will also be boosted. In guise of testing the grounds after ‘Brexit’, the economy may take time to come back in its best form. Yesterday, the pair GBPUSD commenced the session at the 1.327 level and was brought down to the 1.295 level after many pullbacks. The GBPUSD has moved to new lows, therefore, be cautious here.

 

Economic Calendar