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ATFX Market Update - 2020.02.04


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ATFX Market Outlook, 2020 Feb 4

Personal opinions today:

The U.S. Markit and ISM manufacturing purchasing managers' indices for January beat market expectations and rose above the 50 marks for expansion. Yesterday, we noted that if the data beat market expectations, it could lead to short-term volatility in the U.S. dollar index and Dow futures. But must keep in mind, the global market and investment outlook uncertainties. The dollar index and Dow industrial average futures are expected to see their gains limited tomorrow with the release of ADP private-sector jobs data. If U.S. factory orders were only in line with or below market expectations tonight, risk aversion could rise and the dollar index and Dow futures could fall at any time, directly affecting global stock markets. Capital fund flows to gold, silver and the Japanese yen.

Today, RBA interest rate decision, watching the interest rates and the governor’s economic outlook. Late afternoon, keep an eye on Eurozone PPI, now investors forecasts fall, bearish for the Euro and other European currencies, and indirectly bullish for gold prices. In the evening, pay special attention to U.S. factory orders, bullish for the dollar. Estimates continue to be bearish for the Euro and other European currencies ahead of the release. Gold and silver price rise limits. Separately, U.S. factory orders are expected, and the market is also looking ahead to the day when OPEC will assess the impact of the virus on demand of crude oil and U.S. crude inventories change last week, which are expected to stabilize crude prices in the short term and lead to gains.

[Important financial data and events]
Note: * refers to the degree of importance

11:30 RBA interest rate decision ***
18:00 Eurozone PPI for December **
23:00 U.S. factory orders for December ***
Next day 05:30 U.S. API crude oil stocks change***
US President delivers state of the union address ***
OPEC will assess the impact of the virus on demand ***

1.1075/1.1085 resistance
1.1030/1.1020 support
Germany and the Eurozone manufacturing PMI in January met market expectations for only modest growth. Preliminary estimates of Eurozone December PPI fell to 0%, bearish for the Euro. Last night, the U.S. manufacturing PMI beat market expectations. Coupled with the expected growth in U.S. factory orders tonight, it is likely to be bullish on the dollar and bearish on the Euro. It is believed that the Euro is likely to adjust its losses after the release of U.S. factory orders data tonight.

Pound to dollar
1.3050/1.3060 resistance
1.2960/1.2950 support
Britain has officially left the European Union, but not completed. The U.K. now entering a period of transition from the EU. Despite the positive comments from British prime minister Boris Johnson on Brexit, investors still not optimistic about the negotiation of a trade deal between the U.K. and the EU, and both sides cannot reach a consensus in the short term. Investors turn to pound investment cautious, take profit, short position cover. More importantly, the dollar rose and the pound fell on strong U.S. economic data. After tonight's U.S. data, the market looks to the U.S. ADP job data, which could limit the dollar's gains, the pound could end the decline.

Australian dollar
0.6725/0.6735 resistance
0.6680/0.6670 support
At 11.30 am in Beijing today, the RBA announced its decision on interest rates and the market is expected to keep them unchanged. But since the end of last year, the RBA chairman has said he intends to cut rates. The move, which had been limiting the rise of the Australian dollar before the decision, AUDUSD fell to a four-month low of around 0.6668. If the RBA keeps rates on hold and signals an economic growth outlook, the Australian dollar has a chance to rebound from its lows against the greenback. Technically, the reference AUDUSD trading lower is 0.6668. If not lost and rebound, look up to 0.6755 and 0.6800

Dollar to yen
108.95/109.05 resistance
108.20/108.10 support
Last night, Dow futures rebounded and global stock markets followed the trends. The dollar rose from a low against the yen. Investors are watching the U.S. factory orders for December are expected to rise. If the data performs better than expected, it could test 108.95 or 109.05 resistance. But worries could be heightened by the release of U.S. jobs data later. Technically, keep an eye on Dow futures. If Dow futures fall, the dollar will follow the trends.

1.3315/1.3325 resistance
1.3270/1.3260 support
Markets expect the global economy to slow in the first quarter and demand for crude oil products to fall. Crude oil prices fell, indirectly bearish the Canadian dollar. The market is now waiting for an OPEC meeting to agree on lower crude supplies. If OPEC members do not intend to cut output, crude oil prices continue to fall, are expected to further bearish the Canadian dollar. At this moment, keep waiting for the OPEC meeting and the U.S. crude oil inventory change, short-term indirect impact on the Canadian dollar volatility.

US crude oil futures
50.85/51.30 resistance
49.70/49.45 support
The market is watching OPEC members and non-members meet to discuss a cut in crude oil production. The OPEC is expected to propose interest rate cuts to stabilize crude oil prices. In the short term, investors watch U.S. factory order data and crude oil inventory change data, indirectly affect oil price volatility. Technically, though, crude fell below the $50.05 target support. Then supported by the fundamentals, recover lost ground. However, the current moving average in the hourly chart is still limiting price gains and it is estimated that crude oil prices could still fall before the 20-hour average is breached.

1585/1587 resistance
1573/1571 support
The global economic slowdown, and the likelihood that most of central Banks around the world will lean toward loose monetary policy, have an opportunity to push up the price of gold. But now U.S. economic data is beating expectations and Dow futures are up, limiting gold price. Dow futures fell if U.S. jobs data were weak. Believe that the gold prices will have the opportunity to continue to explore high. We recommend keeping a close eye on Dow futures, which move inversely to the gold trend.

U.S. Dow Jones industrial average futures US30
28645/28790 resistance
28320/28130 support
Financial institutions forecast a global economic slowdown in the first quarter, the news bearish Dow futures. But last night, Dow futures rebounded after strong U.S. economic data. If U.S. factory orders for December were only in line with market expectations for a 1.2%, Dow futures could adjust gains and test support ahead of tomorrow night's U.S. ADP job data, after which the market is expected to price in.

9575 / 9800 resistance
9050 / 8800 support
Most financial institutions forecast the global economic slowdown in the first quarter. Dow futures and Asian stock markets trading lower. Keep watching the Dow future and global stock market indexes. If Dow keeping downtrend, the bitcoin price could up.

Enjoy trading! The content is for reference only. Please do ensure that you understand the risk.
Registered Australian Accountant/ Certified Professional Manager / Certified Financial Advisor Experienced Investor / Media Market Commentator Martin Lam has Over 17 years’ experience in global investment market. Familiar with the worldwide stock indices, precious metals such Gold and Silver, Crude oil and Forex. He operated Martin Currency Trading Company and had partnership with a number of well-known international financial corporations and institutions. Before he join ATFX, he was TeleTrade Greater China development and Sales Director. Mr. Lam attends Hong Kong Now TV and China CCTV finance channel once a week. He also had regularly invited by different media, such as DBC Digital Financial Channel, Hong Kong Economic Times, The Standard, Ming Pao to share his experience to trade in Forex, Precious metals, Crude oil and worldwide stock indices.

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