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ATFX Market Update - 2020.02.06


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ATFX Market Outlook, 2020 Feb 6

Personal opinions today:

The number of ADP beat market expectations to 291,000 last night. On top of that, the U.S. service sector PMI rose in January, while dollar index and Dow futures rose. The market is currently adjusting to the release of the official U.S. non-farm payrolls forecast for January, which could keep the dollar index and Dow futures rising ahead of the non-farm payrolls data tomorrow. Technically, note that the previous highs for the dollar index were 98.33 and 98.50, respectively, and the previous high for Dow futures was 29,406. The dollar index and Dow futures rose into related ranges, wary of investors locking in profits and trimming gains by covering short positions.

So far the Eurozone and Germany have reported data for January that is bearish for the Euro, and indirectly bearish for the pound and the Swiss franc, compared with U.S. economic data. Note that at 16:00 PM in Beijing time, ECB President gives a speech on whether the Euro will be allowed to strengthen the pound and the Swiss franc.

In the evening, U.S. weekly jobless claims data are expected to be bullish for the dollar, bullish for crude oil, bearish for gold and silver price. Dow futures performed after investors took note of the data. If Dow futures fell, could bearish for crude oil and bullish for gold and silver price.

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

15:00 German manufacturing orders for December **
16:00 ECB President speaks ***
16:30 German construction PMI for January **
20:30 U.S. companies shed jobs in January **
21:30 U.S. jobless claims change ***
22:15 Fed reserve's Kaplan speech **
22:45 U.S. Bloomberg consumer confidence index **

1.1015/1.1025 resistance
1.0980/1.0970 support
The Euro fell after strong U.S. economic and job data in January and weak Eurozone data. Technically, the Euro could test a late-year low of 1.0980. If Eurozone fundamentals worry, the EURUSD could hit a low of 1.0930 or 1.0880 for the second half of last year. Investors are waiting for comments from ECB President speaks and coming U.S. economic data, looking at the dollar trends against Euro.

Pound to dollar
1.3030/1.3040 resistance
1.2960/1.2950 support
Although the UK Brexit already, it is actually still in a no-deal, likely a hard Brexit. The UK and the EU are still negotiating a trade deal. In the absence of a final deal to decide, investors have no confidence to invest the British pound, bearish the British pound. Separately, strong U.S. economic and job data in January bullish the dollar higher and bearish the British pound. Technically, it is recommended to keep an eye on U.S. data over the next two days to gauge the direction of the British pound.

Australian dollar
0.6775/0.6785 resistance
0.6725/0.6715 support
The RBA kept interest rates on hold, released a rate cut expectation. Technically, the Australian dollar has rebounded from its low early last week to break through 0.6760 resistance. If it breaks, the upper resistance target is 0.6800. The focus is on strong U.S. economic data that could limit the Australian dollar's gains. However, the Australian economy is expected to grow faster in the first quarter, and the Australian dollar should be bullish. The Australian dollar should be bought after the adjustment.

Dollar to yen
109.95/110.15 resistance
109.55/109.45 support
Risk aversion cooled after better-than-expected U.S. economic and job data. In the Dow futures rose, the dollar against the yen tested 110 resistance. The number of U.S. jobless claims change was released tonight, and investors are looking ahead to an increase to 250,000 non-farm payroll number growth for tomorrow night. Dow futures are expected to continue to rise over the next two days and the dollar could test 110.15 resistance against the yen. Recommend keeping a close eye on U.S. data over the next two nights, believing Dow futures will move in the same direction as the dollar versus the yen.

1.3315/1.3325 resistance
1.3270/1.3260 support
The Canadian dollar rose as U.S. economic and job data beat expectations, dispelling fears of a sharp rise in crude inventories and slowing future demand. Continue to watch OPEC discuss interest rate cuts, short-term indirect impact on the Canadian dollar volatility. If crude oil continues to break through resistance at $52.38 and continues to rise, expect to see a bullish Canadian dollar. On the other hand, strong U.S. employment and economic data have led to gains in the Canadian dollar. Technically, USDCAD breaks through 1.3260 support, looking for 1.3180 support.

US crude oil futures
52.35/52.60 resistance
50.65/50.35 support
Strong job and economic data in the United States have bullish crude oil prices. Yesterday, here we said that the fundamentals of the crude oil market were positive, with oil trading at $49.45 support. Crude oil prices are above $50, above in the hourly moving average, and could test $52.35 or $52.60 resistance ahead of U.S.non-farm payrolls data tomorrow.

1565/1567 resistance
1549/1547 support
U.S. economic data beat expectations, Dow futures rose and gold fell as risk aversion cooled. It is believed that the U.S. non-farm payrolls data, if not for a sudden event to stimulate gold prices, or Dow futures decline, triggered the flow of funds into the gold market. Gold prices are expected to limit gains. Technically, a preliminary assessment of gold price moves between $1549 or $1547 support and $1565 or $1567 resistance.

U.S. Dow Jones industrial average futures US30
29415/29515 resistance
29295/29110 support
U.S. economic and job data over the investor’s expectation. U.S. ADP job data rose much more than expected last night then Dow futures rebounded and back to record high 29400 levels. Investors will wait to see the official non-farm payrolls data tomorrow night. With investors already pricing in these all good data, Dow futures could see gains in ranging and adjust slightly.

9575 / 9800 resistance
9050 / 8800 support
U.S. ADP job data rose much more than expected last night then Dow futures rebounded nearly 500 points, back to record high 29400 levels. Keep watching the Dow future and global stock market indexes. If Dow reverse and fall, the bitcoin price could up. Otherwise, the bitcoin price hits $9575 or $9800 resistance, investors would take profit or hedging for protest profit.

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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