US Dollar Index, DXY, SP 500, US Jobless Claims, EU Open – Talking Points:
- US Jobless Claims will be earnestly watched in a arriving event and might fuel risk hatred should a series of claims transcend expectations
- US Dollar might continue a decrease after breaching pivotal support during a Dec 2019 low
- SP 500 struggling during a psychologically pivotal 3,200 level. Could this be a finish of a highway for a benchmark US index?
Asia- Pacific Recap
Asian equities followed US futures aloft as markets discharged sharpening US-China tensions and ‘second wave’ coronavirus fears.
A important swell in a Chinese Yuan maybe stoked risk appetite, as a USD/CNH sell rate forsaken subsequent 7.00 and into oversold domain for a initial time given a agreement of a ‘phase one’ trade understanding in January.
Looking ahead, US jobless claims title a arriving mercantile calendar and might infer market-moving should both initial and stability claims continue to disappoint.
US Jobless Claims Headline a Economic Docket
US jobless claims information has been a churned bag over new weeks, with both stability and initial claims consistently surpassing marketplace forecasts.
Considering a stream state of affairs, it is not undiscerning to design this trend to continue as reliable cases of a novel coronavirus transcend 3 million, forcing a deception of lockdown measures in several US states.
US Initial Jobless Claims (LHS) Continuing Jobless Claims (RHS) – Year-to-Date
This supposition might reason some-more weight as President of a Federal Reserve Bank of Atlanta, Raphael Bostic, believes “the appetite in terms of reopening for businesses and for only ubiquitous activity is starting to turn off”.
With stagnation advantages set to run out during a finish of July, Bostic has called for Congress to deliver serve support to forestall a US economy hurtling off a corner of a mercantile precipice as “officials via a Federal Reserve complement have been flattering transparent that even if there is weakness, it is not always apparent that a Fed is a right physique to be doing a response”.
Data Source – Bloomberg
As permanent pursuit waste in a US swell to a top levels given 2013, a destiny of millions of American employees hinge on “what a subsequent service package should demeanour like”. Bostic stressed that “the longer this goes” but businesses removing relief, a some-more expected it becomes that many of a new pursuit waste to “move from a proxy mainstay into a permanent column”.
To that end, worse-than-expected claims information might fuel a duration of risk hatred as investors demeanour to Congress for superintendence when ir reconvenes on Jul 20.
US Dollar Index (DXY) Daily Chart
US Dollar Index (DXY) daily draft combined regulating TradingView
From a technical perspective, a US Dollar’s opinion stays lopsided to a downside after a mangle of a uptrend from early Jun lighted offered pressure, relocating a Greenback by support during a Dec low (96.36).
The RSI and Momentum indicators strengthen a bearish disposition reflected in cost action, with both oscillators remaining capped by their particular downtrends.
A postulated decrease behind towards a yearly low (94.65) might be in a offing should a RSI strengthen into oversold territory.
However, pivotal support during a 50% Fibonacci (95.86) will need to be overcome to countenance bearish potential.
SP 500 (e-mini) Futures Daily Chart
SP 500 (e-mini) futures daily draft combined regulating TradingView
Discounting elemental drivers, a SP 500 continues to onslaught during a psychologically commanding 3,200 level.
The benchmark US index seems staid for a decrease behind to a 200-day relocating normal (3,017) as a RSI fails to follow cost to aloft highs – famous as bearish dissimilarity – suggesting depletion in a many new rally.
A mangle subsequent a 78.6% Fibonacci (3,135.75) could feature offered pressure, with a 50- and 200-DMA behaving as a intensity uphold for buyers.
Conversely, a mangle above a Jun high (3,231) is indispensable to countenance bulls and might potentially vigilance a delay of a uptrend from a Mar low (2,174)
— Written by Daniel Moss, Analyst for DailyFX
Follow me on Twitter @DanielGMoss