North of England faces renewed lockdowns, US stimulus plan yet to be confirmed

(Source: https://markets.businessinside...)

After Monday’s decline, the US equity market rebounded yesterday.

The Dow Jones closed 0.4% up at 28308.79, while the S&P500 and NASDAQrose 0.47% to 3443.12 and 0.37% to11677.84respectively.

However, the European market declined further - the DAX continuously fell another 0.92% to 12736.95, whereas the FTSE consolidated slightly upwards by 0.08% to 5889.22.

The Chinese market saw a boost in terms of both trading volume and prices; the Shanghai Index rose 0.47% and the SZSE Component index and GEM index saw a 0.47% and 1.89% increase, respectively.

Crude oil forward contracts

WTI crude oil climbed back, opening low and going higherduring the Asiantrading hours.

The price hit a bottom at $40.45 in later in the session but reached topsof $41.3 in the US hours,closing upby 1.06%at $42.77 per barrel.

Brent oil closed up by 0.75% at $42.77 perbarrel.

Precious metal forward contracts

Gold dropped to daily lows at 1895.592 during the early Asian session before strengthening and breaking the resistance around 1910 and hitting daily highs of 1914.

The precious metalultimately closed at $1907.169 per ounce.

Currency pairs

·        USDXdown to93.08 (-0.343%)

·        EUR/USDup to1.1822 (0.462%)

·        GBP/USDdown to1.29395 (-0.040%)

·        AUD/USD down to0.70468 (-0.238%)

·        NZD/USDdown to0.65759 (-0.407%)

·        USD/CADdown to1.31263 (-0.444%)

·        USD/JPY up to 105.455 (0.038%)

Global Fundamental

United States

US President Donald Trump revealed that he would still debate Democrat challenger Joe Biden for the final time on Thursday,despiteexpressing displeasure that the new microphone muting rules (decided unanimously by the Commission on Presidential Debates) are unfair to him.¹

Meanwhile, Speaker of the House Nancy Pelosi had said earlier on Tuesday that she was ‘optimistic’ a deal could be reached with the Trump administration regarding a new stimulus package in the coming days.2

UK

The Bank of England’s (BoE) Dr GertjanVlieghe delivered a speech stating that 2% inflation is not considered a major issue by the bank, adding the risk from negative interest rates and current monetary policies is under control.³

UK Secretary of State for International Trade Liz Trussexplained that the UK will reenforce negotiations with the US and thata fifth round of talks is on the way. Truss also opined that further coronavirus lockdown measures would cause more damage to economy.⁴

Crude oil

API reports show that crude oil inventories have increased by 0.584 million barrels to around 490 million barrels.⁵

Today’s major assets analysis

EUR/USD and GBP/USD

The euro is currently strengthening whilst the pound remains weak.

The EUR price drove up during the European and North American sessions yesterday, breaking the resistance around 1.175 and completing a daily ‘N’ pattern, at one point hitting 1.183 - the highest point since 12^th October.

As for the KD analysis, the K value is above 80, while D is climbing. The price is beginning to reconsolidate and now stands above both EMAs.

The support level for the euro is around 1.180 with a secondnear 1.175, while the resistancepointsseem to be 1.183 and 1.187.

Meanwhile, the GBP current price is relatively weak compared to the EUR, and both its K and D valuesare around the middle of the range.

There are currentlyfewer supports for the pound – one can ostensibly be found around 1.292 – while the resistance is around 1.298.

[EUR/USD, four-hour chart] (Source: KVB PRIME)

[GBP/USD, four-hour chart] (Source: KVB PRIME)

AUD/USD

The Australian dollar is now consolidating after Monday’s fall after theUSDX’sdrop last night.

In terms of KD indicators, both K and D are around 20 and the price is consolidating upwards. The resistance is around 0.708, while the support is around 0.704.

[AUD/USD, four-hour chart] (Source: KVB PRIME)

Gold

Gold was climbing up as the USD went down and rose further during the US session. Currently, the price is around 1915 after breaking the resistanceat 1910. This momentum is now is supported by both EMAs.

Gold’s K value is turning strong while the D did not change much intraday. In the near term, the resistance is around 1920, while the support is around 1905. 

[XAU/USD, four-hour chart] (Source: KVB PRIME)

USDX

The USDX dropped and tested the93 supportlevel as the euro made gains. This morning, the price trajectory shows a gap.

The USDX was pushed down due to the strong EUR, though a weaker GBP slowed the process down somewhat.

As for DK indicators, the K value is around 20 and D is falling. The index is now consolidating and following the trend.

If the USDX broke the 93 support then a second support could be found around 92.8 with a resistance around 93.25. 

[USDX, four-hour chart] (Source: KVB PRIME)

[i]CNN (2020),

Donald Trump just lost his go-to debate move,

https://edition.cnn.com/2020/1...

[ii]The New York Times (2020),

McConnell Pushes Against Stimulus Deal,

https://www.nytimes.com/live/2...

[iii] Bank of England (2020),

Assessing the health of the Economy,

https://www.bankofengland.co.u...

[iv]Twitter (2020),

Liz Truss,

https://twitter.com/trussliz

[v]API(2020),

API's Weekly Statistical Bulletin,

https://www.api.org/products-a...