Daily Market outlook, February 03, 2020

Market Wrap: Stocks, Bonds, Commodities

US Wall Street’s major stock indices fell sharply on Friday, wiped out the Dow Jones index gain for January, as traders were highly worried about the potential economic impact of China’s fast-spreading coronavirus virus.  

The Dow Jones Industrial index dropped 603.41 points (2.1%) to 28,256.03, worst day since August. The S&P 500 had its worst day since October, declined 1.8% to 3,225.52. The Nasdaq Composite slipped 1.6% to 9,150.94. Energy (-3.18%), Information Technology (-2.72%), Industrials (-2.29%), Materials (-2.21%), Financials (-2.02%) were sector most under pressure.

Regarding the U.S. economic data, The Chicago Purchasing Managers Index (PMI) jumped to 42.9, well below forecasts of 48.8. That was the lowest reading since September 2015, as the slump in manufacturing activity continues. Later today, economists expect ISM Manufacturing PMI rise to 48.5 from 47.2 earlier.

Asian markets are down on Monday on fears about world growth from the rapidly spreading coronavirus virus, with the Chinese market down 9% after trading resumes following the Lunar New Year break.

MSCI’s broadest index of Asia-Pacific shares outside Japan slipped was 0.95% lower to 651 level, on track for an eighth straight day of losses. Japan’s Nikkei tumbled 1.0% and Australia’s benchmark index was down 1.50%.

European stocks were mixed, with the Stoxx Europe 50 Index down -1.40% to 3,640.91. Germany’s DAX fell -1.33% to 12,981.97 and France’s CAC dropped -1.11% to 5,806.34 and the U.K.’s FTSE 100 declined -1.30% to 7,286.01.

U.S. government-bond prices advanced as demand for safe assets grew. Friday, The benchmark U.S. 10-year Treasury yield declined from 1.597 to 1.505.

The yellow metal posted its best monthly gain in last five month on Friday as fears drove more safe-haven buying in the gold. Today spot Gold traded -0.20% down to 1580.

Brent and U.S. West Texas Intermediate (WTI) crude fell for a fourth week consequently after most of the airlines cancelled flights to China. Supply chains across the world’s second-largest economy have also been disrupted. WTI crude was at $51.60 a barrel.

Market Wrap: Forex

The dollar fell on Friday, as lower than expected US economic data and fear about the effect of coronavirus virus on the world economy.

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, advanced 0.10% to 97.305.

Moves in the widely traded EUR/USD pair were mixed, with the Euro flat to $1.10845 and British pound down -0.20% to $1.30650.

Other Commodity-linked currencies were broadly higher against the greenback. AUD/USD advanced 0.20% to 0.67040 and NZD/USD flat to 0.64740.

EUR/USD Intraday : Intraday support at 1.10790

Our pivot point is at 1.10790

Preferable Price Action: Take long positions above 1.10790 with targets at 1.10940 & 1.11075 in extension.

Alternative Price Action: Below pivot looks for further downside at 1.10600 & 1.10500

Comment: The RSI indicator near 50 and MACD above its Zero line. Moreover, the pair is trading above its 55 MA and below 20 MA.

Green Lines Indicate Resistance Levels  – Red Lines Indicates Support Levels  
– Light Blue is a Pivot Point   – Black represents the price when the report was produced

GBP/USD Intraday:  The bias remains bullish

Our pivot point is at 1.31470

Preferable Price Action: Long positions above pivot with targets at 1.31850 & 1.3200 in extension.

Alternative Price Action: Price below pivot would call for further downside to 1.31195 and 1.30990

Comment: The RSI indicator near the 50-level mark and MACD near-zero level.

Green Lines Indicate Resistance Levels  – Red Lines Indicates Support Levels  
– Light Blue is a Pivot Point   – Black represents the price when the report was produced

JPY/USD Intraday:  Downtrend continues

Our pivot point is at 108.580

Preferable Price Action: Short position below 108.580 with the target at 108.440 and 108.320 in extension

Alternative Price Action: The upside breakout of 108.580 would call for 108.730 and 108.825

Comment: Pair below its 20MA and 55MA and MACD also in negative territory.

Green Lines Indicate Resistance Levels  – Red Lines Indicates Support Levels  
– Light Blue is a Pivot Point   – Black represents the price when the report was produced

AUD/USD Intraday:  Intraday Resistance around 0.67060

Our pivot point is at 0.67060

Preferable Price Action: Short positions below 0.67060 with targets at 0.66925 & 0.66825 in extension.

Alternative Price Action: above pivots looks for further upside with 0.67200 & 0.67305 as targets.

Comment: The RSI indicator near 50 levels and price above their 55MA and 20MA.

Green Lines Indicate Resistance Levels  – Red Lines Indicates Support Levels  
– Light Blue is a Pivot Point   – Black represents the price when the report was produced

CRUDEOIL Intraday: Intraday resistance at 51.85

Our pivot point is at 51.85

Preferable Price Action: Sell below 51.85 with targets at 51.20 and 50.74 in extension.

Alternative Price Action: Above pivots buy Oil with 52.35 & 52.70 as targets.

Comment: MACD indicator in negative territory and pair below its 55MA and above its 20MA.

Green Lines Indicate Resistance Levels  – Red Lines Indicates Support Levels  
– Light Blue is a Pivot Point   – Black represents the price when the report was produced

XAU/USD Intraday:  Support at 1577.79

Our pivot point is at 1577.79

Preferable Price Action: Further upside to 1582.21 & 1585.39

Alternative Price Action: If price gives downside breakout of support level, then price extends to 1574.44 and 1571.23

Comment: The RSI indicator below 50 marks and MACD also in negative territory.

Green Lines Indicate Resistance Levels  – Red Lines Indicates Support Levels  
– Light Blue is a Pivot Point   – Black represents the price when the report was produced

Dow jones Intraday:   Under Pressure

Our pivot point is at 28,486

Preferable Price Action: Take short positions below pivot with targets at 28,340 & 28,222 in extension.

Alternative Price Action: Above 28,486 looks for further upside to 28,574 & 28,650.

Comment: The RSI indicator below 50 marks and MACD in negative territory. Moreover, the pair is trading above 20MA & below 55MA.

Green Lines Indicate Resistance Levels  – Red Lines Indicates Support Levels  
– Light Blue is a Pivot Point   – Black represents the price when the report was produced

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