Daily Market Outlook, 4 February, 2020

Market Wrap: Stocks, Bonds, Commodities

US Wall Street’s major stock indices advanced on Monday, boosted by surprise strength in US manufacturing activity, following a sharp selloff in Friday on concerns about the economic impact from the fast-spreading coronavirus in china.

The Dow Jones Industrial Average rose 143.78 points (0.51%) to 28,399.81, the S&P 500 gained 23.4 points (0.73%) to 3,248.92, and the Nasdaq Composite added 122.47 points (1.34%) to 9,273.40. Materials (2.13%), Information technology (1.32%), Communication services (1.27%), Health Care (0.93%), Consumer Discretionary (0.60%) were the most gainer sectors.

Regarding the U.S. economic data, economists expect ISM Manufacturing PMI jumped to 50.8, well above the forecasts of 48.5.

Asian shares traded higher on Tuesday after steep sell-off on Monday and investors waited anxiously to see if Beijing could take heavy stem to stop spread coronavirus virus.

MSCI’s broadest index of Asia-Pacific shares outside Japan had inched up 1.51% to 664.60, led by gains in China and Australia. Japan’s Nikkei rose 0.45% to 23,100.

European stocks were rose on Monday, with the Stoxx Europe 50 Index advanced 0.56% to 3,661.27, Germany’s DAX gained 0.49% to 13,045.19 and France’s CAC added 0.45% to 5832.51 and the U.K.’s FTSE 100 advanced 0.55% to 7,326.31.

U.S. government-bond prices down as demand for risky assets grow. The benchmark U.S. 10-year Treasury yield advanced 2.27% to 1.554.

The yellow metal traded flat on Monday before sliding on a stronger dollar index and profit-booking and an unexpected rebound on Wall Street. Today spot Gold traded -0.35% down to $1573 per ounce.

Oil prices down to the lowest level in one year on Monday as the coronavirus impact on Chinese demand and then jumped because of potential supply cuts by OPEC and its allies.

Brent crude settled down 3.5% at $54.50 a barrel, its lowest since January last year. US West Texas Intermediate (WTI) crude fell $1.45 a barrel to $50.12.

Market Wrap: Forex

The dollar held firm on Tuesday after a key U.S. manufacturing survey showed a surprise recovery, while concerns about a widening coronavirus outbreak in China kept the yuan and the Australian dollar subdued.

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, advanced 0.04% to 97.660.

Moves in the widely traded EUR/USD pair were mixed, with the Euro flat to $1.10610 and British pound jumped 0.20% to $1.30200.

EUR/USD Intraday: : Intraday Resistance at 1.10660

Our pivot point is at 1.10660

Preferable Price Action: Take short positions below 1.10660 with targets at 1.10540 & 1.11440 in extension.

Alternative Price Action: Above pivot looks for further Upside to 1.10810 & 1.10940

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

GBP/USD Intraday:  The bias remains bullish

Our pivot point is at 1.29820

Preferable Price Action: Long positions above pivot with targets at 1.30296 & 1.30482 in extension.

Alternative Price Action: Price below pivot would call for further downside to 1.29580 and 1.29327

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

JPY/USD Intraday:  Intraday support at 108.580

Our pivot point is at 108.580

Preferable Price Action: Long position above 108.580 with the target at 108.820 and 108.980 in extension

Alternative Price Action: The downside breakout of 108.580 would call for 108.404 and 108.253

Comment: Pair above its 20MA and 55MA and MACD also in positive territory.

AUD/USD Intraday:  Intraday support around 0.67070

Our pivot point is at 0.67070

Preferable Price Action: Long positions above pivot with targets at 0.67294 & 0.67412 in extension.

Alternative Price Action: Below pivot looks for further downside with 0.66935 & 0.66811 as targets.

Comment: The RSI indicator at 70 levels and price above their 55MA and 20MA.

CRUDEOIL Intraday: Downtrend Continues

Our pivot point is at 50.92

Preferable Price Action: Sell below 50.92 with targets at 50.39 and 49.89 in extension.

Alternative Price Action: Above pivots buy Oil with 51.50 & 51.94 as targets.

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

XAU/USD Intraday:  Support at 1570.36

Our pivot point is at 1570.36

Preferable Price Action: Further upside to 1579.92 & 1584.85

Alternative Price Action: If price gives downside breakout of support level, then price extends to 1562.36 and 1556.98

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

Dow jones Intraday:   Break Resistance level

Our pivot point is at 28,526

Preferable Price Action: Take long positions above pivot with targets at 28,677 & 28,754 in extension.

Alternative Price Action: Below 28,526 looks for further downside to 28,422 & 28,355.

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

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