These days, there’s not much that moves the markets – Market Analysis – June 23

By: Miguel A. Rodriguez

09:45, 14 September 2020

Global equities seem to have developed news-immunity

After a bizarre statement by the North American government's trade adviser, Navarro, in which he affirmed that the negotiations with China were over, the stock markets suffered a sudden fall in the Asian session. 

The rectification of the adviser and of President Trump himself in which described the statement as a "misunderstanding," and those trade commitments with China were maintained, made the indices resume their bullish path, rising above 1% in the case of the Americans. 

The European Market

In Europe, the gains were higher due mainly to PMI figures published in the United Kingdom, Germany, and France; the latter being on the path of growth by exceeding the level 50 of this indicator.

This better feeling of risk from investors and the setting of a date in mid-July for European leaders to meet to agree on the form that the European rescue fund will take has led to an extraordinary upward momentum to Euro that has risen across the board.

EUR/USD technically has targets in the 1.1350 and 1.1380 zones, above which the theoretical projection is at 1.1600, which is the 50% Fibonacci retracement of the entire downward leg that runs from February 2018 to March 2020.


Another bullish euro cross is EUR/GBP. Although Sterling Pound has strengthened due to the good PMI figure, the Euro has beaten it. 

Sterling Pound still has open fronts in the area of monetary policy (possible increases in the asset purchase program). It remains vulnerable, primarily due to the delay in the negotiations towards a consensual Brexit. 

That is the reason EUR/GBP may continue to rise for fundamental reasons. Technically, it finds its first resistance at 0.9186 50% Fibonacci retracement bearish leg from March 2020 to May2020 and above, the level of 0.618% Fibonacci retracement to 0.9182.


The American Market

The continuity of the market in risk-on mode causes a general weakening of the US Dollar, not only against the major currencies but also against those of emerging countries.

The Canadian Dollar is close to reversing the fall it suffered as a result of the crisis, due to a US Dollar that strengthened as a safe-haven currency and the drop in crude oil price with which the Canadian currency is highly correlated. 

Now that OIL demand is recovering and is about to exceed its first target of $41.20 to head towards $45.30, USD/CAD has the potential to fall, from a technical analysis view to the 1.3350 zone as an intermediate target and to 1.3230 later.


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