Market Focus

Traders are gearing up for a busy week of corporate earnings results from the mega-cap technology stocks this week, including Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Facebook (FB), and Alphabet (GOOGL). This will come alongside a slew of economic data reports and a monetary policy decision from the Federal Reserve. As a reminder, Dow Jones rose 0.58%, or 238.20, and Nasdaq closed green (+1.04%, or 152.39) last Friday.

China unveiled a sweeping overhaul of its $100 billion education tech sector, banning companies that teach the school curriculum from making profits, raising capital, or going public.

Beijing on Saturday published a plethora of regulations that together threaten to up-end the sector and jeopardize billions of dollars in foreign investment. Companies that teach school subjects can no longer accept overseas investment, which could include capital from the offshore registered entities of Chinese firms, according to a notice released by the State Council. Those now in violation of that rule must take steps to rectify the situation, the country’s most powerful administrative authority said, without elaborating.

In addition, listed firms will no longer be allowed to raise capital via stock markets to invest in businesses that teach classroom subjects. Outright acquisitions are forbidden. And all vacation and weekend tutoring related to the school syllabus is now off-limits.

The regulations threaten to obliterate the outsized growth that made stock market darlings of TAL Education Group, New Oriental Education & Technology Group, and Gaotu Techedu Inc. They could also put the market largely out of reach of global investors. Education technology had emerged as one of the hottest investment plays in China in recent years, attracting billions from the likes of Tiger Global Management, Temasek Holdings Pte, and SoftBank Group Corp.

Main Pairs Movement

The dollar retained its strength heading into the weekly close but was unable to extend gains. Appetite for high-yielding assets dented demand for the greenback as US indexes closed at all-time highs. Government bond yields maintained the positive tone, and settled near the upper end of their weekly range, also reflecting a better market mood.

Data released on Friday indicated that the economic recovery continued at an uneven pace in July. Markit published the flash July PMIs. European indexes were mostly upbeat, while in the US and the UK the services sector contracted.

Majors remained range-bound at the end of the week, consolidating losses against their American rival, as the US Federal Reserve looms. Choppy trading will likely prevail ahead of Wednesday when the central bank will announce its decision on monetary policy. The focus is on tapering. The central bank will likely hint at some action for the last quarter of the year.

Gold finished the week with modest losses just above the $1,800 mark. Crude oil prices posted a nice comeback by the end of the week, with WTI settling at $72.15 a barrel, and Brent trading at $74.20.

 

Technical Analysis

GBPUSD (4-hour Chart)

Sterling has hovered around 1.375, clinging at this level after Kingdom unveiled its retail sales beat estimation yet PMI missed on both sides of the pond. In the meantime, the market is still eye on variant impact to the U.K. after the official announced restriction lifted.

For the technical aspect, the RSI indicator is close to around 54 figures which suggests a slightly bull guideline for at least the short term. For moving average side, 15 long SMA indicator strong jumped up to ascending momentum while 60 long SMA indicator remaining a slight upside but seems flat movement. All in all, after sterling rebounded as “V shape”, sterling has test the first immediately support at 1.3745. however, it mainstay the support eventually. If the market fell below the support level, we expect the market will head to 1.3665.

Resistance: 1.3896

Support: 1.36, 1.3665, 1.3745

 

AUDUSD (4- Hour Chart)

Aussie closed the previous two trading days modestly higher but lost its traction during the Asian trading hours. After dropping to a daily low of 0.7359, however, the pair erase its losses and trading flat on the day at 0.737 around as of writing. Although the risk-on mode remained intact in the second half of the day with 3 main U.S. shares markets breaching a new all-time high, the greenback turns strong and block off the buy-in traction for Aussie.

From the technical perspective, the RSI indicator struggle around the natural area set at 49 as of writing, suggesting a lack of direction momentum for a short run. For the moving average side, 15 long SMA indicators remain north way and 60 long SMA remained descending slope as of writing. On the downside, we still believe 0.73 is compelling support. On the up way, we expect 0.7415 would be a stressful resistance as a neckline in light of the price pattern.

Resistance: 0.7415, 0.7492

Support: 0.7323, 0.73

 

EURUSD (4- Hour Chart)

Euro fiber move in tiny in the day market that unable to show momentum at the current stage, keep pressuring in the 1.1774 area gain unchanged intraday as of writing. The euro fiber is about to end the week under pressure and looking as esoteric, but so far stays above short-term support rely on price action. On the economic data side, despite the German PMI trilogy’s overtrip expectation, its price action is still limited after digest the news.

For the technical side, the RSI indicator set 45 figures that feeling suggesting slightly bearish guidance for the short term. For moving average perspective, 15 long SMA indicator moving along with the price close to a slight downward movement, but 60 long SMA just turn it way to south side significantly.

Following the recent suggestion, we deem the market is rejuvenating to the upper stage if the market could exceed the first resistance at 1.1804 around. Moreover, if the price could propel to higher than the next price level would eye on 1.1848~1.188. In contrast, if the price penetrates the first immediate support level that is also close to the current price level, it could toward 1.17 as our perspective.

Resistance: 1.1804, 1.1848, 1.188

Support: 1.1766, 1.17