Nasdaq 100 Record High Faces Resistance, AUD/USD Turns to RBA Next

Nasdaq 100, Australian Dollar, New Zealand Dollar, US Dollar, RBA – Asia Pacific Market Open

• Nasdaq 100 hits record high but futures show resistance has held

• Australian Dollar damaged by rising coronavirus, eyeing the RBA

• US case growth slows, markets optimistic despite stimulus impasse

Global market sentiment improved over the past 24 hours, with the tech-heavy Nasdaq 100 setting a record high on Wall Street rising 1.47%. The S&P 500 and Dow Jones were not too far behind at +0.72% and +0.89% respectively. Despite the broadly ‘risk-on’ tone, the growth-oriented Australian Dollar and New Zealand Dollar cautiously fell. The haven-oriented US Dollar ended the day marginally higher.

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Gains in information technology stocks may have been an extension from last week where most of the FAANG group smashed earnings expectations. Investors may have continued to bet on these firms outperforming in a working-from-home environment. Traders seemed to also brush aside the ongoing impasse in Congress to procure the next fiscal stimulus package. The extra $600 per week employment benefit expired Friday.

During the North American trading session, US President Donald Trump hinted at using executive orders to extend certain unemployment benefits. It is unclear at this time how this might occur, but it could include pausing evictions. As for the coronavirus outbreak, cases in the US only grew 0.9% over the past 24 hours, under previous weeks 1.4% average.

The Australian and New Zealand Dollars spent most of the Wall Street session recovering earlier losses. AUD/USD initially sank after Australias Victoria State declared a state of emergency in response to a surge in coronavirus infections. The Canadian Dollar outperformed some of its major counterparts. As for commodities, both gold and crude oil prices ended Monday little changed.

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Tuesdays Asia Pacific Trading Session

With that in mind, we may see Asia Pacific equities follow the broadly optimistic tone from Wall Street. This could offer an opportunity for AUD/USD and NZD/USD to gain. The former does have the Reserve Bank of Australia (RBA) to contend with at 4:30 GMT. The RBA is expected to leave rates and the 3-year yield target unchanged. Their outlook on the economy will thus be of more significance amid rising local Covid-19 cases.

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Nasdaq 100 Technical Analysis

A closer look at Nasdaq 100 futures shows that while a new record high was set, the index remains within a narrow range of resistance between 10964 and 11058. These were highs set last month. Negative RSI divergence does show fading upside momentum which can at times precede a turn lower. Otherwise, the 23.6% Fibonacci extension sits above at 11346.

Nasdaq Futures – Daily Chart

Chart Created in TradingView