Are investors losing confidence?

GBPUSD – technical overview

Technical studies are in the process of consolidating from stretched levels after the push to fresh multi-month highs. This leaves room for additional consolidation, before the market considers a meaningful bullish continuation towards a retest of the 2018 high. But look for setbacks to now be very well supported into the 1.3500 area.

• R2 1.4002 – 23 June high – Strong
• R1 1.3911 – 12 July high – Medium
• S1 1.3800 – Figure – Medium
• S2 1.3732 – 6 July low – Strong

GBPUSD – fundamental overview

The Pound recovered in Wednesday trade, getting a boost from BOE Cunliffe who said the BOE was predicting pre-COVID growth by in H2 this year. Of course, hotter UK CPI and Fed Powell talking down Tuesday's US inflation data were also factoring into the GBP demand. Key standouts on Thursday’s calendar include UK employment, Canada ADP employment, US initial jobless claims, the Philly Fed, US industrial production, and more Fed Chair testimony.

USDJPY – technical overview

The longer-term trend is still bearish despite the recent run higher. Look for additional upside to be limited, with scope for a topside failure and bearish resumption over the coming sessions. It would take a clear break back above 113.00 to negate the outlook.

• R2 111.00 – Figure– Medium
• R1 110.70 – 14 July high – Strong
• S1 109.53 – 8 July low – Medium
• S2 109.19 – 7 June low – Strong

USDJPY – fundamental overview

Plenty of demand for the Yen into Thursday after the currency caught a bid from risk off flow and broad based US Dollar outflows as the Fed Chair talked down concerns around rising inflation. Key standouts on Thursday’s calendar include UK employment, Canada ADP employment, US initial jobless claims, the Philly Fed, US industrial production, and more Fed Chair testimony.

AUDUSD – technical overview

Technical studies have turned up in recent months, after the market traded down to its lowest levels since 2003 in 2020. There is evidence of a longer-term bottom following the latest push back through 0.7000, though at this stage, there is risk for a deeper pullback to allow for shorter term studies to unwind. Setbacks should now be well supported ahead of 0.7000.

• R2 0.7599 – 6 July high – Strong
• R1 0.7504 – 13 July high – Medium
• S1 0.7410 – 9 July/2021 low – Strong
• S2 0.7400 – Figure – Medium

AUDUSD – fundamental overview

The Australian Dollar managed to recovery on Wednesday, getting help from the more dovish leaning Fed Chair testimony. At the same time, we did see Aussie underperformance relative to its peers on fears of a Q3 contraction in Australia. Key standouts on Thursday’s calendar include the Aussie jobs report, UK employment, Canada ADP employment, US initial jobless claims, the Philly Fed, US industrial production, and more Fed Chair testimony.

USDCAD – technical overview

Has been in major decline since topping out in 2021 above 1.4600. At this stage, with the decline now well extended, the market is likely to find solid support into the 1.2000 area ahead of a resumption of gains. Ultimately, only a weekly close below 1.2000 would suggest otherwise. A weekly close back above 1.2500 will strengthen the outlook.

• R2 1.2655 – 21 April high – Strong
• R1 1.2591 – 8 July high – Medium
• S1 1.2423– 7 July low – Medium
• S2 1.2252 – 23 June high – Strong

USDCAD – fundamental overview

There were no surprises from the Bank of Canada decision, and it almost seemed as though the market was expecting some hawkish leaning surprises given the price action response. What ensued was selling of the Canadian Dollar on the fact, with the Loonie underperforming as a result. Key standouts on Thursday’s calendar include UK employment, Canada ADP employment, US initial jobless claims, the Philly Fed, US industrial production, and more Fed Chair testimony.

NZDUSD – technical overview

The market has been very well supported in recent months and there is evidence of a longer-term base. Look for setbacks to hold up above 0.6800, with sights set on a run back towards the 0.7500 area.

• R2 0.7106 – 6 July high – Strong
• R1 0.7050 – Mid-Figure – Medium
• S1 0.6918 – 13 July/2021 low– Medium
• S2 0.6900 – Figure – Strong

NZDUSD – fundamental overview

The New Zealand Dollar got a double shot of bids on Wednesday, initially from the more upbeat and hawkish leaning RBNZ decision and then from the dovish leaning Fed Chair Powell testimony. The market is now pricing a good chance for an RBNZ hike in August. Key standouts on Thursday’s calendar include UK employment, Canada ADP employment, US initial jobless claims, the Philly Fed, US industrial production, and more Fed Chair testimony.

US SPX 500 – technical overview

Longer-term technical studies are looking quite exhausted and the market is showing signs of wanting to roll over after racing to another record high. Look for rallies to be well capped ahead of 4500, with a break back below 4139 to strengthen the outlook.

• R2 4400 – Psychological – Strong
• R1 4394– 14 July/Record high – Medium
• S1 4289 – 8 July low – Medium
• S2 4218 – 22 June low – Medium

US SPX 500 – fundamental overview

We're trading just off fresh record highs, and yet, with so little room for additional central bank accommodation, given an already depressed interest rate environment, the prospect for sustainable runs to the topside on easy money policy incentives and government stimulus, should no longer be as enticing to investors. Meanwhile, ongoing worry associated with coronavirus fallout and risk of rising inflation should weigh more heavily on investor sentiment into the second half of 2021.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs and an acceleration beyond the next major psychological barrier at 2000. Setbacks should now be well supported above 1600.

• R2 1917 – 1 June high – Strong
• R1 1850 – Mid-Figure – Medium
• S1 1750 – 29 June low – Medium
• S2 1724 – 13 April low – Strong

GOLD (SPOT) – fundamental overview

The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about exhausted monetary policy, extended global equities, and coronavirus fallout. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.