Economic Calendar Heats Up In Wednesday Trade

GBPUSD – technical overview

Fresh 2015 highs for this market, following an impressive Monday surge through 1.5600. The bullish break takes some of the pressure off the downside and could signal the next major upside extension from here, towards a measured move objective in the 1.5900 area. Still, with the broader downtrend intact, look for the rally to eventually be well capped towards 1.6000, with a medium-term lower top sough out ahead of bearish resumption.

• R2 1.5786 – 16Dec high – Medium
• R1 1.5710 – 12May/2015 high – Strong
• S1 1.5557 – 12May low  – Strong
• S2 1.5500 – 11May low  – Medium

GBPUSD – fundamental overview

The Pound continues to extend its surge to fresh 2015 highs post UK election, on the back of solid UK industrial and manufacturing production showing on Tuesday. Broad based US Dollar weakness has also helped to support the Pound, and the market is now considering the prospect for additional gains towards the psychological barrier at 1.6000. Still, there is plenty of risk on the calendar for Wednesday, with UK employment, the Bank of England Quarterly Inflation Report and US retail sales all due.

USDJPY – technical overview

Although the market remains locked within a well defined uptrend, lack of upside follow through has been discouraging, with the pair more content on deferring to a period of consolidation. Still, overall, the broader trend remains highly constructive and any setbacks should continue to be very well supported in favour of the next major upside extension through 122.03 and towards key psychological barriers at 125.00 further up. At this point, only a close below 118.00 would delay, while a break below 115.55 would be required to negate the constructive outlook.

• R2 120.84 – 13Apr high – Strong
• R1 120.50 – 5May high – Medium
• S1 119.05 – 7May low – Medium
• S2 118.23 – 17Feb low – Strong

USDJPY – fundamental overview

No reason to expect any additional easing from the BOJ any time soon, after Governor Kuroda reiterated the economy remains in a moderate recovery and policy accommodation is having its intended impact. The major pair remains confined to some very tight trade and participants have been anxiously waiting for the next big break. Softer than expected China retail sales and industrial production haven’t factored into trade and the market will now look ahead to today’s US retail sales print.

EURCHF – technical overview

The market has finally put in an impressive rebound after a multi-day drop out from the February, 1.0815 recovery high. From here, there is risk for additional upside back towards 1.0815 in the days ahead, with any setbacks expected to be very well supported ahead of 1.0300. Look for a push back above 1.0525 to confirm and accelerate gains. Ultimately, only below 1.0235 negates.

• R2 1.0525 – 30Apr high – Strong
• R1 1.0451 – 8May high – Medium
• S1 1.0305 – 7May low– Medium
• S2 1.0235 – 21Apr low – Strong

EURCHF – fundamental overview

Recent SNB measures on sight deposits and an ongoing commitment from the central bank to continue to act to curb excessive overvaluation in the Franc, should help to support this market on dips. Dealers cite solid demand, with no meaningful stops until below 1.0200. Comments from Eurogroup Chairman Dijsselbloem earlier this week that partial bailout disbursements could be exchanged for a partial implementation of reform measures, and a EUR750M Greek loan repayment on Tuesday, have been also supportive of this market.

AUDUSD – technical overview

Despite a recent surge through 0.8000, the bearish structure remains intact with the market positioning for a medium-term lower top and next major downside extension. The rally has stalled out just over previous support turned resistance at 0.8033 and this opens the door for a bearish resumption back towards and eventually below the recent multi-year low at 0.7533. Only back above 0.8075 would delay.

• R2 0.8075 – 29Apr high – Strong
• R1 0.8030 – 6May high – Medium
• S1 0.7863 – 8May low – Medium
• S2 0.7787 – 5May low – Strong

AUDUSD – fundamental overview

Wednesday Aussie data came in softer than expected, with wage growth below forecast, while data out of China wasn’t Aussie supportive either, after China retail sales and industrial production disappointed. Still, the Australian Dollar has found comfort in a bout of broad based US Dollar weakness, with the price action encouraging renewed gains through 0.8000. Still, there are plenty of offers above 0.8000 from medium-term players and no real buy stops reported until above 0.8100. Looking ahead, US retail sales will be watched closely.

USDCAD – technical overview

While the broader uptrend is still firmly intact, the market has entered a period of healthy correction following a recent break below support at 1.2350. But now that the market has finally traded into the measured move downside objective area in the 1.1900s, look out for the formation of the next meaningful higher low and resumption of the broader uptrend. Ultimately, only a weekly close below 1.1865 would compromise the constructive outlook.

• R2 1.2163 – 7May high – Strong
• R1 1.2107 – 12May high – Medium
• S1 1.1978 – 12May low – Medium
• S2 1.1940 – 6May low – Strong

USDCAD – fundamental overview

Finally a bit of movement in this pair into the mid-week, following a quiet Monday start. Though economic data has been lacking, the Canadian Dollar has been well bid in recent sessions on the back of some broad based US Dollar weakness and an impressive rebound in the price of OIL. Order books are rather light at current levels, though there has been some good US Dollar demand reported around the 1.1900 area. For today, the key focus will be on US retail sales. Anything on the strong side will open a recovery in the Buck, while anything weaker will result in more gains for the Loonie.

NZDUSD – technical overview

Despite a minor bounce, the market remains locked within a broader, well defined downtrend and looks to be in the process of carving out the next medium-term lower top. As such, look for a more pronounced bearish reversal in the sessions ahead, back towards the key low of 0.7176, below which opens the next major downside extension towards psychological barriers at 0.6500. Ultimately, only back above 0.7890 would compromise and give reason for pause.

• R2 0.7577 – 5May high– Strong
• R1 0.7466 – 11May high– Medium
• S1 0.7318 – 12Mar low – Medium
• S2 0.7274 – 18Mar low – Strong

NZDUSD – fundamental overview

RBNZ Wheeler reminded markets how uncomfortable the central bank is with the elevated Kiwi rate, though the comments didn’t come as much of a surprise in light of recent developments. Kiwi has underperformed of late, with the RBNZ adopting a more dovish outlook, but is finding some demand into Wednesday on the back of some broad based US Dollar declines. Also helping to support is the recovery in correlated risk assets, with the higher yielding Kiwi benefitting from these flows. Softer China data hasn’t factored into trade and the market will now be looking ahead to US retail sales.

US SPX 500 – technical overview

The most recent rally is stalling after only slightly exceeding critical resistance in the form of the previous record high from February at 2120. This suggests we could be in the process of carving out a more meaningful top. Still, while the market holds above 2040, the broader uptrend remains firmly intact, with a break below 2040 ultimately required to confirm a topping structure and accelerate declines. Initially, the market will need to close below 2070 to encourage the reversal prospect.

• R2 2150.00 – Psychological – Medium
• R1 2126.00 – 27Apr/Record – Strong
• S1 2062.00 – 7May low – Medium
• S2 2040.00 – 11Mar low – Strong

US SPX 500 – fundamental overview

Equity markets are looking a little softer of late and it feels as though the market is less attracted to the possibility of a lower for longer Fed scenario, even though it should in theory incentivize further demand. Central banks have relied heavily on this strategy to help with the recovery and if this strategy shows signs of losing appeal, we could be in for a rough ride ahead. Stocks have had a way of rallying on softer US economic data on the expectation the Fed will hold off, but recently, there has been an emerging pattern of stocks selling off on softer data. As such, pay attention to how the market responds to today’s US retail sales number.

GOLD (SPOT) – technical overview

The market has been in a consolidation mode since recovering out ahead of the 2014 base. The bounce suggests the market could now be poised for additional upside in the sessions ahead in an attempt to carve out a more meaningful longer-term base. Still, a daily close above 1225 will be required to strengthen the constructive prospect. Meanwhile, a daily close back below 1170 delays the recovery and puts pressure back on the downside.

• R2 1246.00 – 10Feb high – Medium
• R1 1224.00 – 6Apr high – Strong
• S1 1170.00 – 1May low – Medium
• S2 1143.00 – 17Mar low – Strong

GOLD (SPOT) – fundamental overview

The gold market continues to show signs of demand since stalling ahead of the 2014 base. Many investors already feel that with currencies across the board in a downward spiral, and global equities at risk for major capitulation, there is no better place to be invested than in the yellow metal. Gold has since pulled back a bit since rallying to $1224, but there is healthy demand reported into current dips, with no real sell-stops seen until below $1170.

Feature – technical overview

USDSGD has been in corrective mode over the past few weeks, with the market pulling back sharply from the 1.3937, 2015 peak from March. However, the broader uptrend remains intact and a medium-term higher low is now sought out at 1.3148 ahead of the next major upside extension. Ultimately, only back below 1.3148 would compromise the outlook.

• R2 1.3500 – Psychological – Medium
• R1 1.3398 – 12May high – Strong
• S1 1.3216 – 6May low – Medium
• S2 1.3148 – 29Apr low – Strong

Feature – fundamental overview

The Singapore Dollar has been suffering from a cooling off in China and some weaker local data. The weekend decision by the PBOC to cut rates hasn’t done anything to inspire confidence, and this has been backed up with today’s softer China retail sales and industrial production. Overall, the ongoing expectation for the Fed to move sooner than later, despite a slightly weaker NFP report last Friday, is also playing a role, and the outlook for this market continues to favour Singapore Dollar weakness, particularly with correlated risk assets starting to show signs of rolling over.