Wild Week Comes To Fitting Close With NFPs

GBPUSD – technical overview

The latest round of setbacks off the recent 2015 high at 1.5815 have stalled out, with the market bouncing ahead of key support at 1.5089. Still, with the medium-term downtrend intact, any rallies are classified as corrective, with the market in search of another lower top below 1.5815 in favour of a bearish resumption back towards 1.5089. Look for the current bounce to be well capped below 1.5500, with only a daily close back above this level to delay the immediate bearish outlook.

• R2 1.5441 – 4Jun high – Strong
• R1 1.5400 – Figure – Medium
• S1 1.5304 – 4Jun low  – Medium
• S2 1.5251 – 3Jun low  – Strong

GBPUSD – fundamental overview

A recent run of softer UK economic data could suggest a slowdown in Q2 growth, something that has been weighing on the Pound in recent trade. Bank of England rate hike expectations have been scaled back and the policy divergence with the Fed should continue to weigh on this pair. There were no surprises from the BOE on Thursday, with the central bank leaving policy on hold as widely expected. Looking ahead, exactly how this market closes out the week will be predicated on the result of today’s monthly employment report out of the US.

USDJPY – technical overview

Although the bullish structure remains firmly intact, following the recent break to fresh multi-year highs beyond 122.00, there are signs of short-term exhaustion after the market stalled out above 125.00 earlier this week. A bearish outside day formation on Tuesday has done a good job of capping additional gains for now, though any setbacks should be very well supported above previous resistance turned support at 122.00.

• R2 125.50 – Mid-Figure – Medium
• R1 125.05 – 2Jun/2015 high – Strong
• S1 123.75 – 2Jun low – Medium
• S2 122.77 – 27May low – Strong

USDJPY – fundamental overview

Some early Friday, relatively in-line, Japanese economic data has failed to factor into price action, with the major pair more comfortable consolidating ahead of today’s highly anticipated monthly employment report out of the US. The long USDJPY play is a favourite in the institutional community and any dips continue to be very well absorbed by these larger accounts. A solid NFP print will likely open the door for a push to fresh highs beyond 125.05, while anything disappointing could lead to a deeper corrective retreat.

EURCHF – technical overview

The market has finally leveled out after a multi-day drop out from the February high at 1.0815. From here, there is risk for recovery back towards 1.0815 in the days ahead, with any setbacks expected to be very well supported above 1.0300 on a daily close basis. The latest push back above 1.0525 strengthens the constructive outlook and should accelerate gains.

• R2 1.0700 – 19Mar high – Strong
• R1 1.0574 – 4Jun high – Medium
• S1 1.0435 – 2Jun high – Medium
• S2 1.0398 – 3Jun low – Strong

EURCHF – fundamental overview

So many positives for this market in the early week, with the Euro finding fresh bids on renewed optimism for a Greek deal. But just like that, the optimism has faded after Greece rejected the latest proposal from its creditors and announced it would be deferring its IMF payment due today. Still, the market has held up rather well in the face of this news and an ongoing SNB commitment to act to curb excessive overvaluation in the Franc, as highlighted by SNB Jordan last weekend, should continue to support on dips.

AUDUSD – technical overview

Overall, the broader downtrend remains intact after the market stalled out ahead of 0.8200 several days back. Look for a medium-term lower top to now be in place at 0.8163, in favour of the next major downside extension back towards and eventually below the current multi-year base from early April at 0.7533. The latest corrective rally should be well capped ahead of 0.8000, while ultimately, only a break back above 0.8163 will delay the bearish structure.

• R2 0.7819 – 3Jun high – Strong
• R1 0.7751 – 3Jun low – Medium
• S1 0.7664 – 4Jun low – Medium
• S2 0.7598 – 1Jun high – Strong

AUDUSD – fundamental overview

Rallies in the Australian Dollar have been very well capped this week, with the currency taking a hit on a horrid batch of data. Abysmal Aussie retail sales and a worst on record trade print have been the primary drivers, with even some misleading, better than expected Aussie GDP contributing. Of course, the commodity currency has also been weighed down in sympathy with Euro declines into Friday and the attention will now shift to the release of the monthly employment report out of the US. Clearly this run of softer data out of Australia will keep the RBA thinking about the possibility for additional policy accommodation.

USDCAD – technical overview

The market looks like it may finally have based out at 1.1920, putting in a meaningful medium-term higher low, ahead of the next major upside extension and bullish trend resumption towards the 2015 high at 1.2835. The recent daily close back above previous support at 1.2350 strengthens the outlook, with setbacks now expected to be well supported above 1.2150. Above 1.2563 should accelerate.

• R2 1.2667 – 10Apr high – Medium
• R1 1.2563 – 1Jun high – Strong
• S1 1.2436 – 4Jun low – Medium
• S2 1.2367 – 2Jun low – Strong

USDCAD – fundamental overview

Probably a good bet to expect a volatile session from this pair on Friday. While most of the market will be focused on the fallout from the monthly employment report out of the US, Canadian Dollar traders will also have to contend with the Canada employment data out at the same time. A pullback in OIL prices over the past few sessions has been supportive of the US Dollar and overall, with Fed rate hike expectations angling towards a September hike, the trajectory continues to favour USD upside. Price action in OIL markets will be watched closely on Friday with the OPEC meeting kicking off.

NZDUSD – technical overview

Last week’s break to fresh 2015 and multi-month lows confirms a medium-term lower top at 0.7744 and opens the door for the next major downside extension towards a measured move objective in the 0.6500 area. The market has since paused for a breather following the latest round of fresh declines, but at this point, look for any intraday rallies to be well capped ahead of 0.7400.

• R2 0.7271 – 28May high– Strong
• R1 0.7201 – 2Jun high– Medium
• S1 0.7103 – 4Jun low – Medium
• S2 0.7078 – 1Jun/2015 low – Strong

NZDUSD – fundamental overview

Though the New Zealand economic calendar has been exceptionally quiet this week, Kiwi has been very well offered into rallies. Last week’s run of softer New Zealand data has fueled fresh yearly and multi-month lows, with expectations building for a potential RBNZ rate cut next week.  Throw in the diverging Fed policy outlook, slowing China and exhausted global equities market and any rallies in NZDUSD should be very well capped. Looking ahead, the key focus will be on today’s monthly employment report out of the US.

US SPX 500 – technical overview

The latest break to fresh record highs has stalled out, with the lack of bullish momentum suggesting the market could be exhausted at current levels and poised for a significant corrective decline. The recent close below 2110 strengthens the outlook and could open the door for deeper setbacks towards critical support at 2040 over the coming sessions. Ultimately, only back above 2137 negates.

• R2 2137.00 – 19May/Record – Strong
• R1 2123.00 – 3Jun high – Strong
• S1 2084.00 – 12May low – Medium
• S2 2062.00 – 7May low – Strong

US SPX 500 – fundamental overview

The equity market has failed to establish any meaningful bullish momentum after recently breaking to fresh record highs and could be at risk for stalling out yet again. A wave of solid US economic data has helped to solidify prospects for a sooner than later rate liftoff, and this reality is making it less attractive to be long equities at lofty levels. The next big move in this market will most probably hinge on today’s all important monthly employment report. If the data comes in exceedingly strong, this could open a major round of profit taking on long positions.

GOLD (SPOT) – technical overview

The market has been very well supported on dips since recovering from the 2014 base. The price action 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. Look for a break back above recent highs at 1232 to strengthen this outlook. Ultimately, only a daily close below 1170 will negate.

• R2 1246.00 – 10Feb high – Medium
• R1 1232.00 – 18May high – Strong
• S1 1170.00 – 1May low – Medium
• S2 1143.00 – 17Mar low – Strong

GOLD (SPOT) – fundamental overview

Despite recent setbacks, the GOLD market continues to show signs of demand on dips. Many investors already feel that with currencies across the board looking less attractive in a low yield environment, and with global equities looking vulnerable at record highs, there is no better place for capital allocation than GOLD. Dealers cite plenty of interest ahead of $1170 with buy-stops reported above $1235.

Feature – technical overview

USDZAR remains locked within a very well defined uptrend, with the market now looking for a retest and break to fresh multi-year highs, beyond the current 2015 peak at 12.5210. A medium-term higher low looks to be in place at 11.6935, with a break above 12.5210 to confirm and open the next major upside extension. In the interim, any setbacks should be very well supported ahead of 11.9000.

• R2 12.5210 – 13Mar/2015 high – Strong
• R1 12.4085 – 6Jun high – Medium
• S1 12.1370 – 1Jun low – Medium
• S2 12.0130 – 28May low – Strong

Feature – fundamental overview

Yet another decline in SARB reserve data, which has been trending down over the past year, not doing anything to help the beleaguered Rand’s cause. The SARB made it clear that with the economy in a fragile state, the tightening cycle would be moderate as the central bank does not want to stifle growth prospects. Ultimately, the outlook for the Rand is rather negative, particularly with the Fed on the verge of liftoff and the monetary policy divergence theme so pronounced. This puts added pressure on EM currencies with already restrictive policy. USDZAR is now looking to extend gains to fresh 2015 highs. Today’s US employment report will factor into short-term price action.