Strong US Employment Report Fuels USD Gains

GBPUSD – technical overview

The latest round of setbacks off the recent 2015 high at 1.5815 have stalled out, with the market consolidating ahead of key support at 1.5089. Any additional rallies are classified as corrective, with a fresh lower top sought in favour of a bearish resumption below 1.5089. Look for any rallies 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 1.5370 – 5Jun high – Medium
• S1 1.5190 – 5Jun low  – Medium
• S2 1.5170 – 1Jun low  – Strong

GBPUSD – fundamental overview

Lack of first-tier data out of the UK or US on Monday, will likely leave this pair trading within a sideways chop. Overall, the outlook is increasingly bearish, with US economic data picking back up, highlighted by Friday’s impressive employment report. This solidifies the prospect for a sooner Fed rate hike and pushes yield differentials in the US Dollar’s favour. Meanwhile, UK PM Cameron is holding meetings with all 27 EU heads of government to discuss the need for EU reform ahead of the European Summit on June 25^th.

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 ahead of 126.00. Daily, weekly and monthly studies are overextended and warn of a healthy correction ahead, though any setbacks should be very well supported above previous resistance turned support at 122.00.

• R2 126.00 – Figure – Medium
• R1 125.85 – 5Jun/2015 high – Strong
• S1 125.05 – 2Jun high – Medium
• S2 124.68 – 4Jun high – Strong

USDJPY – fundamental overview

An upwardly revised Japanese GDP print has done very little to inspire fresh interest in the Yen thus far. The Yen continues to be a victim of the Fed monetary policy divergence trade, with expectations for a sooner Fed rate hike driving this market higher and higher. Macro players have been sizable buyers on dips, particularly after Friday’s very healthy US employment report.

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

With Greece talks fizzling out yet again, we are back to seeing some heavy Euro outflows, with this market under pressure on the lack of clarity. It appears Greece and its creditors will be back and forth into the final hour later this month when everything will most certainly come to a head as IMF payments come due. 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 the other week, 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. Any corrective rallies should be well capped ahead of 0.8000, while ultimately, only a break back above 0.8163 will delay the bearish structure.

• R2 0.7731 – 5Jun high – Strong
• R1 0.7700 – Figure – Medium
• S1 0.7598 – 1Jun low – Medium
• S2 0.7533 – 2Apr/2015 low – Strong

AUDUSD – fundamental overview

The Australian Dollar has been a standout underperformer in recent sessions. The currency had already been struggling with misleading GDP, terrible retail sales and disturbing trade data into last Friday, and has suffered another blow since, with a very healthy US employment report and softer early Monday China imports, weighing further. Clearly this run of data will keep the RBA thinking about the possibility for additional policy accommodation at upcoming meetings. Dealers cite heavy sell-stops below 0.7530.

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 1.2427 – 5Jun low – Medium
• S2 1.2367 – 2Jun low – Strong

USDCAD – fundamental overview

The Canadian Dollar was the only major currency to show gains against the US Dollar in Friday trade, with the Loonie benefitting from some solid Canada employment data. Also seen supporting CAD gains has been a recovery in OIL prices. Still, the overall trajectory favours additional CAD declines, with the reality of a sooner Fed rate hike to fuel solid demand for the US Dollar on dips. Looking at the data out of the two countries over the past several weeks, it’s the US economic data performance that has been more impressive overall. For today, the economic calendar is quiet, with only Canada housing starts and building permits due for release.

NZDUSD – technical overview

The recent 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 0.7156 – 5Jun high– Strong
• R1 0.7103 – 4Jun low– Medium
• S1 0.7024 – 5Jun/2015 low – Medium
• S2 0.7000 – Psychological – Strong

NZDUSD – fundamental overview

Though the New Zealand economic calendar has been exceptionally quiet, Kiwi continues to extend declines against the Buck. Economic data has been less impressive out of New Zealand on the whole, and the market has been pricing in the chance for an RBNZ rate cut this 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. This latest run of terrible China import data only reaffirms the negative outlook for Kiwi.

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, highlighted by Friday’s impressive US monthly employment report, 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.

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 a fresh bounce 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 1232.00 – 18May high – Strong
• R1 1204.00 – 1Jun high – Medium
• S1 1163.00 – 5Jun 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 around $1170.

Feature – technical overview

USDTRY remains locked within a very well defined uptrend, with the market now extending gains to fresh highs, beyond the previous 2015 peak at 2.7430. A medium-term higher has been confirmed at 2.5600, with the break above 2.7430 opening the next major upside extension towards 2.9000. From here, any setbacks should be very well supported ahead of 2.6000.

• R2 2.8200 – Figure – Medium
• R1 2.8095 – 8Jun/Record – Strong
• S1 2.7360 – 8Jun low – Medium
• S2 2.7060 – 4Jun high – Strong

Feature – fundamental overview

Another record low for the Turkish Lira on Monday, with the currency hit hard on the weekly open after President Erdogan’s ruling AK party failed to gain a majority government in the election. EMFX has already taken a nice hit on the back of the solid US employment report and strain this is having on interest rate differentials, and this latest election fallout is only making things more challenging for the Lira. The CBRT has since responded to the Lira slide after cutting its Euro deposit rate to 1.5% from 2.0% and US Dollar deposit rate to 3.5% from 4.0%. Better than expected Turkey industrial production hasn’t factored much, but at least is not offering yet another excuse to sell the beleaguered Lira.