Kuroda Shakes Up Yen Market

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 below 1.5600 in favour of a bearish resumption below 1.5089. Only a daily close back above 1.5600 will delay the immediate bearish outlook.

• R2 1.5500 – Figure – Medium
• R1 1.5441 – 4Jun high – Strong
• S1 1.5300 – Figure  – Medium
• S2 1.5190 – 5Jun low  – Strong

GBPUSD – fundamental overview

The Pound has managed to mount a nice recovery this week, with the price action mostly attributed to some broad based US Dollar selling, though a solid Tuesday UK trade print has also helped. However, this is likely to change today, with the UK market digesting BOE Governor Carney’s Mansion House speech, along with industrial and manufacturing production data. There are decent offers into rallies, with some investors growing uneasy as Parliament kicks off talks on UK membership in the EU. Meanwhile, CBI has downgraded its 2015 growth forecasts from 2.7% to 2.4%.

USDJPY – technical overview

Although the bullish structure remains firmly intact, following the recent break to fresh multi-year highs, there are signs of short-term exhaustion after stalling ahead of 126.00. Daily, weekly and monthly studies are stretched and warn of the possibility for a more extended correction. Still, any setbacks should be very well supported above previous resistance turned support at 122.00.

• R2 125.05 – 2Jun high – Strong
• R1 124.73 – 9Jun high – Medium
• S1 122.50 – Mid-Figure – Medium
• S2 122.00 – Previous Resistance – Strong

USDJPY – fundamental overview

The Yen is the big story in Wednesday trade, with USDJPY collapsing intraday on the back of comments from BOJ Governor Kuroda. The market was shaken up after the central banker said ‘the Yen’s real effective exchange rate is already very weak and it’s hard to see it falling further.’ Still, this was a market that had already been due for a healthy correction and with the monetary policy divergence theme so pronounced, there will be plenty of bargain hunters stepping in as buyers of the dip.

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 1.0400 on a daily close basis. Last week’s push back above 1.0525 strengthens the constructive outlook and should accelerate gains.

• R2 1.0700 – 19Mar high – Strong
• R1 1.0575 – 4Jun high – Medium
• S1 1.0440 – 8Jun low – Medium
• S2 1.0398 – 3Jun low – Strong

EURCHF – fundamental overview

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 Tuesday comments from ECB Noyer that a Grexit wouldn’t cause instability in the Eurozone or have a serious influence on the Euro, have been helping to prop. Moreover, 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 0.7819 – 3Jun high – Strong
• R1 0.7731 – 5Jun high – Medium
• S1 0.7598 – 1Jun low – Medium
• S2 0.7533 – 2Apr/2015 low – Strong

AUDUSD – fundamental overview

The Australian Dollar has had the good fortune of benefitting from broader FX flows this week, which have seen the US Dollar under pressure. Certainly developments on the local front have not been supportive on Wednesday with RBA Stevens open to further accommodation, expecting the currency to weaken further, and consumer confidence data coming in a good deal softer than previous. Overall, despite any USD weakness, medium players are looking to sell AUDUSD rallies in size on the monetary policy divergence theme, with the Fed expected to move towards a rate hike sooner than later.

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. However, recent gains have stalled out to trigger a short-term double top, which could open setbacks into the 1.2170-1.2200 area before the market looks to head higher once again.

• R2 1.2472 – 8Jun high – Strong
• R1 1.2442 – 9Jun high – Medium
• S1 1.2307 – 9Jun low – Medium
• S2 1.2275 – 25May low – Strong

USDCAD – fundamental overview

The Canadian Dollar has been holding up rather well of late, with a slew of solid economic data supporting the Loonie. Last Friday’s employment report out of Canada was overshadowed by the US employment report, but the solid reading was a welcome development for CAD bulls, and this has been followed up by another impressive round of data earlier this week in the form of Canada housing starts and building permits. Throw in some renewed OIL demand and there is risk for more short-term upside in the Loonie. Overall however, USDCAD setbacks should start to find support into the 1.2200 area, with the Fed monetary policy divergence theme still the primary driver of medium-term direction.

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 0.7201 – 2Jun high– Strong
• R1 0.7179 – 9Jun high– Medium
• S1 0.7087 – 9Jun low – Medium
• S2 0.7024 – 5Jun/2015 low – Medium

NZDUSD – fundamental overview

Any New Zealand Dollar gains this week have been less a function of Kiwi demand and more on broader US Dollar selling. The outlook for the higher yielding New Zealand Dollar has turned bearish, with softer local data, a cooling China and potential capitulation in global equities all weighing. Whatever data we have seen this week has not been Kiwi supportive, with NZ inflation looking softer and manufacturing sales putting in the worst quarterly showing since 2009. The RBNZ rate decision is out early Thursday and the market will be anxiously waiting to see if the central bank completes its 180 on monetary policy and opts for a rate cut. The market is pricing a 40% chance of a cut.

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 2100 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 2062.00 – 7May low – Medium
• S2 2040.00 – 11Mar 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 last 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 well defined uptrend, with the market extending gains to fresh highs at 2.8095, beyond the previous 2015 peak at 2.7430. A medium-term higher has been confirmed at 2.5600, with the break above 2.7430 exposing 2.9000. Still, daily studies may be a little stretched, with room for some short-term corrective declines. But any setbacks should be very well supported ahead of 2.6000.

• R2 2.8200 – Figure – Medium
• R1 2.8095 – 8Jun/Record – Strong
• S1 2.7065 – 4Jun high – Medium
• S2 2.6550 – 5Jun low – Strong

Feature – fundamental overview

Some welcome relief for the Turkish Lira and CBRT Governor Basci on Wednesday after Turkey GDP came in only slighty softer than previous and a good deal better than expected. The market had been looking for a print of 1.7% from 2.6% previous and was given a gift of 2.3%. The Lira had traded to a fresh record low earlier this week and was not looking pretty post Turkish election after President Erdogan’s ruling AK party failed to gain a majority government. Also helping the Lira a bit has been some broad based USD weakness.