RBNZ Cuts, Strong Aussie Jobs, US Retail Sales Ahead

GBPUSD – technical overview

A nice recovery for this market over the past several sessions, with the price surging back above 1.5500. While we could be on pace for a retest of the recent yearly high at 1.5815, it is going to take a close above Wednesday’s 1.5554 high to strengthen this outlook. Otherwise, we may have already seen a lower top at 1.5554, with the market stalling out at solid internal resistance going back to February (see highlighted blue on chart).

• R2 1.5600 – Figure – Medium
• R1 1.5554 – 10Jun high – Strong
• S1 1.5369 – 10Jun low  – Strong
• S2 1.5300 – Figure  – Medium

GBPUSD – fundamental overview

Another on the whole better round of UK data on Wednesday helped to further extend the latest recovery in the major pair through barriers at 1.5500. Though UK manufacturing production was softer, industrial production beat, while NIESR GDP estimates rose to 0.6% in May from 0.4% previous. The UK economic calendar is quiet on Thursday, and the Pound has since pulled back a bit, perhaps as monetary policy divergence with the Fed is highlighted post RBNZ and BoK rate cuts. Looking ahead, direction in this market will hinge on the result of US retail sales. US initial jobless claims are also scheduled.

USDJPY – technical overview

Although the bullish structure remains firmly intact, following the recent break to fresh multi-year highs, the market has finally entered a period of healthy correction after stalling ahead of 126.00. Stretched studies are unwinding from overbought, with room for further weakness to 122.00. But any additional setbacks below 122.00 should be very well supported in favour of a bullish resumption.

• R2 124.73 – 9Jun high – Strong
• R1 123.85 – 9Jun low – Medium
• S1 122.45 – 10Jun low – Medium
• S2 122.00 – Previous Resistance – Strong

USDJPY – fundamental overview

The Yen rally has tapered out post Kuroda, though the market is still not sure if additional Yen gains are warranted. A World Bank downgrade of US growth forecasts and calls for the Fed to hold off on rate hikes has helped to keep the Yen supported, though the RBNZ rate cut has offset somewhat, with the move further highlighting ongoing monetary policy divergence between the Fed and rest of the central banking world. Looking ahead, it’s all about US retail sales and the next big move will hinge on the result. Also out on Thursday are US initial jobless claims.

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

Though there has been some progress this week, 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. 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 0.7934 – 20May high – Medium
• R1 0.7819 – 3Jun high – Strong
• S1 0.7707 – 11Jun low – Medium
• S2 0.7598 – 1Jun low – Strong

AUDUSD – fundamental overview

While the Australian Dollar has been a beneficiary of Kiwi outflows on Thursday post RBNZ rate cut, the currency has also found support on its own merits, with Aussie employment data coming in well above forecast. The market had been looking for a 15k job print and got a whopping 42k instead, with unemployment also ticking down and producing a downward revision to the previous print. Rates are at record lows in Australia and today’s report will do a good job of scaling back any possibility for additional RBA easing. Looking ahead, the market will be focused on the upcoming US retail sales print and weekly initial jobless claims release.

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. Recent setbacks should now be well supported in the 1.2200 area, after the market reached a short-term double top objective. Ultimately, only a daily close below 1.2150 would delay the constructive outlook.

• R2 1.2442 – 9Jun high – Strong
• R1 1.2352 – 10Jun high – Medium
• S1 1.2202 – 10Jun low – Medium
• S2 1.2129 – 29May low – Strong

USDCAD – fundamental overview

Most of the gains we had seen in the Canadian Dollar of late had been driven off broader US Dollar weakness and ongoing demand for OIL. However, economic data out of Canada has also been solid over the past several days, with last Friday’s employment report standing out. But in the end, it really comes down to US Dollar sentiment more than anything else and a lot of this will be determined by the outcome of today’s US retail sales release. The market is expecting a big number for retail sales, with a headline forecast for 1.2% from 0% previous. Otherwise, Canada capacity utilization and new house prices are due, along with US initial jobless claims. Perhaps there is some more risk later in the day, with the release of the Bank of Canada FSR.

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. For now, the market will be focused on trying to establish below the psychological barrier at 0.7000, with the first key support level below the barrier coming in at 0.6946, the low from August 2010. Any rallies should now be well capped below 0.7400.

• R2 0.7150 – Mid-Figure– Medium
• R1 0.7100 – Figure– Strong
• S1 0.6998 – 11Jun/2015 low – Medium
• S2 0.6946 – Aug 2010 low – Medium

NZDUSD – fundamental overview

A massive unwinding of Kiwi longs is underway after the RBNZ went ahead and completed its 180 shift on monetary policy with the announcement of a 25bp rate cut. The rate cut was accompanied by some dovish commentary, with the central bank citing concerns of a slowdown in the economy and signaling more rate cuts ahead. Kiwi is now contemplating the establishment below next major psychological barriers at 0.7000 against the Buck and is testing levels not seen since 2010. Looking ahead, US retail sales will be the big focus from here.

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. Despite Wednesday’s bounce, the recent close below 2100 strengthens the bearish 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. If today’s US retail sales print matches or exceeds expectations, look out for more profit taking on longs.

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

A wider Turkish current account gap and upward revision to March’s deficit are now a welcome development for a Lira that is already trading just off recently established record lows. The Lira had traded to a fresh record low earlier this week and has not looked pretty since the Turkish election results, after President Erdogan’s ruling AK party failed to gain a majority government. Much of the direction in the Lira will now be predicated on the outcome of today’s US retail sales data.