Market Still Waiting For Clarity On Greece

GBPUSD – technical overview

An impressive rally to fresh 2015 highs has stalled out ahead of the 1.6000 psychological barrier, with the market reversing lower and exposing a drop back towards some internal support at 1.5550. A break and close below 1.5550 will open the door for a more pronounced bearish reversal, while inability to do so will keep the immediate pressure on the topside for an eventual retest and break above 1.6000.

• R2 1.5930 – 18Jun/2015 high – Strong
• R1 1.5803 – 24Jun high – Medium
• S1 1.5662 – 29Jun low  – Medium
• S2 1.5625 – 17Jun low  – Strong

GBPUSD – fundamental overview

Though the Pound was weighed down in sympathy with the Euro in Tuesday trade, the UK currency held up rather well on a relative basis, with a solid round of economic data contributing to the price action. UK GDP readings came in well above forecast on a year over year basis, while total investment was strong. The only discouraging piece of data came in the form of a softer current account. Looking ahead, Greece will continue to be front and center, but we do get a decent round of data with UK manufacturing PMIs, US ADP, US ISM manufacturing, and US construction spending due. Also out in UK trade will be BOE Carney and the Financial Stability Report.

USDJPY – technical overview

Although the bullish structure remains firmly intact, following the recent break to fresh multi-year highs, the market has entered a period of healthy correction after stalling ahead of 126.00. Medium-term stretched studies are unwinding from overbought, with room for further weakness below 122.00. But any setbacks below 122.00 should be very well supported ahead of 120.00 in favour of a bullish resumption.

• R2 124.45 – 17Jun high – Strong
• R1 123.19 –29Jun high – Medium
• S1 121.94 – 30Jun low – Strong
• S2 121.50 – Mid-Figure – Medium

USDJPY – fundamental overview

Japan’s Tankan survey produced some on the whole solid results, though the data still shows the recovery on fragile footing. Sentiment amongst large manufacturers was up a good deal above consensus, while capex plans also exceeded expectations. But for the major pair, the direction has been less impacted by economic data and more heavily influenced by broader macro flows and flight to safety demand in the face of a tense and unsettled Greek saga. Looking ahead, the market will be paying close attention to the Wednesday teleconference on Greece, while economic data out of the US including ADP employment and ISM manufacturing will also be watched.

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 a 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. Look for a push back above 1.0575 to strengthen the constructive outlook and accelerate gains. Ultimately, only a daily close below 1.0300 would compromise the recovery outlook and give reason for pause.

• R2 1.0575 – 4Jun high – Strong
• R1 1.0497 – 26Jun high – Medium
• S1 1.0280 – 29May low – Medium
• S2 1.0235 – 20Apr low – Strong

EURCHF – fundamental overview

The SNB was forced into action on Monday, with the weekend fallout from the Greece turmoil opening a massive flight to safety flow into the Franc. SNB Jordan backed up recent comments and was on the wires on confirming the central bank had stepped in with some form of an intervention to support the sharp declines in the EURCHF rate. It is speculated the latest intervention was probably more of a smoothing out as opposed to anything intense from the Swiss central bank. The rate has since remained supported on a fresh round of optimism relating to this latest Greek proposal to creditors, which will be reviewed today. However, as per various EU officials, no such decision is likely to be given until after the referendum.

AUDUSD – technical overview

Overall, the broader downtrend remains intact, with the market consolidating below psychological barriers at 0.8000. 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. For now, any corrective rallies should be well capped ahead of the recent peak at 0.7819, while ultimately, only a break back above 0.8163 will ultimately delay the bearish structure.

• R2 0.7771 – 24Jun high – Strong
• R1 0.7712 – 29Jun high – Medium
• S1 0.7587 – 29Jun low – Medium
• S2 0.7533 – 2Apr/2015 low – Strong

AUDUSD – fundamental overview

Some mixed data out of Australia in Wednesday trade, with a disturbingly weak PMI showing offset by a pickup in building approvals. Also out was a China HSBC PMI print below 50 and slightly below forecast. But this week has been about Greece and developments on that front, and with some optimism for a deal emerging after the Greek government issued another proposal to creditors, the Australian Dollar has been supported on dips for now. Looking ahead, the teleconference on Greece to review this latest proposal will be in focus, while US data out for Wednesday should also be watched. ADP employment and US ISM manufacturing are the standouts.

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. Setbacks should now be well supported in the 1.2200 area, while ultimately, only a daily close back below 1.2127 would delay the constructive outlook. Look for a break back above 1.2563 to confirm the constructive outlook and accelerate gains.

• R2 1.2563 – 5Jun high – Strong
• R1 1.2500 – Figure – Medium
• S1 1.2363 – 30Jun low – Medium
• S2 1.2277 – 24Jun low – Strong

USDCAD – fundamental overview

A much weaker than expected Canada GDP print sent chills down the spines of CAD bulls in Tuesday trade, with the data not only coming in softer than forecast, but also producing a negative month over month print. This has stoked fear amongst locals that Bank of Canada Governor Poloz may have been off with his assessment of the economy earlier this year after calling for a quick rebound post worrying Q1 data. The Canadian Dollar was a standout underperformer on Tuesday and will now contend with ongoing Greece headlines and US economic releases in the form of ADP, ISM manufacturing and construction spending in Wednesday trade.

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. Daily studies are however looking a little stretched and there is risk for a short-term corrective bounce in the sessions ahead. But any rallies should now be well capped well below 0.7200.

• R2 0.6924 – 25Jun high– Strong
• R1 0.6882 – 29Jun high– Medium
• S1 0.6747 – 30Jun/2015 low – Strong
• S2 0.6700 – Figure – Medium

NZDUSD – fundamental overview

The New Zealand Dollar was already a standout underperformer over the past couple of weeks, with the RBNZ 180 shift on policy driving a rotation out of the higher yielding Kiwi. The market is now pricing in additional rate cuts from the central bank over the coming months, as the local economy struggles. Tuesday’s horrid business confidence has only helped to reaffirm the bearish Kiwi outlook. Throw in Greece uncertainty, the Fed policy trajectory and declining equities, and the outlook for the NZD remains quite bleak. Still, with some optimism emerging in Greece following this latest proposal and with Kiwi technically overextended, we have seen some profit taking on shorts inspire a bit of a relief rally into Wednesday.

US SPX 500 – technical overview

The market has stalled out after posting record highs in May, with the lack of bullish momentum suggestive of exhaustion and warning of deeper setbacks ahead. Look for the latest topside failure and sharp bearish reversal below 2100 to strengthen the outlook and expose critical support at 2040. Rallies should now be well capped below 2100 on a daily close basis.

• R2 2137.00 – 19May/Record – Strong
• R1 2100.00 – Psychological – Medium
• S1 2055.00 – 29Jun low – Medium
• S2 2040.00 – 11Mar low – Strong

US SPX 500 – fundamental overview

The equity market has failed to establish any meaningful bullish momentum since breaking to fresh record highs in May and could be at risk of forming a major top. The escalation in the Greek crisis has opened a fresh round of setbacks in the early week, while ongoing solid US economic data helps to solidify prospects for a sooner than later rate liftoff. These realities are making it less attractive to be long equities at lofty levels. Still, while the market holds above the March lows, dip buyers are expected to emerge.

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 1206.00 – 18Jun 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, with global equities looking vulnerable at record highs, and with the Greece crisis in escalation mode, there is no better place for capital allocation than GOLD. Dealers cite plenty of interest around $1170, with decent stops below $1163 and above $1235.

Feature – technical overview

USDZAR is locked within a well defined uptrend, with the market consolidating off recently established 2015 highs. A medium-term higher low is in place just over 11.6900, with any setbacks expected to be very well supported above the level ahead of the next major upside extension back above 12.6365. Ultimately, only a break and close below 11.6900 would negate.

• R2 12.6375 – 8Jun/2015 high – Strong
• R1 12.3900 – 29Jun high – Medium
• S1 12.0540 – 25Jun low – Medium
• S2 11.6945 – 6Apr low – Strong

Feature – fundamental overview

A welcome surprise for the Rand in Tuesday trade, with economic data influencing price action. The market had been preparing for a widening out in the South Africa trade deficit and instead got the good news of a trade surplus. This opened some relative outperformance in the Rand, though any gains are viewed as short-term, with the more pressing uncertainty surrounding Greece, the prospect of a Fed rate liftoff, and a still struggling local economy seen weighing on the emerging market currency over the medium-term.