End Of The Line For Greece, Decision Day Nears

GBPUSD – technical overview

Tuesday’s break and close below 1.5550 shifts the focus back to the downside, with setbacks accelerating and eyeing a retracement to the June 1 low at 1.5170. At this point, a break and close back above 1.5550 would be required to suggest bullish resumption back towards the recent 2015 high at 1.5930.

• R2 1.5530 – 6Jul low – Strong
• R1 1.5467 – 8Jul low – Medium
• S1 1.5330 – 8Jul low  – Medium
• S2 1.5257 – 9Jun low  – Strong

GBPUSD – fundamental overview

Concern over tightened government spending in the UK budget could be factoring into the latest wave of weakness in the Pound, with the currency underperforming even against the Euro despite the Greece uncertainty. Sources also talk about some repositioning in this market, with many local traders exiting long Sterling following an impressive run towards 1.6000. Later today, the BOE is out with its policy decision, though no change is expected, with rates to stay pat at 0.50% and the APT to hold steady at GBP375B.

USDJPY – technical overview

Wednesday’s collapse below 122.00 has forced a shift in the overall structure, with the intense setbacks now opening the door for deeper declines in the days ahead back towards next critical support in the 118.00s. Monthly studies are only just now crossing down from overbought and there is plenty of room for additional weakness. In the interim, any rallies should be well capped below 123.00, while only a break back above this figure would take the immediate pressure off the downside.

• R2 121.85 – 6Jul low – Strong
• R1 121.00 –Figure – Medium
• S1 120.00 – Psychological – Strong
• S2 118.89 – 14May low – Medium

USDJPY – fundamental overview

Selling in the major pair has intensified in recent sessions, with the market clearing stops and taking no prisoners as it trades down into the 120.00 area. If there was any question of correlations between the Yen and safe haven flows, that question has been answered these past days, with the Grexit risk and China meltdown resulting in a heavy wave of Yen inflows. The Yen was the standout outperformer in Wednesday trade and with plenty of risk still in the air and heavier sell-stops reported below 120.00, the possibility for deeper setbacks should not be ruled out.

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 1.0525 – 2Jul high – Medium
• S1 1.0355 – 6Jul low – Medium
• S2 1.0315 – 29Jun low – Strong

EURCHF – fundamental overview

Greece’s request for a three year loan facility for the ESM has inspired some confidence in this rate, with the market rallying impressively in Wednesday trade. Still, we are waiting for colour on the latest proposal and expect more clarity today. Overall, reassurances from the SNB that it will continue to support dips in this market have been well received by investors, happy to ride on the central bank’s back whenever we see downside pressure. Still, the SNB would probably be better served if a deal were reached, as any additional intensification on this front, particularly with China under pressure, could prove too difficult for the central bank to fight. Dealers cite stops below 1.0300 and above 1.0600.

AUDUSD – technical overview

A multi-day bearish consolidation has finally been broken to the downside, with the market taking out the yearly/multi-year low at 0.7533 to open the door for the next major downside extension towards 0.7000 further down. Daily studies are however a little stretched leaving the door open for some corrective upside before bearish resumption. However, any rallies should be well capped below 0.7819.

• R2 0.7587 – 29Jun low – Strong
• R1 0.7533 – 6Jul high – Medium
• S1 0.7372 – 8Jul/2015 low – Strong
• S2 0.7350 – Mid-Figure – Medium

AUDUSD – fundamental overview

The Australian Dollar has been battling external risks, with ongoing uncertainty surrounding Greece’s fate and the shocking decline in Chinese equities opening fresh multi-year lows against the Buck. However, developments on the local front have been more favourable this week. Soft iron prices aside, a less dovish RBA meeting on Tuesday and another solid round of employment data early Thursday are encouraging some demand for the beaten down commodity currency. The better jobs report should be a welcome relief to the RBA and reaffirm the current stance that rates are appropriate at current levels.

USDCAD – technical overview

The recent push through 1.2563 confirms a fresh higher low at 1.2128 and opens the door for the next major upside extension through the 1.2835, 2015 high in the sessions ahead. A break above 1.2835 will then expose the 2009 peak at 1.3065 further up. At this point, look for any setbacks to be very well supported ahead of 1.2563, while only a drop below 1.2300 delays the highly constructive outlook for the pair.

• R2 1.2835 – 18Mar/2015 high – Strong
• R1 1.2780 – 7Jul high – Medium
• S1 1.2645 – 7Jul low – Medium
• S2 1.2563 – 6Jul low – Strong

USDCAD – fundamental overview

The last week or so hasn’t been a friend to the Canadian Dollar, which continues to get hit hard across many fronts. Though we have seen some softer data out of the US, this has been more than offset with disheartening data out of Canada as reflected through last week’s GDP and Tuesday’s trade data, which showed a ballooning deficit. Adding insult to injury, the commodity currency, heavily correlated to OIL flows, is taking an added hit with OIL prices pulling back sharply over the past few sessions. Finally, with risk markets sensitive to Greece and China, this has taken away from incentive to be long the Loonie. Looking ahead, Canada housing data is due along with US initial jobless claims.

NZDUSD – technical overview

The market continues to extend declines to fresh yearly and multi-year lows, with the pair closing in on a measured move downside objective in the 0.6500 area. However, daily studies are now correcting from deep oversold territory, and there is risk for additional upside in the sessions ahead to allow for these studies to unwind. But any rallies should be well capped ahead of 0.7000.

• R2 0.6924 – 25Jun high– Strong
• R1 0.6810 – 1Jul high– Medium
• S1 0.6621 – 7Jul/2015 low – Strong
• S2 0.6600 – Figure – Medium

NZDUSD – fundamental overview

There has been an aggressive upgrade of RBNZ rate cut expectations, with the market pricing additional easings in the months ahead. Declining dairy prices have been a major drag on the economy, while this week’s NZIER Q2 business survey hasn’t done anything to inspire confidence, with sentiment crumbling to its lowest levels in three years. Moreover, Kiwi is still the highest yielding currency of the developed economies and as such, is deeply exposed in risk off settings. While we did see some outperformance in Wednesday trade, the price action was attributed to nothing more than some profit taking on shorts following an intense sell off over the past several days. Looking ahead, the market will continue to pay close attention to developments in Greece and China where uncertainty runs high.

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 bearish reversal below 2100 to strengthen the outlook and open a break below critical support at 2040, which guards against 2000 further down. Rallies should now be well capped below 2100 on a daily close basis.

• R2 2100.00 – Psychological – Strong
• R1 2094.00 – 26Jun low – Medium
• S1 2040.00 – 11Mar low – Strong
• S2 2000.00 – Psychological – Strong

US SPX 500 – fundamental overview

Stocks closed lower on Wednesday, unable to shake off the fallout from the Chinese equity market collapse and systemic risk associated with this and a potential Grexit. Adding insult to injury, a technical glitch on the NYSE resulted in an intraday shut down which didn’t do anything to help investor nerves. The market now hovers just over the low from March and if stops are cleared below, this could open the door for a further acceleration to the downside. A balanced Fed Minutes didn’t really factor into trade, though comments from Fed Williams may have weighed some more, after the central banker still outlined his expectation for rate hike(s) this year.

GOLD (SPOT) – technical overview

The recent bearish close below 1160 diminishes the basing outlook for this market and opens the door for a more immediate retest of the the 2014 low at 1143, which guards against the critical multi-year base from 2014 at 1131 further down. At this point, a break back above 1175 will be required to take the pressure off the downside.

• R2 1188.00 – 29Jun high – Strong
• R1 1175.00 – 6Jul high – Medium
• S1 1143.00 – 17Mar/2015 low – Strong
• S2 1131.00 – 2014 low – Very Strong

GOLD (SPOT) – fundamental overview

Quite surprisingly, the GOLD market has been unable to catch any decent bids in recent trade, despite a major cloud of uncertainty hanging over Greece and its future in the Eurozone. On top of everything going on in Greece at the moment, GOLD has even failed to find bids on the collapse in China’s financial markets. Medium-term players continue to step in but are starting to lose patience with the lack of follow through in the face of events that should otherwise be traditionally supportive of the commodity.

Feature – technical overview

USDTRY continues to trade within a broader well defined uptrend. Although the market has been locked within some consolidation over the past several sessions, setbacks continue to be very well supported and a higher low looks to be carving out at 2.6500 ahead of the next major upside extension beyond the recent record high at 2.8100 from June. Ultimately, only below 2.5500 would compromise the bullish outlook.

• R2 2.8100 – 8Jun/Record high – Strong
• R1 2.7170 – 6Jul high – Medium
• S1 2.6500 – 25Jun low – Strong
• S2 2.6000 – Psychological – Medium

Feature – fundamental overview

The Lira has held up rather well in recent trade considering all the external risks and some softer local data. There has been no clarity offered on Greece as of yet, while China stocks remain under pressure despite stimulus efforts. In Turkey, things haven’t been smooth, with industrial production disappointing and the government still struggling to form a coalition. It’s possible, that for the moment, market participants are more comfortable waiting to see how things play out with Greece and China before committing to sell additional Lira.