Greece Submits Final Proposal, Markets Optimistic

GBPUSD – technical overview

This week’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

The Bank of England left policy on hold as was widely expected, with rates holding steady at 0.50% and the APT unchanged at GBP375B. There was no accompanying statement to the decision and the event came and went with very little reaction. As things go, the market isn’t pricing in any chance for a rate hike in the UK until at least Q1 2016. Today’s decision was most likely unanimous, though there is a small chance that Martin Weale dissented. The BOE Minutes aren’t out until July 22nd, but with BOE Governor Carney slated to speak next week on the 16th, we may get some more colour ahead of the Minutes. Data out of the UK today includes the trade balance and construction output, while in the US, the focus will be on a Janet Yellen speech at 16GMT. The Pound has received a boost in early Friday trade as it follows the Euro’s lead on optimism for a Greece deal.

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 122.93 – 6Jul high – Strong
• R1 122.57 –8Jul high – Medium
• S1 121.00 – Figure – Medium
• S2 120.41 – 8Jul low – Strong

USDJPY – fundamental overview

An intense bout of Yen appreciation has stalled out for now, with the currency coming back under pressure into Friday trade as market participants exit safe haven plays. Greece’s final proposal looks strikingly similar to offers that had already been on the table, and it appears as though the country has conceded and is finally willing to give in on some creditor sticking points that had been holding the deal up. The market is waiting for confirmation of a deal but has been pricing in a favourable result. Also on participants radar screens in today’s trade will be the 16GMT speech from Fed Yellen. Comments from other Fed officials have been mixed this week, with Fed Evans sounding quite dovish on Thursday, while Fed George was rather hawkish, urging for the Fed to start raising rates now.

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 has submitted what has been dubbed its final proposal to creditors and the market has reacted positively, with an expectation a deal will finally get done after Greece conceded on points that had been holding up the deal. 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. But with a deal looking like it could get done, this will take pressure off the SNB as money naturally flows out of the Franc. Dealers cite stops above 1.0575.

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 0.7533 – Previous Base – Strong
• R1 0.7500 – Psychological – Medium
• S1 0.7372 – 8Jul/2015 low – Strong
• S2 0.7350 – Mid-Figure – Medium

AUDUSD – fundamental overview

An expected Greece deal, solid Thursday showing from Aussie employment data and some China stock market plunge protection have helped drive a welcome relief rally in a very beaten down Australian Dollar. Aussie had traded down to fresh multi-year lows this week before finally finding demand in Thursday trade. Later today, market participants will be focused on comments from Fed Chair Yellen, due to speak at 16GMT. Though the Fed monetary policy divergence theme has slipped into the background, it is still very much alive and as such, any additional insights on Fed timing offered by Yellen, will play a role in the direction of the Australian Dollar. Softer Aussie home loan data hasn’t factored into trade.

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 has taken a hit 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 Canada deficit. Adding insult to injury, the commodity currency, heavily correlated to OIL flows, is taking a bigger hit with OIL prices pulling back this week. All of this has increased speculation the Bank of Canada will now be forced to consider a rate cut at next week’s BoC meeting. The tipping point could come later today, with Canada economic data taking center stage, in the form of employment readings. Also out on today and potentially impacting is a speech from Fed Chair Yellen at 16GMT. We are however seeing some demand for the Loonie into Friday as markets respond favourably to the latest Greece proposal.

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 0.6698 – 9Jul low – Medium
• S2 0.6621 – 7Jul/2015 low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar has found some bids off fresh multi-year lows established this week, with profit taking on Kiwi shorts and optimism for a Greek deal inspiring a bounce. But overall, a slowdown in the dairy sector and deteriorating business confidence are serious concerns for an RBNZ also contending with external risk from China. Markets are now pricing additional rate cuts from the RBNZ in the weeks ahead and this should continue to weigh. Meanwhile, looking at post Fed Minutes comments from various Fed officials, it appears the Fed is still on course for rate hikes in 2015. While we did get some dovish remarks from Fed Evans on Thursday, these comments were offset by Fed Williams on Wednesday and Fed George also out Thursday. This won’t do anything to help Kiwi’s cause and dealers cite good offers into rallies. Looking ahead, a Fed Yellen speech are the focus on Friday.

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

The US equity market is hovering just over the lows from March and if stops are cleared below, this could open the door for a further acceleration to the downside. For the time being, the market has found a way to rally into Friday, with optimism for a Greece deal bolstering sentiment. Still, this market is at risk given perceived overvaluations and a Fed rate liftoff timeline that will at as a disincentive for further investment at current levels. The outlook for Fed monetary policy is a major determinant of market direction and more colour will be offered on this front today when Fed Chair Yellen speaks at 16GMT on the economic outlook.

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. GOLD has even failed to find bids on this week’s 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. Greece has submitted it final proposal to creditors and participants are optimistic a deal will finally get done. It will be interesting to see if confirmation of a deal opens downside pressure towards the 2014 base, or if a US Dollar sell-off on the back of a deal is supportive of the metal.

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

Price action in the Lira on Friday will be largely predicated on external flows and developments relating to Greece’s fate. Emerging markets are highly correlated to the events abroad and could find some relief if a deal is in fact achieved. Greece has submitted its final proposal to creditors and the market has responded favourably and seems to be pricing in a deal. We will now wait for confirmation from the creditors. Still, any Lira gains are not expected to be sustained, with Fed policy divergence and ongoing political uncertainty in the Turkish government keeping the currency from running too far. Fed Yellen is due to speak later today at 16GMT and her comments will be watched closely.