Market Attempts To Focus On Traditional Drivers

GBPUSD – technical overview

Setbacks have been very well supported ahead of 1.5170 and the market could be looking to carve out a fresh higher low at 1.5330 in favour of the next major upside extension back towards and above the recent 2015 high at 1.5930. At this point, only back below 1.5330 would negate the constructive outlook and compromise the bullish structure.

• R2 1.5733 – 1Jul high – Strong
• R1 1.5700 – Figure – Medium
• S1 1.5500 – Figure  – Medium
• S2 1.5451 – 14Jul low  – Strong

GBPUSD – fundamental overview

Some major outperformance in the Pound on Tuesday, with the market easily shrugging off softer UK inflation readings and finding a fresh round of bids on the back of the combination of hawkish BOE Governor Carney comments and soft US data. Governor Carney sounded upbeat and warned that the time for rate hikes was approaching, while US retail sales came in much softer than expected. The market will now look to digest a round of UK employment data, US industrial production and semi-annual testimony from Fed Chair Yellen in today’s trade.

USDJPY – technical overview

The recent breakdown towards 120.00 has forced a shift in the short-term structure, with the setbacks now opening the door for deeper declines in the days ahead back towards next critical support in the 118.00s. Monthly studies are tracking in overbought territory and there is plenty of room for additional weakness ahead. In the interim, any rallies should be well capped below 124.00 on a daily close bases, with a lower top sought out, while only a close back above this figure would take the immediate pressure off the downside.

• R2 124.00 – Figure – Strong
• R1 123.73 –14Jul high – Medium
• S1 122.18 – 13Jul low – Medium
• S2 121.70 – 10Jul low – Strong

USDJPY – fundamental overview

It seems the Greece resolution and concurrent recovery in equity markets has been helping to keep the major pair well supported this week. Overall, market participants have been major buyers of USDJPY dips these past several months and continue to look to build into the position. At the same time, gains have been tempered given the extent of the rally, while more recently, a much softer than expected US retail sales print has been weighing a bit, with the data potentially suggesting the Fed will stay on hold a bit longer. The Bank of Japan decision hasn’t factored into price action, after the central bank left policy on hold as widely expected in another 8-1 vote. Looking ahead, the Fed Chair will give her semi-annual testimony today, while the market will also absorb US PPI, industrial production and the Beige Book.

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 – 10Jul high – Medium
• S1 1.0355 – 6Jul low – Medium
• S2 1.0315 – 29Jun low – Strong

EURCHF – fundamental overview

Although the market has welcomed news of a Greece agreement, the euphoria has worn off rather quickly, with investors realizing there is a lot of work that needs to get done. The combination of the fact that the deal needs to be ratified by the Greek government and some criticism from the IMF on the lack of debt relief to Greece, have resulted in renewed downside pressure, with the market gravitating back into the 1.0400 area. Still, 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.

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 impressive recovery for the Australian Dollar in Tuesday trade, with the market building on the momentum from the softer round of US retail sales data. The much weaker than expected US reading has some participants scaling back Fed rate expectations, and this has bolstered Aussie off recent multi-year lows. Aussie has extended the recovery early Wednesday following a string of impressive China data, after retail sales, industrial production and GDP all exceeded expectations. Still, the market is pricing in 17bps of RBA cuts between now and year end and Aussie fundamentals continue to support accommodative policy. Negative consumer confidence readings out of Australia have been a drag on Aussie sentiment and ultimately even with the softer US data, the rate differential trajectory continues to favour additional Aussie weakness. Looking ahead, the market will take in Fed Yellen’s semi-annual testimony, US PPI, industrial production and the Fed Beige Book.

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 1.2805 – 14Jul high – Medium
• S1 1.2645 – 7Jul low – Medium
• S2 1.2563 – 6Jul low – Strong

USDCAD – fundamental overview

The Canadian Dollar has stalled shy of retesting 2015 lows against the Buck with a much softer than expected US retail sales reading and a nice recovery in the price of OIL factoring into the price action. Still, the Loonie recovery has been rather mild and it seems participants are now more comfortable waiting for additional clarity and insight later today with the Bank of Canada rate decision due and Fed Chair Yellen set to offer semi-annual testimony. Last week, the Fed Chair seemed to suggest the Fed is still on course for liftoff in 2015, while at the same time, local traders were increasing speculation of BoC easing following a bout of some softer Canada data. Other economic of note later today includes Canada manufacturing shipments and existing homes and sales, along with US PPI, industrial production and the Fed Beige Book.

NZDUSD – technical overview

The market continues to extend declines to fresh yearly and multi-year lows, with the pair confined to a bearish channel and 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 0.6850.

• R2 0.6850 – Channel Top– Strong
• R1 0.6769 – 10Jul high– Medium
• S1 0.6650 – Mid-Figure – Medium
• S2 0.6621 – 7Jul/2015 low – Strong

NZDUSD – fundamental overview

The under pressure New Zealand Dollar has found some mild support into Wednesday, with the higher yielding currency rallying on a much softer than expected US retail sales print and recovery in US equities. Still, RBNZ rate cut expectations have been creeping up these past few weeks, with a run of softer New Zealand data and a deteriorating dairy sector factoring into forecasts. For now, the market has found additional bids early Wednesday on the back of a solid round of China retail sales, industrial production and GDP. Looking ahead, participants will prep for Fed Chair Yellen semi-annual testimony later in the day. Also out in Wednesday trade are US PPI, industrial production and the Fed Beige Book. Volatility will then pick up for the pair early Thursday with the release of New Zealand CPI.

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 rally back above 2100 to stall out yet again ahead of the 2137 record peak in favour of deeper setbacks below the critical March low at 2040. At this point, only back above 2137 would negate the topping outlook.

• R2 2137.00 – 19May/Record – Strong
• R1 2126.00 – 27Apr high – Medium
• S1 2064.00 – 13Jul low – Medium
• S2 2040.00 – 11Mar low– Strong

US SPX 500 – fundamental overview

US equity futures have mounted an impressive recovery these past few sessions, with the news of a Greece deal helping to bolster sentiment. Meanwhile, the much softer than expected US retail sales print has some scaling back Fed interest rate hike expectations. a welcome development as it relates to free money US equity investment incentive. The market will get more colour on Wednesday as the Fed Chair gives her semi-annual testimony. Q2 earnings will also factor into trade with more US banks and tech firms ahead. Intel and Netflix are the highlights for Wednesday.

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 broad declines in the US Dollar on the back of a softer US retail sales showing. 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. Right now, the market is waiting to see what will come of today’s semi-annual testimony from the Fed Chair.

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 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 2.6000 – Psychological – Medium
• S2 2.5615 – 21May low – Strong

Feature – fundamental overview

The Iran nuclear deal is something that could be of great benefit to the oil importing Turkish economy, and the Lira has responded in kind, rallying a nice amount into Wednesday trade. Turkey’s energy minister has commented the Iran deal could result in the country saving some USD 13 billion per year. Meanwhile, softer than expected US retail sales data has only helped to further accelerate the Lira recovery. On the political front, according to the PM, the nationalist MHP party is unwilling to join the ruling AK Party in a coalition alliance. Looking ahead, testimony from Fed Chair Yellen will be watched closely in Wednesday trade.