USD Demand Ramps Up As Fed Liftoff Approaches

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 1.5675 – 15Jul high – Medium
• S1 1.5577 – 15Jul low  – Medium
• S2 1.5451 – 14Jul low  – Strong

GBPUSD – fundamental overview

The US Dollar was a broad based winner on Wednesday, but the Pound held up exceptionally well even with the solid US economic data and a signal from the Fed Chair to expect rate hikes in 2015. It seems the primary focus for this market right now is on recent hawkish comments from BOE Governor Carney who has told the market to prepare for rate hikes. Wednesday’s UK employment data was mixed but on the whole, was supportive of the hawkish BOE speak in light of the surge in wages. Thursday’s UK economic calendar is empty and the focus will shift to the US where initial jobless claims and the Philly Fed are featured. Of course, not to be forgotten is the second day of Fed Chair Yellen testimony.

USDJPY – technical overview

The broader uptrend remains firmly intact, with the market very well supported into the latest corrective dip ahead of 120.00. At this point, there could be a fresh medium-term higher low carving at 121.32 ahead of the next major upside extension back towards and above the recent multi-year high at 125.85. Still, with monthly technical readings overbought, additional corrective declines should not be ruled out.

• R2 124.45 – 17Jun high – Strong
• R1 123.97 –15Jul high – Medium
• S1 123.26 – 15Jul low – Medium
• S2 122.92 – 14Jul low – Strong

USDJPY – fundamental overview

No surprises from the Bank of Japan on Wednesday and this market continues to trade on broader themes. The primary driver has been interest rate differentials and the timing of a Fed rate liftoff. And so, with US PPI and industrial production coming in above forecast and with the Fed Chair signaling a hike in 2015, the market has seen a fresh wave of demand. US equity markets have also been well supported, which offers added incentive to be playing the long side of USDJPY. Looking ahead, US initial jobless claims and the Philly Fed are due, while Fed Chair Yellen testimony gets set for her second day of testimony.

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 1.0235 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. 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

The downtrend remains firmly intact, with the market extending declines to fresh multi-year lows and gravitating closer to next key psychological barriers at 0.7000. In the interim, rallies should be very well capped ahead of 0.7600, with only a break back above to take the immediate pressure off the downside.

• R2 0.7533 – Previous Base – Strong
• R1 0.7496 – 10Jul high – Medium
• S1 0.7300 – Figure – Strong
• S2 0.7240 – May 2009 low – Medium

AUDUSD – fundamental overview

Clearly the market has been having a tough time buying into the latest round of China data, and despite the beat, downside pressures persist, with the correlated Australian Dollar perhaps focusing more on struggling China equities. Persistent commodity price declines and an expectation for Fed rate liftoff in 2015 have also contributed to the price action, with Aussie extending declines to yet another fresh multi-year low. Dealers now talk of targets around the 0.7000 level, with no real stops until above 0.7600. Looking ahead, US initial jobless claims, the Philly Fed and a second day of Yellen testimony will be the focus in Thursday trade.

USDCAD – technical overview

Fresh multi-year highs for this pair, with the market surging through the previous 2015 high at 1.2835. From here, scope exists for a continuation of gains towards the 2009 peak at 1.3065 further up. Daily studies are however starting to look a little stretched, but any setbacks are expected to be well supported ahead of 1.2600.

• R2 1.3065 – 2009 high – Strong
• R1 1.2959 – 15Jul/2015 high – Medium
• S1 1.2835 – Previous High – Medium
• S2 1.2717 – 14Jul low – Strong

USDCAD – fundamental overview

It was only a matter of time before the floodgates opened and the Canadian Dollar would sink to fresh multi-year lows. While there had been a lot of talk over the potential for a BoC rate cut on Wednesday, it was by no means fully priced in and as such, the announcement of the cut was a clear catalyst for fresh Canadian Dollar lows and underperformance across the board. BoC Governor Poloz followed up with some dovish speak and downbeat comments relating to commodities prices and the impact of the China slowdown on exports. Canada GDP forecasts were also lowered dramatically for 2015, and the BoC has left the door open for additional easing. Looking ahead, Canada international securities transactions are due today, along with other notables which include US initial jobless claims the Philly Fed and a second day of Fed Chair Yellen testimony.

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 at 0.6500. However, daily studies are tracking in deep oversold territory, and there is risk for some corrective upside in the sessions ahead to allow for these studies to unwind before the market considers a bearish continuation. Still, any rallies should be well capped ahead of 0.6850.

• R2 0.6667 – 14Jul low– Strong
• R1 0.6603 – 16Jul high– Medium
• S1 0.6500 – Psychological – Strong
• S2 0.6450 – Mid-Figure – Medium

NZDUSD – fundamental overview

Another day, another low for the New Zealand Dollar, hit hard in Wednesday and early Thursday trade on the back of a plethora of drivers. Initially it was shaky China equities, though the setbacks intensified later in the day following a round of solid US economic data and further signaling from the Fed Chair for rate liftoff in 2015. Adding insult to injury, the market then absorbed another horrid GDT auction and softer inflation readings. The market is now pricing in additional accommodation from the RBNZ over the coming weeks and the once attractive higher yielding currency has now lost its status. Commodity price declines have also factored into weakness and should not be overlooked. US initial jobless claims, the Philly Fed and another day of Yellen testimony ahead.

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 negates 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

No surprises from the Fed Chair on Wednesday and a day of light volume produced some lackluster price action. Still, overall, stocks have been very well supported in recent trade, with the impressive recovery attributed to some peace of mind with Greece and solid Q2 earnings. However, should US economic data continue to impress, this could further accelerate the Fed’s timeline and invite more than one hike this year which could ultimately weigh on stocks given the removal of free money incentive to be long.

GOLD (SPOT) – technical overview

The recent bearish close below 1160 diminishes the basing outlook for this market and opens the door for a break below the 2014 low at 1143, which guards against the critical multi-year base from 2014 at 1131 further down. At this point, a push 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 what had been a decent wave of risk. 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. A broad based bout of US Dollar demand following solid US economic data and some hawkish Fed comments have been sourced as the driver behind the most recent setbacks.

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

There isn’t any room for any CBRT monetary policy tightening despite higher inflation forecasts and the central bank will be forced to continue to walk a very tight line as the local economy struggles. For now, external flows have been driving price action, with broad based US Dollar demand on the back of solid US economic data and some hawkish Fed comments opening renewed downside pressure in the Lira following a few sessions of gains.