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GBPUSD – technical overview

Setbacks have been very well supported and the market could be looking to carve out a fresh higher low at 1.5350 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 1.5350 would negate the constructive outlook and compromise the constructive outlook.

• R2 1.5690 – 29Jul high – Strong
• R1 1.5546 – 7Aug high – Medium
• S1 1.5425 – 7Aug low  – Medium
• S2 1.5352 – 8Jul low  – Strong

GBPUSD – fundamental overview

The Pound has been well supported on dips in recent trade, though the UK currency has been underperforming, with the rest of the currency market rallying against the Buck. It seems the relative weakness is coming from last Thursday’s Bank of England event risk, with the overall more dovish than expected tone resulting in a scaling back of BOE rate hike bets over the coming months. In the lead up to last Thursday, Carney had been sounding increasingly hawkish, while UK data was also supportive. But the revelation of a BOE still very concerned with lower inflation has opened renewed selling in the Pound. Looking ahead, there is nothing of note on the UK calendar for today. The only standouts in the US session are Fed Lockhart and Fed Fischer speeches and the US labour market conditions index.

USDJPY – technical overview

The rally has been well capped for now around 125.00 and ahead of the critical multi-year peak from June at 125.85. Though the broader uptrend remains firmly intact, longer-term studies are well overbought and warn of some form of a correction before any meaningful bullish trend resumption through 125.85. Friday’s bearish outside day formation could be the catalyst that now triggers a more sizable bearish reversal.

• R2 125.85 – 5Jun/2015 high – Strong
• R1 125.07 – 7Aug high – Medium
• S1 124.02 – 5Aug low – Medium
• S2 123.52 – 31Jul low – Strong

USDJPY – fundamental overview

A relatively in line US jobs report left this major pair looking to other market drivers, with the focus shifting squarely on the liquidation in equity markets. The Yen’s correlation with risk has not gone away and with stocks moving lower, a good portion of the risk off flows have favoured the Yen. At this point, direction in the major pair will be heavily influenced by September Fed liftoff expectations and performance in risk assets. Any increased expectation for a September rate hike will be US Dollar supportive, while any intensified liquidation in equities will likely benefit the Yen. Looking ahead, the only notable events on today’s calendar are Fed Lockhart and Fed Fischer speeches and the US labour market conditions index.

EURCHF – technical overview

The market looks to be in the process of carving a meaningful base. From here, there is risk for a direct retest of the February 1.0815 peak, above which exposes the 1.1000 psychological barrier further up. Any setbacks are expected to be very well supported above 1.0575 on a daily close basis, though only a daily close below 1.0400 would delay the recovery outlook and give reason for pause.

• R2 1.0900 – Figure – Medium
• R1 1.0815 – 20Feb high – Strong
• S1 1.0724 – 6Aug high – Medium
• S2 1.0671 – 6Aug low – Strong

EURCHF – fundamental overview

The SNB has to be feeling really good about the depreciation in the Franc over the past few weeks. There has been talk the central bank has been taking advantage of the thin summer trade to pressure the Franc lower. A broad based US Dollar rally has also helped the SNB’s cause, with the move pushing USDCHF to its highest levels in months. Still, the SNB is far from out of the woods at this point. Global sentiment is looking shaky and any intensified downturn on this front will likely inspire a resurgence in sizable Franc inflows that will prove difficult to offset.

AUDUSD – technical overview

The recent break back above 0.7350 has triggered a double bottom that could open the door for a push to 0.7500 in the sessions ahead. Ultimately however, the broader downtrend remains firmly intact and any gains should be very well capped ahead of 0.7800 in favour of the next lower top and bearish continuation.

• R2 0.7496 – 10Jul high – Strong
• R1 0.7449 – 21Jul high – Medium
• S1 0.7315 – 6Aug low – Medium
• S2 0.7235 – 31Jul/2015 low – Strong

AUDUSD – fundamental overview

The Australian Dollar has held up well these past few sessions, with the currency holding onto gains despite another solid US employment report. But it seems the US data wasn’t quite enough to materially increase the chances for a September Fed rate liftoff, which has opened a bit of position squaring on USD longs into the new week. A still subdued wage growth showing in the US employment report and an ongoing deterioration in the price of OIL has also given Fed doves something else to chew on. Still, with commodities under pressure and China also at risk, there are plenty of Aussie offers reported into rallies. The weekend China trade data came in softer and this in conjunction with pressured equities could invite renewed downside pressure in the Australian Dollar. Looking ahead, the focus for Monday will be on Fed Lockhart and Fed Fischer speeches, along with the US labour market conditions index.

USDCAD – technical overview

The market is locked within a well defined, recently pushing to fresh 11-year highs. However, with daily studies now unwinding from overbought territory, there is risk for some form of a more meaningful corrective pullback towards support at 1.2861 in the sessions ahead to allow for these stretched studies to unwind. Ultimately, any corrective declines should be well supported ahead of 1.2600, with a higher low sought out in favour of a bullish continuation.

• R2 1.3214 – 5Aug/2015 high – Strong
• R1 1.3184 – 7Aug high – Medium
• S1 1.3049 – 7Aug low – Medium
• S2 1.2941 – 31July low– Strong

USDCAD – fundamental overview

Both the US and Canada Friday employment reports came in relatively in line with expectation and the offsetting data left the Loonie focusing on the other major driver in the form of OIL prices. OIL has been in a free-fall over the past several days, with the market trading back down to the critical March base. The ongoing decline in the commodity is a big drag on the Canadian economy and could play a role in forcing the Bank of Canada into further accommodation. Clearly with the Fed moving in the opposite direction, the Canadian Dollar has suffered mightily, to fresh 11 year lows in the previous week. Looking ahead, the focus for Monday will be on the price of OIL along with Fed Lockhart and Fed Fischer speeches and the US labour market conditions index.

NZDUSD – technical overview

Daily studies are in the process of unwinding from oversold off fresh multi-year lows and there is risk for additional correction in the sessions ahead to allow for these studies to further unwind before the market considers a legitimate bearish continuation below 0.6500. Still, any rallies should be well capped ahead of 0.6850 in favour of the existing downtrend.

• R2 0.6739 – 29Jul high– Strong
• R1 0.6674 – 31Jul high– Medium
• S1 0.6529 – 7Aug low – Medium
• S2 0.6491 – 5Aug/2015 low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar has been benefitting from broad based profit taking on long US Dollar positions over the past few sessions, with still subdued US wage growth readings and falling oil prices fueling some expectations the Fed will hold off from moving in September. But there really hasn’t been anything super-positive out of New Zealand, with dairy prices sliding, economic data deteriorating and China cooing off. This opens a striking divergence of Fed, RBNZ monetary policy and should continue to weigh on the New Zealand Dollar over the coming weeks. Looking ahead, the focus for Monday will be on Fed Lockhart and Fed Fischer speeches, along with the US labour market conditions index.

US SPX 500 – technical overview

The market has stalled out just shy of the May record high, with the lack of bullish momentum suggestive of exhaustion and warning of deeper setbacks ahead. Look for the latest topside failure to strengthen the bearish outlook in favour of deeper setbacks below the critical March low at 2040. At this point, only a break and daily close above 2137 would negate and open a bullish continuation to fresh record highs.

• R2 2137.00 – 19May/Record – Strong
• R1 2117.00 – 31Jul high – Medium
• S1 2063.00 – 27Jul low – Medium
• S2 2040.00 – 11Mar low– Strong

US SPX 500 – fundamental overview

Sellers continue to emerge into rallies ahead of the record high from May and there is a growing sense this market could be in the process of carving out some form of a material top. The reality of a September liftoff is something the equity market has not properly considered to date, but with US economic data looking increasingly positive, the market may be getting a little jittery. Looking ahead, the focus for Monday will be on Fed Lockhart and Fed Fischer speeches, along with the US labour market conditions index.

GOLD (SPOT) – technical overview

The market remains under intense pressure, breaking to fresh multi-year lows below 1100. At this point, the downside break opens the door for the possibility of another drop towards the major psychological barrier at 1000. However, it is worth noting that daily studies are stretched and there is room for a short-term bounce. But a daily close back above the previous 2015 base at 1142 would be required to take the immediate pressure off the downside.

• R2 1142.00 – Previous Low – Strong
• R1 1100.00 – Psychological – Medium
• S1 1073.00 – 20Jul/2015 low – Medium
• S2 1000.00 – Psychological – Strong

GOLD (SPOT) – fundamental overview

The GOLD market remains under pressure at multi-year lows, with the prospect for a Fed rate hike and broad based US Dollar demand opening intense downside pressure in the beaten down metal. Speculative positioning has recently shifted to the short side and the market is now contemplating the next major drop down towards critical barriers at $1000. Still, with global equities starting to come off a bit, there are renewed bids creeping back into the market, with dealers talking bargain hunting below $1100.

Feature – technical overview

USDZAR remains locked in a well defined uptrend, but has seen some corrective weakness in recent sessions off multi-year highs. From here, there is risk for additional declines towards support in the 12.3000 area before the market considers a fresh higher low and bullish resumption. But ultimately, only a daily close below 12.2900 would take the pressure off the topside and force a shift in the structure.

• R2 13.000 – Psychological – Medium
• R1 12.8280 – 5Aug/2015 high – Strong
• S1 12.4690 – 29Jul low – Strong
• S2 12.3750 – 23Jul low – Medium

Feature – fundamental overview

The Rand has had the good fortune of finding some welcome bids in recent trade, with the emerging market currency benefitting from broad based profit taking on USD longs off multi-year highs. Still, with capital outflows a major headwind for the South African currency in the face of diverging Fed policy and ongoing weakness in the commodity markets, any strength in the Rand is viewed as temporary. The SARB may be forced to raise rates to keep up with the Fed, and while this may initially help the currency, ultimately, the impact of higher rates in a still struggling South African economy, could backfire and open a more intensified depreciation in the Rand.