Midweek Indecision

GBPUSD – technical overview

The recent daily close below the 200-Day SMA suggests the market could be on the verge of rolling over for deeper setbacks towards 1.5000 in the sessions ahead. The market had mostly been trading above the 200-Day SMA since early June and after stalling ahead of the 2015 high, the price action is suggestive of some form of topping. At this point, a daily close back above 1.5509 would be required to put the focus back on the topside.

• R2 1.5509 – 27Aug high – Strong
• R1 1.5408 – 1Sep high – Medium
• S1 1.5257 – 9Jun low  – Medium
• S2 1.5170 – 1Jun low  – Strong

GBPUSD – fundamental overview

UK markets were back into full swing on Tuesday, but this did little to help the Pound, with the currency dropping to fresh multi-session lows and establishing below the 200-day moving average. It seems BOE Governor Carney’s weekend comments at Jackson Hole, talking about a rate hike around the corner, are not being taken as seriously by the market, with the OIS curve not looking for hikes until further out. Perhaps Tuesday’s softer UK consumer credit and manufacturing PMIs have also contributed to weakness. Even a softer US ISM print failed to prop the major pair. Looking ahead, UK construction PMIs, US ADP employment and the Fed Beige Book are the key releases for the day.

USDJPY – technical overview

The latest rally has been well capped ahead of 122.00 and a lower top is now sought out in favour of a resumption of declines back towards the recent extreme low at 116.12. At this point, only a break back above 121.74 would negate the short-term bearish outlook and put the pressure back on the topside.

• R2 121.74 – 28Aug high – Strong
• R1 120.65 – 28Aug low – Medium
• S1 119.22 – 2Sep low – Medium
• S2 118.45 – 26Aug low – Strong

USDJPY – fundamental overview

Risk sentiment had already been weighed down in early Tuesday trade on the back of some soft China manufacturing data, and this sentiment carried over into the North American session after US ISM manufacturing also disappointed, putting in readings not seen since May 2013. The Yen was a prime beneficiary of these flows, with the currency standing out as the strongest on the day in the flight to safety environment. We have since seen some Yen selling in early Wednesday on profit taking and a China stock bounce, but not enough to turn any heads just yet. Looking ahead, US ADP employment and the Fed Beige Book are the key releases in today’s trade.

EURCHF – technical overview

The market looks to be in the process of carving a meaningful base since taking out key multi-day range resistance at 1.0575 several days back. This has opened the latest break above the February peak at 1.0815 which now exposes fresh upside through psychological barriers at 1.1000 and towards 1.1500 further up. Any setbacks should now be well supported ahead of 1.0700, with only a break back below 1.0575 to negate the constructive outlook.

• R2 1.0962 – 12Aug high – Strong
• R1 1.0881 – 25Aug high – Medium
• S1 1.0714 – 20Aug low – Strong
• S2 1.0575 – Previous Resistance – Medium

EURCHF – fundamental overview

SNB Jordan was on the wires on Tuesday and helped keep the Franc offered after reiterating the Franc was markedly overvalued and the central bank stood ready to intervene. But overall, there is still a lot of uncertainty out there, and investors are growing increasingly wary of the impact of stimulatory moves by central banks and governments. As such, if US equities take out last weeks extreme lows, it could spell major trouble for the SNB. The SNB balance sheet has ballooned to around 85% of GDP, which means it is unlikely there is a lot left in the tank for future interventions.

AUDUSD – technical overview

Setbacks have accelerated sharply to the downside to yet another multi-year low, below critical psychological barriers at 0.7000. The drop opens the door for a fresh measured move downside extension towards 0.6830 in the sessions ahead. Technical studies are however tracking in oversold territory across multiple timeframes which suggests the market could be poised for a correction in the coming sessions. Still, any rallies are expected to be very well capped, with only a break back above 0.7440 to compromise the bearish outlook.

• R2 0.7205 – 28Aug high – Strong
• R1 0.7082 – 31Aug low – Medium
• S1 0.6982 – 2Sep/2015 low – Medium
• S2 0.6900 – Figure – Strong

AUDUSD – fundamental overview

Ongoing concern over the China outlook, an RBA committed to remaining accommodative and a sliding global equity market are all factors contributing to Aussie’s slide to yet another fresh multi-year low. Even a softer US ISM manufacturing print failed to give the beaten currency a boost. The market is now digesting the latest softer than expected Aussie GDP data triggering yet another decline to fresh lows. The data further supports the RBA’s accommodative bias and Aussie should continue to remain very well offered, especially with the Fed still expected to move on rates in 2015. Looking ahead, US ADP employment and the Fed Beige Book are the key releases for the remainder of the day.

USDCAD – technical overview

The market is locked within a well defined uptrend, pushing to fresh 11-year highs and closing in on next major psychological barriers at 1.3500. However, with medium-term studies looking stretched, we are seeing the onset of a correction to allow for these stretched studies to unwind. But ultimately, any corrective declines should be well supported with a higher low sought out ideally above 1.2860 in favour of a bullish continuation.

• R2 1.3354 – 25Aug/2015 high – Strong
• R1 1.3300 – Figure – Medium
• S1 1.3117 – 31Aug low – Medium
• S2 1.3025 – 19Aug low– Strong

USDCAD – fundamental overview

Canada GDP came in not as bad as the market was expecting, though the data still shows the economy in technical recession territory and does not offer any encouraging signs for the next batch in this data series, which will also factor in the latest slide in OIL prices and worry over the global trade outlook. As such, any Loonie gains from the release were quickly sold off with the sharp reversal in the price of OIL not doing anything to help the Canadian Dollar’s cause. The market will now be looking ahead to Thursday’s Canada trade data as it prepares for next week’s anticipated Bank of Canada rate decision. In the interim, the focus will be on today’s US ADP employment and Fed Beige Book.

NZDUSD – technical overview

Daily studies are in the process of unwinding from oversold off a violent decline to fresh multi-year lows and there is risk for additional consolidation in the sessions ahead to allow for these studies to further unwind before the market considers a legitimate bearish continuation below 0.6130. Still, any rallies should be well capped below 0.6740 in favour of the existing downtrend.

• R2 0.6467 – 31Aug high– Strong
• R1 0.6389 – 1Sep high– Medium
• S1 0.6300 – Figure – Medium
• S2 0.6130 – 24Aug/2015 low – Strong

NZDUSD – fundamental overview

Many now believe this week’s round of softer New Zealand business confidence seals the deal on another RBNZ rate cut when the central bank meets next week on September 9th. This would be the third rate cut since May and could very well open the door for fresh declines below last Monday’s 0.6130 multi-year low. Ongoing uncertainty surrounding China and global equity market weakness are also a negatives for Kiwi and will continued to be monitored closely. Looking ahead, US ADP employment and the Fed Beige Book are the key releases later today.

US SPX 500 – technical overview

The recent breakdown below 2040 has been a significant development, with the move confirming the formation of a major top off record highs. We have since seen a rapid acceleration of declines, with the market crashing through a measured move downside extension objective at 1940, stalling just shy of 1800 thus far. Technical studies are now unwinding from super stretched readings, so there is risk for some additional consolidation before the market looks for a bearish continuation below 1800. Still, any rallies are now expected to be well capped below 2000 on a daily close basis.

• R2 1996.00 – 28Aug high – Strong
• R1 1970.00 – 1Sep high – Medium
• S1 1900.00 – Figure – Medium
• S2 1946.00 – 26Aug low – Strong

US SPX 500 – fundamental overview

Stocks have come back under pressure this week and it seems the market could be looking for a new area code following recent declines. Last Monday’s extreme low is now back in sight and the market could be looking to take out the level over the coming sessions. Ongoing uncertainty surrounding the China outlook and an expectation the Fed will indeed go ahead and raise rates this year are not comforting prospects for the stock market and should continue to weigh going forward. US ADP employment and the Fed Beige Book will be watched closely on Wednesday.

GOLD (SPOT) – technical overview

Finally signs of a potential base since breaking down to fresh multi-year lows below 1100. The recent recovery back above the previous 2015 base at 1142 strengthens the outlook and could open the door for additional upside towards 1233 over the coming days. Look for the latest round of setbacks to now be well supported on dips ahead of 1100. Only a daily close below 1100 negates and puts the pressure back on the downside.

• R2 1188.00 – 29Jun high – Strong
• R1 1170.00 – 24Aug high – Medium
• S1 1118.00 – 26Aug low – Medium
• S2 1073.00 – 20Jul/2015 low – Strong

GOLD (SPOT) – fundamental overview

Overall, there is still plenty of uncertainty out there, and with US stocks topping off record highs and China doing its best to keep its faltering economy going, there is plenty of interest for safe haven GOLD at current levels, just off multi-year lows. Hedge funds are slowly stepping back into the long position and the added risk of rising inflation over the coming months is making the position all the more compelling.

Feature – technical overview

USDSGD has been consolidating just off a fresh +5-year high and remains highly constructive. The uptrend is firmly intact and any setbacks should be well supported above 1.3800 in favour of a higher low and bullish continuation towards next key resistance at 1.4245, in the form of the 2010 high, above which exposes a measured move objective at 1.4400. Only a daily close below 1.3800 will delay the bullish outlook.

• R2 1.4245 – 2010 high – Strong
• R1 1.4170 – 24Aug/2015 high – Strong
• S1 1.3940 – 25Aug low – Medium
• S2 1.3890 – 13Aug low – Strong

Feature – fundamental overview

It has not been a good run for the Singapore Dollar, which remains under pressure along with the rest of the emerging markets on a deteriorating China economic outlook and more favourable US Dollar yield differentials. The Singapore Dollar is still suffering from the blow to China manufacturing after a recent China Caixin PMI print produced its lowest reading in more than 6 years. This data also follows softer fixed asset investment, retail sales, industrial production and export readings and likely suggests more soft data in the months ahead. This in conjunction with the expectation for a Fed rate hike this year should translate into more SGD weakness going forward. Tuesday’s softer US ISM print did little to deter USDSGD bulls.