European Data and UK Brexit Risk

GBPUSD – technical overview

The market continues to extend its correction out from the recent 7 year low at 1.3836, with the latest push back above 1.4440 exposing the next key resistance point in the form of a previous lower top at 1.4668. A break above 1.4668 would signal a bullish structural shift, while inability to take out the level will keep the medium-term pressure on the downside.

• R2 1.4514 – 18Mar high – Strong
• R1 1.4467 – 21Mar high – Medium
• S1 1.4350 – Mid-Figure  – Medium
• S2 1.4274 – 16Mar high – Strong

GBPUSD – fundamental overview

The Pound was one of the weaker performers in Monday trade, with the UK currency weighed down on news of the resignation of Works and Pension Secretary Iain Duncan Smith, a supporter of Brexit. More volatility expected today with a busy economic calendar featuring UK inflation and public finances along with speeches on Brexit from UK Chancellor of the Exchequer George Osborne and London Mayor Boris Johnson. In the US, we get some manufacturing data and a Fed Evans speech.

USDJPY – technical overview

Last week’s break below the previous multi-month low from February was a significant development, as it potentially warns of a fresh downside extension ahead following a period of multi-day consolidation. At this point, a daily close below 111.00 would be required to strengthen this prospect, while inability to establish below 111.00 could invite another bounce off the range low back towards the 115.00 area.

• R2 112.96 – 17Mar high – Strong
• R1 112.21 – 21Mar high – Medium
• S1 111.22 – 21Mar low – Medium
• S2 110.00 – 17Mar/2016 low – Strong

USDJPY – fundamental overview

HFT and macro names are capping any rallies in the major pair, which continues to find offers despite a well bid US equity market and this latest disappointing round of Japanese manufacturing PMIs, the softest print since February 2013. Looking ahead, the US economic calendar is light, with some manufacturing data and a Fed Evans speech due. Expect the market to trade on broader macro flow.

EURCHF – technical overview

The latest round of setbacks from fresh multi-month highs at 1.1200 have been well supported, with the broader outlook still highly constructive. Look for any additional weakness in the sessions ahead to continue to be supported above 1.0800, in favour of a higher low and the next major upside extension through 1.1200, towards 1.1500 further up. Only a close below 1.0715 would delay the outlook.

• R2 1.1062 – 17Feb high – Strong
• R1 1.1025 – 10Mar high – Medium
• S1 1.0894 – 10Mar low – Medium
• S2 1.0810 – 29Feb/2016 low – Strong

EURCHF – fundamental overview

The cross rate has come back under mild pressure in recent trade, weighed down by last week’s unchanged SNB policy decision and these most recent dovish comments from ECB Praet that the central bank could still move lower on rates. But overall, dips continue to be very well supported with the SNB remaining committed to weakening the Franc as necessary through negative interest rates and intervention. The SNB will need to keep a close eye on stocks in the days ahead, with the market extended and potentially at risk for renewed weakness, which could invite unwanted demand for the Franc.

AUDUSD – technical overview

The recent break above medium-term resistance at 0.7385 has forced a shift in the structure and now opens the door for a push towards next key resistance at 0.7849 further up. At this point, a break back below the previous resistance at 0.7385 would be required to take the pressure of the topside and open a broader resumption of the longer-term downtrend.

• R2 0.7700 – Figure – Strong
• R1 0.7681 – 18Mar/2016 high – Medium
• S1 0.7550 – Mid-Figure – Medium
• S2 0.7533 – 17Mar low – Strong

AUDUSD – fundamental overview

While RBA Stevens conceded Australia still had room for an adjustment in monetary policy in the event of a serious economic downturn, overall, Stevens was more upbeat and less dovish than many had been expecting. In fact, there was no jawboning of the Australian Dollar despite recent gains, which has fueled some post speech Aussie bids. Looking ahead, the US economic calendar is light, with some manufacturing data and a Fed Evans speech due. Expect the market to trade on broader macro flow.

USDCAD – technical overview

The latest break below the 78.6% fib retrace off the October 2015 to January 2016 low to high move, opens the door for a full retracement back to the October base at 1.2832 further down. Overall, the longer-term uptrend is still intact, but the market will need to break back above 1.3447 to take the immediate pressure off the downside and set up the possibility for a higher low.

• R2 1.3133 – 17Mar high – Strong
• R1 1.3103 – 22Mar high – Medium
• S1 1.3005 – 21Mar low – Medium
• S2 1.2923 – 18Mar/2016 low– Strong

USDCAD – fundamental overview

Interestingly enough, the Canadian Dollar traded lower on Monday, despite the continued resurgence in demand for OIL. Hawkish Fed comments from Lockhart and Williams contributed to the Canadian Dollar’s offered tone, while positioning ahead of this week’s Canada budget also factored into trade. Looking ahead, the US economic calendar is light, with some manufacturing data and a Fed Evans speech due. Expect the market to trade on broader macro flow.

NZDUSD – technical overview

The market remains confined to a broader downtrend with rallies continuing to be very well capped ahead of medium-term resistance at 0.6900. However, a break back below 0.6546 will be required to strengthen the outlook and expose fresh declines towards next key support at 0.6347 further down. Ultimately, only a weekly close back above 0.6900 compromises the bearish outlook.

• R2 0.6874 – 18Mar/2016 high – Strong
• R1 0.6792 – 21Mar high – Medium
• S1 0.6718 – 17Mar low – Medium
• S2 0.6685 – 15Mar high – Strong

NZDUSD – fundamental overview

A quiet start to the week for the New Zealand Dollar which has performed rather well over the past several days, despite the recent surprise RBNZ rate cut. But we have seen some Kiwi weakness into Tuesday, perhaps on Monday’s softer round of New Zealand data in the form of Westpac consumer confidence and net migration. Also seen weighing a bit are the latest round of hawkish comments from Fed’s Lockhart and Williams. Looking ahead, the US economic calendar is light, with some manufacturing data and a Fed Evans speech due. Expect the market to trade on broader macro flow.

US SPX 500 – technical overview

The current rally is classified as corrective, with any additional upside expected to be well capped below 2050 on a weekly close basis in favour of the next major downside extension below 1800 and towards a measured move at 1550 further down. Ultimately, only a weekly close back above 2050 will delay the bearish outlook.

• R2 2083.00 – 29Dec high – Strong
• R1 2055.00 – 22Mar/2016 high – Medium
• S1 2004.00 –15Mar low – Medium
• S2 1968.00 – 10Mar low – Strong

US SPX 500 – fundamental overview

Investors are still buying into Fed and global central bank accommodative gestures despite exhausted monetary policy, with last week’s dovish FOMC decision fueling a fresh round of bids, extending this impressive recovery out from the early February multi-month low. The primary driver behind this latest push has been the Fed’s scaled back dot plot, with the central bank downgrading its rate hike timeline assessment from 4 to just 2 hikes in 2016. Still, despite the rally, there is a sense that with policy reaching its limits, the incentive to be buying risk assets isn’t what it once was, which could once again weigh over the coming sessions. The calendar for Tuesday is quite light, with some second tier manufacturing data due along with a Fed Evans speech.

GOLD (SPOT) – technical overview

The market continues to show signs of a major structural shift, with the impressive recovery from the multi-year low in late 2015 at 1046, extending above the critical October 2015 peak at 1192. From here, any setbacks should be well supported ahead of 1191, in favour of a higher low and the next major upside extension to medium-term resistance at 1307. Ultimately, only a weekly close back below 1191 would delay the newly adopted constructive outlook.

• R2 1283.50 – 10Mar/2016 high – Strong
• R1 1270.90 – 17Mar high – Medium
• S1 1225.70 – 15Mar low – Medium
• S2 1191.50 – Previous Resistance – Very Strong

GOLD (SPOT) – fundamental overview

GOLD continues to show impressive demand on dips. The yellow metal has become increasingly attractive in the current market environment. Uncertainty has resurrected GOLD on its status as a compelling hedge against exhausted monetary policy. Even this impressive rally in stocks has done little to weigh on the commodity, reflective of the fact that any rallies in risk are less compelling these days.

Feature – technical overview

USDSGD has entered a period of intense correction off the multi-year peak at 1.4442 from January. But overall, the structure remains constructive, with dips seen well supported into the 78.6% fib retrace off the 2015-2016 low to high move at 1.3425. Look for the market to find the next meaningful base around 1.3425 ahead of the next major upside extension. Ultimately, only a weekly close below 1.3400 would compromise the outlook.

• R2 1.3671 – 17Mar high – Strong
• R1 1.3641 – 22Mar high – Medium
• S1 1.3477 – 18Mar/2016 low – Medium
• S2 1.3425 – 78.6% Fib Retrace – Very Strong

Feature – fundamental overview

The Singapore Dollar has enjoyed a nice recovery run over the past several weeks, breaking to fresh 2016 highs. A resurgence in risk appetite has helped fuel the renewed demand for the emerging market currency, with the more dovish FOMC decision and scaled back Fed rate hike timeline fueling the move. But technicians cite major support ahead of 1.3400 which ultimately could inspire renewed Singapore Dollar selling. Global equities have also enjoyed a nice run in recent weeks and if investors start to lose confidence in the effectiveness of exhausted monetary policy, we could once again see a run on emerging market FX. Certainly, Monday’s round of hawkish Fed comments from Lockhart and Williams have invited additional Singapore Dollar offers. Looking ahead, Fed Evan’s is slated to speak late Tuesday.