Yen Stands Out in Otherwise Quiet Holiday Trade

GBPUSD – technical overview

The recovery rally out from a recent 7 year low has stalled out ahead of key resistance at 1.4668, potentially setting the stage for the next major lower top and bearish resumption. A daily close below 1.4053 will strengthen this outlook and expose a retest of 1.3836, which guards against the multi-year base at 1.3500 further down. Back above 1.4668 would be required to take the immediate pressure off the downside.

• R2 1.4228 – 23Mar high – Strong
• R1 1.4183 – 24Mar high – Medium
• S1 1.4053 – 16Mar low  – Medium
• S2 1.3836 – 29Feb/2016 low – Strong

GBPUSD – fundamental overview

Not too much movement for markets since Thursday, in light of the the long holiday weekend. Still, we have seen recent dips supported on the the back of last week’s solid UK retail sales print and a referendum poll showing the remain camp well in the lead. But overall, with the US Dollar broadly bid on a wave of hawkish Fed commentary, and with Brexit risk an ongoing concern, Cable rallies should continue to be well capped. UK markets are shut down today and the key standout on the calendar comes in the US, with a batch of data due, featuring core PCE, personal income and spending, the goods trade balance, pending home sales, and Dallas Fed manufacturing. The market will also start to think about an important speech from the Fed Chair at the Economics Club of New York on Tuesday.

USDJPY – technical overview

The recent 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, though any rallies in the interim should be very well capped ahead of 115.00. Ultimately, only back above 115.00 would force a shift in the structure and take the pressure off the downside.

• R2 114.15 – 15Mar high – Strong
• R1 114.00 – Figure – Medium
• S1 112.75 – 25Mar low – Medium
• S2 112.14 – 23Mar low – Strong

USDJPY – fundamental overview

The Yen is one of the only notable movers in Monday trade, with the rest of the market still on Easter holiday. Reports that PM Abe will introduce new fiscal measures on Tuesday have opened renewed downside pressure in the Japanese currency. Initial reports of a delay in the sales tax hike had also contributed to early Yen declines, though these reports were later denied by Japan Chief Cabinet Secretary Suga. Looking ahead, the key standouts for the remainder of the day come out of the US, with a batch of data due, featuring core PCE, personal income and spending, the goods trade balance, pending home sales, and Dallas Fed manufacturing. The market will also start to think about an important speech from the Fed Chair at the Economics Club of New York on Tuesday.

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 1.1024 – 17Feb high – Strong
• R1 1.1000 – Psychological – Medium
• S1 1.0875 – 23Mar low – Medium
• S2 1.0810 – 29Feb/2016 low – Strong

EURCHF – fundamental overview

The Swiss National Bank released its annual report  last Thursday, which to no surprise, showed a good deal of intervention in 2015, mostly from the historic moves in January 2015. In total, the SNB purchased foreign currency worth CHF 86.1 Billion. The SNB remains committed to its current policy strategy of intervention and negative rates but is now having to battle broader macro forces, which could invite unwanted appreciation in the Franc. Ongoing geopolitical risk has resulted in renewed Franc demand, while a round of hawkish Fed speak and concurrent sell-off in equities on the back of the negative risk implication of higher US rates, has also inspired demand for the traditional safe haven.

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 potential push towards next key resistance at 0.7849 further up. At this point, only a break back below the previous resistance at 0.7385 would take the pressure of the topside and open a broader resumption of the longer-term downtrend.

• R2 0.7600 – Figure – Medium
• R1 0.7537 – 23Mar high – Medium
• S1 0.7477 – 24Mar low– Medium
• S2 0.7385 – Previous Resistance – Strong

AUDUSD – fundamental overview

Although the Australian Dollar has come under pressure in recent days, the currency has done a good job relative to its peers. An impressive commodities recovery has been helping to drive relative strength, with the CRB index up over 12% from the February lows and iron ore surging nearly 20%. Still, the wave of hawkish Fed speak and potential downturn in global equities should make it difficult for the risk correlated currency to extend gains much further, with the greater risk for renewed downside pressure. The RBA has also made it clear it does not want to see a higher Australian Dollar. And so, we have seen medium-term players selling rallies. Looking ahead, the key standouts for the remainder of the day come out of the US, with a batch of data due, featuring core PCE, personal income and spending, the goods trade balance, pending home sales, and Dallas Fed manufacturing. The market will also start to think about an important speech from the Fed Chair at the Economics Club of New York on Tuesday.

USDCAD – technical overview

Signs of a potential bottom after the market stalled ahead of the critical October base at 1.2832. The market will need to establish back above 1.3406 to strengthen this outlook and accelerate gains, setting up the next medium-term higher low and bullish resumption. But while the market holds below 1.3406, there is still risk for a drop towards 1.2832.

• R2 1.3406 – 16Mar high – Strong
• R1 1.3296 – 24Mar high – Medium
• S1 1.3139 – 22Mar high – Medium
• S2 1.3029 – 22Mar low– Strong

USDCAD – fundamental overview

An impressive run in the Canadian Dollar off near 13 year lows in January looks like it could be coming to an end, with the Loonie back under pressure over the past few sessions. The combination of hawkish Fed speak and healthy retreat in the price of OIL off recent recovery highs have been the primary drivers behind the renewed selling. Looking ahead, trade is expected to thin out for the long holiday weekend. The Canada economic calendar is empty on Friday, with the only noteworthy release coming in the form of some US growth data. Looking ahead, the key standouts for the remainder of the day come out of the US, with a batch of data due, featuring core PCE, personal income and spending, the goods trade balance, pending home sales, and Dallas Fed manufacturing. The market will also start to think about an important speech from the Fed Chair at the Economics Club of New York on Tuesday.

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 0.6771 – 23Mar high – Strong
• R1 0.6722 – 24Mar high – Medium
• S1 0.6650 – Mid-Figure – Medium
• S2 0.6575 – 16Mar low – Strong

NZDUSD – fundamental overview

Some of the larger regional banks have been out with bearish calls for the New Zealand Dollar. CBA is looking for a drop in rates to 1.50% on the downside risks to the economy and subdued inflation, while ANZ sees also sees downside risks. This in conjunction with hawkish Fed comments, signs of renewed weakness in equities and a broad based resurgence is US Dollar demand, are expected to continue to invite offers from medium-term players into rallies. Looking ahead, the key standouts for the remainder of the day come out of the US, with a batch of data due, featuring core PCE, personal income and spending, the goods trade balance, pending home sales, and Dallas Fed manufacturing. The market will also start to think about an important speech from the Fed Chair at the Economics Club of New York on Tuesday.

US SPX 500 – technical overview

This latest multi-day 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 2058.00 – 22Mar/2016 high – Medium
• S1 2004.00 –15Mar low – Medium
• S2 1968.00 – 10Mar low – Strong

US SPX 500 – fundamental overview

Investors aren’t loving these latest Fed messages post this month’s dovish FOMC rate decision. Fed officials have gone on the offensive in response to the market’s FOMC reaction, with comments clearly leaning to the hawkish side. Fed Bullard’s warnings that an April hike should not be ruled out have been the most worrying for an investor base that wants anything but the removal of artificial easy money stimulus. Looking ahead, we get a healthy batch of data to start the week, featuring core PCE, personal income and spending, the goods trade balance, pending home sales, and Dallas Fed manufacturing. The market will also start to think about an important speech from the Fed Chair at the Economics Club of New York on Tuesday.

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 1249.40 – 23Mar high – Medium
• S1 1200.00 – Psychological – Medium
• S2 1191.50 – Previous Resistance – Very Strong

GOLD (SPOT) – fundamental overview

GOLD has pulled back a good deal over the past few sessions, with the yellow metal reacting to a resurgence in demand for the US Dollar on a wave of hawkish Fed speak. And yet, dealers continue to cite plenty of demand into dips, with even US Dollar strength unlikely to deter medium-term investors looking for an alternative in a shaky risk environment. Exhausted central bank policy is a major concern for the global economy at the moment, making the case for a rotation back into the hard asset increasingly attractive. Dealers report plenty of interest towards $1200.

Feature – technical overview

USDSGD is finally looking to turn back up after a period of intense correction. 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 in the 1.3400s ahead of the next major upside extension. Ultimately, only a weekly close below 1.3400 would compromise the outlook.

• R2 1.3850 – 16Mar high – Strong
• R1 1.3800 – Figure – Medium
• S1 1.3654 – 24Mar low – Medium
• S2 1.3578 – 23Mar low – Very Strong

Feature – fundamental overview

We have seen renewed downside pressure in the emerging markets on the combination of terror attacks and a fresh wave of hawkish Fed comments. US equities are showing signs of topping out again and this is having a negative impact on the correlated Singapore Dollar. Last week’s disappointing Singapore industrial production print coming in at -4.7% y/y versus the -3.7% y/y print expected has also done nothing to help the Singapore Dollar’s cause. Looking ahead, we get a healthy batch of US data to start the week, featuring core PCE, personal income and spending, the goods trade balance, pending home sales, and Dallas Fed manufacturing. The market will also start to think about an important speech from the Fed Chair at the Economics Club of New York on Tuesday.