Quarter End Flows, Friday NFPs

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 1.4459 – 30Mar high – Strong
• R1 1.4380 – 31Mar high – Medium
• S1 1.4283 – 28Mar high  – Medium
• S2 1.4195 – 29Mar low – Strong

GBPUSD – fundamental overview

Brexit risk has calmed a bit in recent days, with most of the focus shifting to the Fed policy outlook and Yellen’s dovish speech. This has resulted in some bids in the Pound this week, though the market is once again finding offers into rallies, with the Brexit overhang still not going away and a good deal of economic data and event risk ahead. For today in the UK, we get consumer credit, mortgage approvals, the current account and a final reading of GDP. Later in the US, initial jobless claims and Chicago PMIs are out. And of course, pre-NFP positioning is also expected, with the highly anticipated monthly report due Friday.

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 113.80 – 29Mar high – Strong
• R1 112.80 – 30Mar high – Medium
• S1 112.02 – 30Mar low – Medium
• S2 111.38 – 22Mar low – Strong

USDJPY – fundamental overview

It’s month end, quarter end and fiscal year end for Japan today and this has been been factoring into some of the volatility. Overall however, price action has been fairly controlled, with the major pair still finding good two way flow. Dips have been supported on expectations for additional BOJ easing and a Yen that could be too strong, while rallies have been well capped on a more dovish Fed and uneasy global backdrop that could weigh on risk. Looking ahead, the market will take in US initial jobless claims and Chicago PMIs, but will probably be more focused on Friday’s event risk in the form of the monthly employment report out of the US.

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

Economic data out of Switzerland has been better of late, as reflected through the trade balance and KoF leading indicator, and there could be signs of an alleviation of intense deflationary pressures. And yet, with the Franc still deemed to be well overvalued, the SNB remains committed to its current policy strategy of intervention and negative rates. The SNB’s job has been a lot easier of late, with the EURCHF rate stable despite more ECB stimulus and accommodations elsewhere, and this should give the central bank the flexibility it needs to keep from making any additional easing moves. But the global backdrop is still shaky and any signs of renewed downside pressure on equities, could invite unwanted CHF appreciation, something the SNB needs to continue to closely monitor.

AUDUSD – technical overview

An impressive run for this pair over the past several days, with gains extending to fresh 2016 highs. However, the run is starting to look a little stretched and there is risk for a pullback and potential bearish resumption. Still, a break back below 0.7477 would be required to strengthen this outlook and take the immediate pressure off the topside.

• R2 0.7800 – Figure – Strong
• R1 0.7709 – 30Mar/2016 high – Medium
• S1 0.7615 – 30Mar low – Medium
• S2 0.7558 – 28Mar high – Strong

AUDUSD – fundamental overview

Some mixed second tier Aussie data hasn’t really factored into Thursday trade, after new home sales and job vacancies were softer, while private sector credit improved. The focus this week has been on the dovish Yellen speech and subsequent US Dollar fallout that has helped to propel currencies and other risk assets across the board. Looking ahead, the market will take in US initial jobless claims and Chicago PMIs, but will probably be more focused on Friday’s event risk in the form of the monthly employment report out of the US.

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 1.3296 to strengthen this outlook and accelerate gains, setting up a possible double bottom and bullish resumption. But while the market holds below 1.3296, a drop towards the October 2015 base at 1.2832 should not be ruled out.

• R2 1.3167 – 28Mar low – Strong
• R1 1.3081 – 30Mar high – Medium
• S1 1.2912 – 30Mar/2016 low – Medium
• S2 1.2832 – 15Oct low– Very Strong

USDCAD – fundamental overview

Bank of Canada Deputy Governor Patterson was on the wires Wednesday expressing her view that the path to BoC policy normalisation would be very slow and drawn out, while also highlighting the positive impact of the lower Canadian Dollar on exports. The Canadian Dollar was still however bid on the day, with the broad based US Dollar selling post Tuesday’s dovish Yellen speech carrying over into Wednesday. Even the additional pullback in the price of OIL could do nothing to invite any meaningful renewed offers in the Loonie which sits at fresh 2016 highs against the Buck. Looking ahead, the market will take in Canada GDP along with US initial jobless claims and Chicago PMIs. Positioning ahead of Friday’s monthly employment report out of the US will also influence today’s trade.

NZDUSD – technical overview

The market remains confined to a broader downtrend with rallies continuing to be very well capped ahead of the key psychological barrier at 0.7000. However, a break back below 0.6668 will be required to strengthen the outlook and expose fresh declines towards next key support at 0.6546 further down. Ultimately, only a weekly close above 0.7000 compromises the bearish outlook.

• R2 0.7000 – Psychological – Very Strong
• R1 0.6966 – 30Mar/2016 high – Medium
• S1 0.6841 – 30Mar low – Medium
• S2 0.6716 – 29Mar low – Strong

NZDUSD – fundamental overview

Softer economic data out of New Zealand and subdued inflation readings should keep the RBNZ thinking about more cuts ahead, something that is getting priced in. For the moment, OIS is pricing a 40% chance for an April rate cut and a full 25bp cut by the August meeting. But Kiwi has ascended to new heights in 2016 against the Buck, on the back of this latest round of heavy US Dollar selling from Tuesday’s dovish Fed Yellen speech. Looking ahead, the market will take in US initial jobless claims and Chicago PMIs, but will probably be more focused on Friday’s event risk in the form of the monthly employment report out of the US.

US SPX 500 – technical overview

This latest multi-day rally is classified as corrective, with any additional upside expected to be well capped below 2100 on a weekly close basis in favour of the next major downside extension below 1800 and towards a measured move at 1500 further down. Ultimately, only a weekly close back above 21000 will delay the bearish outlook.

• R2 2083.00 – 29Dec high – Strong
• R1 2074.00 – 30Mar/2016 high – Medium
• S1 2021.00 –24Mar low – Strong
• S2 2004.00 – 15Mar low – Medium

US SPX 500 – fundamental overview

Investors continue to find comfort in dovish Fed speak, with Tuesday’s Yellen comments fueling this latest push to fresh 2016 highs. But how long investors find comfort in gestures of additional accommodation is an entirely different question and one that could ultimately become more important sooner than later. If the market loses confidence in the ability for exhausted monetary policy gestures to stimulate the economy, or if a fresh set of headwinds emerge, there won't be much the Fed can do – a distressing prospect even the Fed Chair recognizes. Looking ahead, the market will take in US initial jobless claims and Chicago PMIs, but will probably be more focused on Friday’s event risk in the form of the monthly employment report out of the US.

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 1244.10 – 30Mar high – Medium
• S1 1208.35 – 28Mar low – Medium
• S2 1191.50 – Previous Resistance – Very Strong

GOLD (SPOT) – fundamental overview

GOLD has been very well supported in recent dips, with the yellow metal finding solid demand in 2016 on the back of fears over the limitations of exhausted monetary policy and broad based currency weakness. But it has been this latest sell-off in the Buck, following dovish Yellen speak that has inspired this week’s recovery.

Feature – technical overview

USDSGD is finally poised to turn back up after a period of intense correction. Overall, the structure remains constructive, with current 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 1.3737 – 28Mar high – Strong
• R1 1.3583 – 30Mar high – Medium
• S1 1.3460 – 30Mar/2016 low – Medium
• S2 1.3425 – 78.6% Fib Retrace – Strong

Feature – fundamental overview

Tuesday’s dovish speech from the Fed Chair has proven to be a major support for emerging market currencies. Contrary to recent Fed speak, Yellen has come out dismissing any sense of imminence for future rate hikes and this has been having a stabilising influence over risk correlated assets, with yield differentials concurrently widening back in favour of these markets. The Singapore Dollar has rallied back to fresh yearly highs in response, but could start to find stiff resistance as USDSGD drops back towards a critical fibonacci support. Looking ahead, the market will start to position for tomorrow’s all important monthly employment report out of the US.