Too Early to Rule Out July Fed Hike?

GBPUSD – technical overview

Despite signs of the potential for a medium-term base, rallies continue to stall out ahead of 1.4800, keeping the pressure on the downside. This latest topside failure has opened a drop back towards key support around 1.4300, below which exposes a more direct retest of critical psychological barriers at 1.4000. A daily close above 1.4770 would now be required to officially take the pressure off the downside and force a shift in the structure.

• R2 1.4601 – 8Jun high – Medium
• R1 1.4527 – 9Jun high – Medium
• S1 1.4400– Figure – Medium
• S2 1.4352 – 6Jun low – Strong

GBPUSD – fundamental overview

The US Dollar was very well offered this week, while UK economic data was solid overall as reflected by industrial and manufacturing production, NIESR GDP estimates and trade. Still, the Pound wasn’t able to muster any significant gains, tracking marginally lower against the US Dollar on the week into Friday as EU referendum risk continued to be the primary driver of flow. The market is still quite nervous about the outcome, with polls split down the middle and posing serious risk to the UK currency’s outlook in the event of an exit. Meanwhile, Thursday’s broad based recovery in the US Dollar has only added to Sterling downside pressure. Looking ahead, UK construction output and US Michigan confidence stand out.

USDJPY – technical overview

Overall, the pressure remains on the downside after the market recently stalled out ahead of the previous lower top at 111.89. A fresh lower top is now potentially in place at 111.45 ahead of the next major downside extension through 105.55 and towards 100.00. Ultimately, only back above 111.89 would negate and take the pressure off the downside. Look for any intraday rallies to be well capped ahead of 109.50.

• R2 107.90 – 7Jun high – Strong
• R1 107.39 – 8Jun high – Medium
• S1 106.25 – 9Jun low – Medium
• S2 105.55 – 3May/2016 low – Strong

USDJPY – fundamental overview

HFTs and leveraged accounts have been on the offer in size this week, with the major pair dropping down to a 5 week low of 106.25. Some weakness in global equities has been adding to the general offered tone, though the broad based recovery in the US Dollar on Thursday is supporting setbacks into Friday. There are more stops reported below 106.25, which if triggered, will likely open an acceleration to retest the 2016 low from May at 105.55. Looking ahead, Michigan confidence is the only key standout on the economic calendar.

EURCHF – technical overview

The market has come back under intense pressure in recent trade, with the cross gravitating towards critical medium-term support in the 1.0800 area. Previous dips into this area have been well supported and with setbacks starting to look extended on the daily chart, it’s quite possible the market will once again look to bounce around the 1.0800 area. A daily close below 1.0800 would however hint at a more significant bearish structural shift.

• R2 1.0986 – 8Jun high – Strong
• R1 1.0938 – 9Jun high – Medium
• S1 1.0844 – 7Apr low – Strong
• S2 1.0810 – 29Feb low – Strong

EURCHF – fundamental overview

Renewed downside pressure on this cross rate over the past few sessions, with the price action getting some attention given the ongoing bid tone in risk markets which is normally supportive. This has been the weakest week for the cross rate since the January 2015 collapse, and while this doesn’t even come close to comparing, it has definitely been a bit of a head scratcher. Talk of Polish mortgages in Francs being remarked, ongoing Brexit risk and political uncertainty in the US are all said to be contributing to this latest wave of appreciation in the Franc that could soon force the SNB off the sidelines.

AUDUSD – technical overview

The market has entered a period of correction after recently breaking down to fresh multi-day lows at 0.7145. However, any additional upside should be well capped below 0.7500 on a daily close basis, with a lower top sought out ahead of the next major downside extension below 0.7145 and towards the 2016 base at 0.6827 further down. Thursday’s bearish outside formation strengthens the bearish outlook.

• R2 0.7570 – 61.8% Fib – Strong
• R1 0.7504 – 9Jun high – Medium
• S1 0.7360 – 7Jun low – Medium
• S2 0.7315 – 6June low – Strong

AUDUSD – fundamental overview

The Australian Dollar had performed quiet well against the US Dollar this week into Thursday, before taking a hit on the back of some heavy cross related selling in AUDNZD post the less dovish RBNZ decision and a round of broad based US Dollar buying. Earlier this week, the RBA was out with its own less dovish policy decision, but the impact has faded, with Aussie giving back a good chunk of these gains. Looking ahead, US Michigan confidence is the only notable standout on the calendar for the remainder of the day.

USDCAD – technical overview

The market could finally be in the process of establishing a meaningful base following this latest impressive reversal out from multi-month lows below 1.2500. However, the current round of setbacks will need to hold above 1.2650 on a daily close basis to keep this prospect alive. An eventual break back above 1.3189 will confirm the basing outlook and accelerate gains towards 1.3500 further up. A daily close below 1.2650 will negate and open a direct retest of the yearly low.

• R2 1.2840 – 7Jun high – Strong
• R1 1.2767 – 9Jun high – Medium
• S1 1.2655 – 8Jun low – Medium
• S2 1.2600 – Figure – Strong

USDCAD – fundamental overview

It didn’t come as much of a surprise to see the Canadian Dollar reverse course in Thursday trade, giving back some of its recent gains. The combination of a bearish reversal day in the price of OIL, broad based US Dollar demand, pullback in equities and comments from Bank of Canada Governor Poloz expressing concern over the Toronto and Vancouver housing market, all contributed to renewed Canadian Dollar selling. Another contributing factor could very well be Friday’s economic calendar, with the market positioning into key Canada employment data. US Michigan confidence is also scheduled for release.

NZDUSD – technical overview

The latest break to fresh 2016 highs beyond 0.7055 suggests the market could be in the process of a more significant structural shift. Still the market will need to establish above critical previous support around 0.7175 to strengthen the bullish prospect, while inability to do so could invite another topside failure. Daily studies have traded into overbought territory, though a break back below 0.7000 would be required to take the immediate pressure off the topside.

• R2 0.7176 – February 2015 base – Strong
• R1 0.7148 – 9Jun/2016 high – Medium
• S1 0.7054 – Previous 2016 high– Medium
• S2 0.7000 – Psychological – Strong

NZDUSD – fundamental overview

Those expecting a cut from the RBNZ on Thursday were let down, with the central bank leaving rates on hold and policy unchanged. There was no real upgrade to the easing bias and this inspired a fresh round of bids, with Kiwi surging to 2016 highs. RBNZ Wheeler’s comments that there wasn’t a need for additional stimulus at this stage and that plans for another rate cut could change, didn’t do anything to help the case of the doves, with the pair then easily tripping stops above 0.7100. Kiwi has emerged as the strongest currency on the week into Friday trade. There have been some offers into Friday after the New Zealand manufacturer and exporter association said it needed a lower exchange rate to be competitive. Looking ahead, US Michigan confidence is the only notable standout on today’s economic calendar.

US SPX 500 – technical overview

The prospect for the formation of an imminent top has faded, with the price rallying back above critical psychological resistance at 2100 to fresh 2016 highs. This opens the door for a direct retest of the record high from 2015 at 2133. At this point, a break back below 2085 would be required to take the immediate pressure off the topside.

• R2 2133.00 – 20Jul 2015/Record – Very Strong
• R1 2121.00 – 8Jun/2016 high – Strong
• S1 2085.00 –1Jun low – Medium
• S2 2076.00 – 25May low– Strong

US SPX 500 – fundamental overview

The stock market is once again looking vulnerable at lofty heights, with 2016 rallies continuing to feel like they have very little behind them. The fact that monetary policy is exhausted on a global scale is not something that should be a comfort to investors, especially after dovish implications from last Friday’s worrying US employment report have done little to materially extend gains. Indeed, stocks are at 2016 highs and now within a stone’s throw of the 2015 record high, with the Fed’s scaled back hawkishness contributing to the move. But the follow through has been unimpressive and it doesn’t look like the market will be able to push much higher on this lower for longer monetary policy fuel. There is talk of heavy stops below 2085. Michigan confidence is the only notable release in Friday trade.

GOLD (SPOT) – technical overview

The market has done a formidable job recovering out from an intense round of setbacks into the 1200 area. Overall, while the price holds above critical previous medium term resistance at 1191, the structure remains constructive, with scope for the formation of the next medium term base ahead of a resumption of gains back through 1300 and towards 1400 further up.

• R2 1303.90 – 2May/2016 high – Strong
• R1 1271.85 – 9Jun high – Medium
• S1 1234.95 – 7Jun low – Medium
• S2 1199.90 – 30May low – Strong

GOLD (SPOT) – fundamental overview

GOLD has been very well supported into the latest dip, with the yellow metal finding solid demand from medium-term players in 2016, on the back of fears over the limitations of exhausted monetary policy and extended global equities. Risk sentiment likely to be a major driver going forward. Renewed weakness on this front will almost certainly continue to keep the commodity supported ahead of $1190. But it’s this latest slide in the Buck in the aftermath of last Friday’s horrid US jobs report, that has been a major prop for the metal this time round.

Feature – technical overview

USDTRY remains exceptionally well supported on dips, with the latest round of setbacks propped around 2.8800. From here, look for a higher low in favour of the next major upside extension through 3.0120 and back towards a retest of the 2016 high from January at 3.0610. Ultimately, only a daily close below 2.8800 would delay the constructive outlook.

• R2 3.0120 – 24May high – Strong
• R1 2.9685 – 30May high – Medium
• S1 2.8795 –8Jun low – Strong
• S2 2.8435 – 4May low – Medium

Feature – fundamental overview

Domestic security concerns and CBRT liquidity measures have been a drag on the Lira, though much of this has been offset this week by a wave of broad based US Dollar selling in the aftermath of last Friday’s horrid US employment report and dovish Fed implications. Still, US equities are looking quite stretched at current levels and the CBRT is expected to cut rates some more over the coming months. Both of these themes should ultimately keep USDTRY dips very well supported going forward.