Stacked Calendar and Month End Flow

GBPUSD – technical overview

The market remains confined to an intense downtrend and is in the process of consolidating just off the recent +30-year low from July. Any rallies are classified as corrective ahead of what should be the next major break below 1.2800 and towards 1.2500. Only back above 1.3372 will take the immediate pressure off the downside and force a shift in the structure.

• R2 1.3279 – 26Aug high – Strong
• R1 1.3139 – 29Aug high – Medium
• S1 1.3023 – 19Aug low – Medium
• S2 1.2978 – 17Aug low – Strong

GBPUSD – fundamental overview

Though the Pound traded lower against the Buck on Tuesday, the UK currency was rather resilient considering the broad based USD demand and a batch of less friendly UK data in the form of mortgage approvals and net lending to consumers. UK GfK consumer confidence has since come in a little better than expected, helping to support the latest dip and the market will now look to digest UK nationwide house prices, US ADP employment, Chicago PMIs and US pending home sales.

USDJPY – technical overview

Although we’ve seen an impressive bounce in recent trade, overall, the pressure remains on the downside with a lower top sought out ahead of 107.49 in favour of the next major downside extension below the recent yearly and multi-month low at 98.99. At this point, only a break back above 105.00 would delay this outlook and give reason for pause. Below 99.00 exposes the next major support level in the 95.00 area.

• R2 103.99 – 26Jul low – Strong
• R1 103.50 – Mid-Figure – Medium
• S1 101.75 – 30Aug low – Medium
• S2 100.06 – 25Aug low – Strong

USDJPY – fundamental overview

Japanese importers and leveraged funds were on the bid in the major pair, helping it along to a one month high above 103.00 before a fresh round of renewed offers emerged. Comments from BOJ Funo have been largely ignored after the central banker echoed already known BOJ sentiment, saying uncertainty is high and they will continue to pursue monetary easing. Otherwise, we got some Japanese data on Wednesday, highlighted by a disappointing industrial production print, though again, this failed to factor into price action. Looking ahead, US ADP employment, pending home sales and Chicago PMIs are the main standouts on the calendar.

EURCHF – technical overview

Not much doing here over the past several days, with the market confined to a range trade, roughly between 1.0800 and 1.1000. At this point, a daily close above 1.1000 or back below 1.0800 will be required for clearer directional insight. Until then, look for dips to be supported and rallies well capped.

• R2 1.1014 – 24Jun high – Strong
• R1 1.0965 – 30Aug high – Medium
• S1 1.0870 – 24Aug low – Medium
• S2 1.0778 – 16Jun low – Strong

EURCHF – fundamental overview

SNB smoothing activity to prop the EURCHF rate has been helping to elevate the cross, but at the same time, any upside moves haven’t been sustainable with the cross rate continuing to get sold aggressively into rallies towards 1.1000. Overall, this is a market going nowhere right now and it seems stops need to get taken out below 1.0750 or above 1.1000 for clearer insight. US stocks have been supporting EURCHF but are also looking extended which could invite Franc demand if the market starts to roll over from record highs in the sessions ahead.

AUDUSD – technical overview

The market has struggled on rallies above 0.7700 and this suggests the rate could be looking to carve a lower top below the 2016 high at 0.7835 in favour of the next major downside extension. The recent break back below 0.7637 strengthens this outlook and should accelerate declines towards 0.7400 in the sessions ahead. Ultimately, only back above 0.7758 will negate the newly adopted bearish outlook and invite a retest of the 2016 highs.

• R2 0.7693 – 26Aug high – Strong
• R1 0.7582 – 29Aug high – Medium
• S1 0.7488 – 2Aug low – Medium
• S2 0.7421 –27Jul low – Strong

AUDUSD – fundamental overview

Nothing going on with the Australian Dollar into Wednesday, with the currency bid up a bit early on from broader macro flow and some profit taking on long USD exposure. There wasn’t any reaction to mostly in line Aussie private sector credit, while RBA Debelle failed to touch on monetary policy. Looking ahead, we get a decent batch of US data featuring ADP employment, Chicago PMIs and pending home sales. End of month flow should also not be forgotten.

USDCAD – technical overview

This market looks to be in the process of carving out a longer-term base off the 1.2461, 2016 low. Look for any additional weakness to be supported ahead of 1.2655 in favour of the next major upside extension towards a measured move objective into the 1.3500-1.4000 area. Ultimately, only back below 1.2655 would delay the constructive outlook.

• R2 1.3201 – 5Aug high – Strong
• R1 1.3123 – 10Aug high – Medium
• S1 1.3010 – 30Aug low – Medium
• S2 1.2831 – 26Aug low – Strong

USDCAD – fundamental overview

The Canadian Dollar has been an underperformer in recent trade, with the currency suffering at the hands of broad based currency declines against the Buck and setbacks in the price of OIL. Profit taking is kicking in ahead of the OPEC meeting with many questioning the likelihood that a supply freeze can be negotiated. But looking ahead, there will be plenty more for the Canadian Dollar to take in, with Canada GDP due along with a healthy batch of US data featuring ADP employment, Chicago PMIs and pending home sales. End of month flow should also not be forgotten.

NZDUSD – technical overview

Rallies to fresh 2016 highs above 0.7300 have been well capped, with the market looking to adhere to the broader downtrend. As such, look for this latest surge to once again fizzle out, in favour of a resumption of declines. Key support now comes in at 0.7087, but a break below 0.7199 will get things going to the downside.

• R2 0.7381 – 26Aug/2016 high – Strong
• R1 0.7300 – Figure  – Medium
• S1 0.7199 – 16Aug low – Medium
• S2 0.7087 – 8Aug low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar has been holding up well into Wednesday, despite a wave of broad based US Dollar buying. Earlier today we saw headline Kiwi business confidence pulling back, while the activity outlook rose. Though the market hasn’t reflected this fact, the dip in year ahead inflation expectations should be a tad concerning for RBNZ hawks. Still, the market is only pricing a 21.3% chance of a September rate cut, with the greater chance for a move in November. Looking ahead, we get a decent batch of US data featuring ADP employment, Chicago PMIs and pending home sales. End of month flow should also not be forgotten.

US SPX 500 – technical overview

Signs of a potential top after the market put in a bearish reversal week off fresh record highs. But a break and daily close below critical support at 2147 will be required to strengthen this outlook and accelerate declines. Inability to establish below 2147 will leave the market consolidating and focused on a push to fresh record highs through 2200.

• R2 2200.00 – Psychological – Strong
• R1 2194.00 – 15Aug/Record – Medium
• S1 2147.00 –2Aug low – Medium
• S2 2136.00 – 12Jul low– Strong

US SPX 500 – fundamental overview

US equities have come under pressure off record highs following this latest wave of hawkish commentary signaling the possibility for a rate hike as soon as September. But overall, there is a sense that even if the Fed ends up doing nothing in 2016 and holds off, with monetary policy already exhausted and the limitations of policy being reached, there is still the risk for a more intense period of weakness off the recently established record highs. Looking ahead, we get a decent batch of US data featuring ADP employment, Chicago PMIs and pending home sales. End of month flow should also not be forgotten.

GOLD (SPOT) – technical overview

The recent break above the previous 2015 peak at 1307 strengthens the case for a longer term base with the market confirming a medium-term higher low in the 1200 area, opening the door for the next major upside extension towards a measured move at 1450. Any setbacks should be very well supported ahead of 1300, with only a break below this level to compromise the outlook.

• R2 1358.10 – 16Aug high – Strong
• R1 1344.80 – 23Aug high – Medium
• S1 1310.90 – 21Jul low – Medium
• S2 1300.00 – Psychological – Strong

GOLD (SPOT) – fundamental overview

Overall, GOLD has been very well supported in 2016, with the yellow metal finding solid demand from medium and longer-term players on the back of fears over the limitations of exhausted monetary policy and extended global equities. All of this will almost certainly continue to keep the commodity in demand, with many market participants fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.

Feature – technical overview

USDZAR has come under a good deal of pressure in recent months, trading down to a fresh 2016 low around 13.2000. However, it now appears as though the market is finally ready to turn back up in favour of a resumption of the broader uptrend. In the interim, look for any setbacks to be well supported ahead of 13.2000, with fresh upside seen towards 15.0000 in the sessions ahead. Only back below 13.2000 gives reason for pause.

• R2 15.0000 – Psychological – Strong
• R1 14.6000 – 15Jul high – Medium
• S1 13.8850 – 24Aug low – Medium
• S2 13.2000 – 10Aug/2016 low – Strong

Feature – fundamental overview

The ANC party has come out with a vote of confidence for FinMin Gordhan, though the market isn’t really paying much attention, instead waiting to see how the administrations actually acts towards the FinMin with respect to his job and protecting him from arrest. Certainly General Secretart Mantashe comments that ministers must go and answer police questions if summoned, and Gordhan must co-operate, are not comforting to investors. Moreover, there has been a lot of talk over the possibility for South Africa rating agency downgrades to junketeer this year, which should keep the emerging market currency on the back foot.