Central Bankers Consume Wednesday Calendar

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 1.3533 will take the immediate pressure off the downside and force a shift in the structure.

• R2 1.3138 – 14Sep low – Strong
• R1 1.3121 – 22Sep high – Medium
• S1 1.2915 – 23Sep low – Medium
• S2 1.2796 – 6Jul/2016 low – Strong

GBPUSD – fundamental overview

The Pound was bid up on Tuesday with most of the positive flow coming from cross related selling in EURGBP, with the Euro taking a hit on the back of the Deutsche Bank woes. Still, rallies were well capped with US consumer confidence hitting a 9 year high and Fed Williams acknowledging the US economy’s readiness for a rate hike. Looking ahead, lack of economic data on the UK calendar will leave the UK currency focused on US durable goods and a slew of Fed speak including Yellen, George, Mester, Bullard and Evans.

USDJPY – technical overview

Overall, the pressure remains on the downside with a lower top sought out at 104.32 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 104.32 would delay this outlook and give reason for pause. Below 99.00 exposes the next major support level in the 95.00 area.

• R2 101.54 – 20Sep low – Medium
• R1 101.24 – 23Sep low – Medium
• S1 100.08 – 27Sep low – Medium
• S2 98.99 – 24Jun/2016 low – Strong

USDJPY – fundamental overview

Japanese PM advisor Koichi Hamada has been out calling for the MOF to intervene in the Yen, though it’s highly unlikely this is going to happen at current levels, with many officials already expressing their distaste for such action. Mostly, the Yen has been stuck in some tight trade and will likely remain locked in a holding pattern until it can take in US durable goods and a slew of Fed speak featuring Yellen, George, Mester, Bullard and Evans.

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 1.1001 – 1Sep high – Medium
• S1 1.0856 – 22/23Sep low – Medium
• S2 1.0778 – 16Jun low – Strong

EURCHF – fundamental overview

Overall, 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. Ultimately, 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 now looking extended which could invite additional Franc demand if the market continues 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. Look for a break back below 0.7421 to strengthen this outlook and accelerate declines towards 0.7000 in the days ahead. Ultimately, only back above 0.7758 will negate the bearish outlook and invite a retest of the 2016 highs.

• R2 0.7758 – 11Aug high – Strong
• R1 0.7696 – 27Sep high – Medium
• S1 0.7603 –26Sep low – Medium
• S2 0.7531 – 20Sep low – Strong

AUDUSD – fundamental overview

Nothing new from RBA Assistant Governor Edey, though we have seen the Australian Dollar supported on the back of an upbeat ANZ Roy Morgan consumer confidence index and better China industrial profits. Rallies have however been somewhat tempered by positive US flow resulting from Tuesday’s impressive US consumer confidence print at a 9 year high. Looking ahead, the market will be watching US durable goods and a heavy dose of Fed speak including the Yellen, George, Mester, Bullard and Evans.

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 through 1.3300 and towards a measured move objective into the 1.3500-1.4000 area. Ultimately, only back below 1.2655 would delay the constructive outlook.

• R2 1.3300 – Figure – Medium
• R1 1.3281 – 27Sep high – Strong
• S1 1.3136 – 26Sep low – Medium
• S2 1.3000 – 22Sep low– Strong

USDCAD – fundamental overview

The Canadian Dollar is standing out as one of the weakest currencies over the past week, with the Loonie taking a hit on a combination of factors. Earlier this week, Governor Poloz offered some dovish remarks and this has been followed up by more downside pressure in OIL, solid US data and hawkish speak from Fed Williams. Looking ahead, the Canada economic calendar is empty and the focus will be on US durable goods and a wave of Fed speak from the likes of Yellen, George, Mester, Bullard and Evans.

NZDUSD – technical overview

Finally signs of a potential top after the market stalled out at 2016 highs ahead of major psychological barriers at 0.7500. Daily studies had already traded up into overbought territory warning of the reversal and this latest bearish reversal strengthens the toppish outlook. Look for a break and close back below 0.7200 to confirm the structural shift and accelerate declines.

• R2 0.7369 –22Sep high – Strong
• R1 0.7330 – 27Sep high  – Medium
• S1 0.7221 – 26Sep low – Medium
• S2 0.7204 – 30Aug low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar tried its best to mount a meaningful rally in the aftermath of the first US presidential debate, but ultimately could not hold onto gains as broader macro themes worked their way in. Worry in the European banking sector weighed on the risk correlated currency, while solid US consumer confidence at a 9 year high and hawkish Fed Williams comments also invited renewed Kiwi selling. Looking ahead, the market will be watching US durable goods and a heavy dose of Fed speak including the Yellen, George, Mester, Bullard and Evans.

US SPX 500 – technical overview

Signs of a potential top after the market recently broke below critical support at 2147. This now opens the door for a meaningful period of weakness exposing a more pronounced decline towards the June base at 1990. Look for any rallies to now be well capped ahead of 2180, with only a daily close back above this level to compromise the newly adopted bearish outlook. Below 2108 accelerates.

• R2 2194.00 – 15Aug/Record high – Strong
• R1 2180.00 – 222Sep high – Medium
• S1 2108.00 – 12Sep low – Medium
• S2 2073.00 – 6Jul low– Strong

US SPX 500 – fundamental overview

It all feels like it’s starting to come to a head for the US equity market. In recent weeks, we have been hearing a lot about the limitations of monetary policy. And now that the Fed has come out appeasing the market with a less hawkish decision this month, it will be interesting to see just how close we are to the limits of this monetary policy. The September low at 2108 will be the critical level to watch. If the market holds above this level, then it can be argued that accommodative policy gestures (or less hawkish gestures) are still helping to artificially support the market. If however the market turns lower in the sessions ahead and breaks down below 2108, we could see a major intensification of declines as it becomes quite clear that monetary policy has in fact reached its limits, leaving investors to stand on their own two feet. Today’s focus will be on US durable goods and a heavy batch of Fed speak from Yellen George, Mester, Bullard and Evans.

GOLD (SPOT) – technical overview

The structure remains highly constructive with dips continuing to be very well supported. A recent round of setbacks were propped ahead of the 100-Day SMA and it looks like a fresh higher low could be in place around 1300 in favour of the next major upside extension beyond the current 2016 peak at 1375 and towards 1450-1500 further up.

• R2 1352.70 – 6Sep high – Strong
• R1 1343.75 – 22Sep high – Medium
• S1 1306.30 – 16Sep low – Medium
• S2 1302.50 – 1Sep low – 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 could be 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 14.7540 – 1Sep high – Strong
• R1 14.0260 – 20Sep high – Strong
• S1 13.3800 – 22Sep low – Medium
• S2 13.2000 – 10Aug/2016 low – Strong

Feature – fundamental overview

The Rand has done a really good job holding up in recent trade in the face of the possibility of a South Africa ratings downgrade in the pipeline, particularly after Moody’s placed five South Africa state owned companies on watch. It seems a mild recovery in risk sentiment post the first US presidential debate is fueling some added Rand demand. Dealers have also been citing M&A related flow into the Rand on the AB InBev deal for SABMiller. Still, its important to note net inflow from the mentioned M&A deal would be far less than the gross number the market has been fixated on. Looking ahead, the direction in the Rand from here on will likely come down to risk flow. If risk appetite holds up, the Rand will move higher, but if risk appetite deteriorates, the Rand will fall. US durable goods and a slew of Fed speak on tap.