Market direction all about Trump

GBPUSD – technical overview

The market has seen an impressive bounce out from the lowest levels since 2016, with the price recovering back above critical resistance at 1.2310, to not only take the immediate pressure off the downside, but also transition the market into a technical uptrend on the daily chart, as per the daily Ichimoku cloud. Ultimately, only back below 1.2000 would compromise the more constructive outlook for the major pair. Next key resistance comes in the form of a double bottom objective at 1.2660.

• R2 1.2504 – 24 September high – Strong
• R1 1.2400 – Figure – Medium
• S1 1.2325 – 13 September low – Medium
• S2 1.2283 – 12 September low – Strong

GBPUSD – fundamental overview

Jeremy Corbyn said he would call a no-confidence vote in Boris Johnson's government once the risk of a no-deal Brexit had been removed. Johnson agreed to allow such a vote but said he wouldn't resign if he lost the vote. Meanwhile, Johnson is looking to call an early election and will be addressing conservative MPs today. The EU has said the latest proposal for an Irish backstop solution was unsatisfactory. Key standouts on today's calendar come in the form of US growth, core PCE, initial jobless claims, pending home sales, and a flurry of central bank speak from the likes of Fed Kaplan, Fed Bullard, Fed Clarida, Fed Daly, and Fed Kashkari.

USDJPY – technical overview

The longer-term downtrend remains firmly intact, with the major pair recently taking out major support in the form of the 2018 and 2019 lows respectively. Rallies should continue to be well capped below 110.00 in favour of  the next major downside extension towards the 2016 low at 99.00.

• R2 109.32 – 1 August high – Strong
• R1 108.48 – 18 September high – Medium
• S1 106.96 – 24 September low – Medium
• S2 106.32 – 5 September low  – Strong

USDJPY – fundamental overview

We continue to see choppy two-way flow in the Yen, as the market gets pulled in both directions from diverging themes. On Wednesday, the news of the launching of an impeachment hearing against President Trump opened a wave of risk off flow and Yen demand. However, this was later offset by upbeat comments from President Trump relating to trade, with the President saying a trade deal with China could come sooner than the market thinks. Looking ahead, key standouts on today's calendar come in the form of US growth, core PCE, initial jobless claims, pending home sales, and a flurry of central bank speak from the likes of Fed Kaplan, Fed Bullard, Fed Clarida, Fed Daly, and Fed Kashkari.

EURCHF – technical overview

The market is attempting to recover out from its lowest levels in two years, and at this point, it would take a daily close back above 1.1173 to take the immediate pressure off the downside. The recent breakdown below 1.1000 opens the door for the next major downside extension towards 1.0600. Look for rallies to be well capped ahead of 1.1100.

• R2 1.1064 – 26 July high – Strong
• R1 1.1020 – 18 September high – Medium
• S1 1.0832 – 25 September low – Medium
• S2 1.0811 – 4 September/2019 low – Strong

EURCHF – fundamental overview

The SNB remains uncomfortable with Franc appreciation and continues to remind the market it will need to be careful about any attempts at trying to force an appreciation in the currency. But the SNB will also need to be careful right now, as its strategy to weaken the Franc is facing headwinds from a less certain global outlook. Any signs of sustained risk liquidation, will likely invite a very large wave of demand for the Franc that will put the SNB in the more challenging position of needing to back up its talk with action, that ultimately, may not prove to be as effective as it once was, given where we're at in the monetary policy cycle.

AUDUSD – technical overview

The market has been under pressure over the past several months, but has also been well supported on dips. The price action suggests we could be seeing the formation of a major base, though it would take a clear break back above 0.7100 to strengthen this outlook. In the interim, look for setbacks to continue to be well supported above 0.6700 on a weekly close basis.

• R2 0.6895 – 12 September high – Strong
• R1 0.6832 – 19 September high – Medium
• S1 0.6739 – 25 September low – Medium
• S2 0.6677 – 7 August/2019 low – Strong

AUDUSD – fundamental overview

Aussie gains on upbeat comments from RBA Lowe earlier in the week were wiped away on Wednesday. Initially, Aussie took a hit on uncertainty associated with the Trump impeachment news. The commodity currency took another blow later in the day after President Trump inspired a broad based US Dollar rally on his comment that a trade deal with China could come sooner than the market thinks. Looking ahead, key standouts on today's calendar come in the form of US growth, core PCE, initial jobless claims, pending home sales, and a flurry of central bank speak from the likes of Fed Kaplan, Fed Bullard, Fed Clarida, Fed Daly, and Fed Kashkari.

USDCAD – technical overview

The longer-term structure remains constructive, with dips expected to be well supported for renewed upside, eventually back above the 2018/multi-month high at 1.3665. At this point, only a weekly close below the psychological barrier at 1.3000 would compromise this outlook.

• R2 1.3383 – 3 September high – Strong
• R1 1.3311 - 18 September high – Medium
• S1 1.3202 – 13 September low – Medium
• S2 1.3133 – 10 September low – Strong

USDCAD – fundamental overview

The Canadian Dollar has been quiet this week, with a lot of this having to do with a light calendar and consolidation in the price of OIL. On Monday, Canada wholesale says came in better than expected, though this didn't have much of an impact on the currency. Looking ahead, key standouts on today's calendar come in the form of Canada average weekly earnings, US growth, core PCE, initial jobless claims, pending home sales, and a flurry of central bank speak from the likes of Fed Kaplan, Fed Bullard, Fed Clarida, Fed Daly, and Fed Kashkari.

NZDUSD – technical overview

Despite recent weakness, there's a case to be made for a meaningful bottom, with the market rallying out from longer-term cycle low area around 0.6200. As such, look for setbacks to be well supported in the days ahead, in anticipation of a continued recovery. Only a weekly close below 0.6200 would give reason for rethink. Back above 0.6451 will take the immediate pressure off the downside.

• R2 0.6451 – 12 September high – Strong
• R1 0.6349 –  25 September high – Medium
• S1 0.6255 – 20 September/2019 low – Medium
• S2 0.6200 – Figure – Strong

NZDUSD – fundamental overview

The New Zealand Dollar had been attempting a healthy recovery after the RBNZ came out with a less dovish tone than the market was expecting earlier this week. However, the combination of worry around the Trump impeachment news and President Trump's comment that a trade deal with China could come sooner than the market thought, was a combination that more than offset the Kiwi recovery from earlier in the week, with the US Dollar broadly bid in the aftermath. Looking ahead, key standouts on today's calendar come in the form of US growth, core PCE, initial jobless claims, pending home sales, and a flurry of central bank speak from the likes of Fed Kaplan, Fed Bullard, Fed Clarida, Fed Daly, and Fed Kashkari.

US SPX 500 – technical overview

There have been signs of a major longer term top, after an exceptional run over the past decade. Any rallies from here, are expected to be very well capped, in favour of renewed weakness targeting an eventual retest of strong longer-term previous resistance turned support in the form of the 2015 high at 2140. The initial level of major support comes in at 2729, with a break below to strengthen the outlook. A monthly close above 3000 would be required to compromise the outlook calling for a top.

• R2 3029 – 26 July/Record high – Strong
• R1 3023 – 19 September high – Strong
• S1 2952 – 25 September low – Medium
• S2 2889 – 2 September low – Strong

US SPX 500 – fundamental overview

Although we've seen the market extending to fresh record highs in 2019, on the back of the Fed policy reversal, with so little room for additional easing, given an already depressed interest rate environment, the prospect for a meaningful extension of this record run, on easy money policy incentives, should no longer be as enticing to investors as it once was. Meanwhile, tension on the global trade front should continue to be a drag on investor sentiment despite any signs that would suggest otherwise. We recommend keeping a much closer eye on the equities to ten year yield comparative going forward, as the movement here is something that could be a major stress to the financial markets looking out.

GOLD (SPOT) – technical overview

The recent breakout above the 2016 high at 1375 was a significant development, and suggests the market is in the early stages of a bullish move that follows a multi-month consolidation. The next major level of resistance comes in around 1600, while in the interim, look for any setbacks to be well supported above 1400.

• R2 1600 – Round number – Strong
• R1 1558 – 4 September/2019 high – Strong
• S1 1480 – 13 August low – Medium
• S2 1400 – Psychological – Strong

GOLD (SPOT) – fundamental overview

The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about exhausted monetary policy, extended global equities, political uncertainty, systemic risk and trade war threats. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.

BTCUSD – technical overview

Overall, look for additional upside to be limited for now, as the market continues to correct and consolidate, in the aftermath of a major surge in the second quarter of 2019. Any setbacks should be very well supported ahead of 7,000, with an eventual higher low sought out in favour of a bullish continuation back above the 2019 high at 13,748. Only a weekly close below 7,000 would compromise the constructive outlook.

• R2 10,972– 20 August high – Strong
• R1 9,825 – 24 September high – Medium
• S1 8,000 – Psychological – Medium
• S2 7,447 – 6 June low – Strong

BTCUSD – fundamental overview

Bitcoin enjoyed a spectacular run in the second quarter of 2019, racing to fresh yearly highs, surging towards 14k, on the back of increased adoption and more openness from the traditional investor community. The news of tech giants now turning towards the world of crypto has invited a higher profile that should be a net positive in the long run. Future ECB President Lagarde has recently come out in support of cryptocurrencies as well. At the same time, it also exposes the ethos to fresh critique from higher ups at the central bank and government levels. The market is also going through a period of technical adjustment after the fierce Q2 run up, though we anticipate continued demand from institutional players starved for yield in a world where global equities are increasingly vulnerable. Plenty of demand is reported on dips down towards $7,000.

BTCUSD - Technical charts in detail

ETHUSD – technical overview

The market is in the process of a major correction after a surge in the second quarter of 2019. Look for setbacks to be well supported above of previous resistance turned support at 150 on a weekly close basis, in favour of the next major higher low and bullish resumption back towards and through the 2019 high up at 363. Ultimately, only a weekly close below 150 would compromise the outlook.

• R2 225 – 19 September high – Strong
• R1 200 – Psychological – Medium
• S1 154 – 24 September low – Medium
• S2 150 – Psychological  – Strong

ETHUSD – fundamental overview

There was a lot more buzz around adoption following the Q2 2019 Bitcoin surge, with many mainstream names coming out in support of blockchain integration. Demand for web 3.0 applications is on the rise, and Ethereum is the blockchain with the biggest front end application potential. At the same time, profit taking in the aftermath of the rapid Q2 appreciation has triggered a healthy period of correction and consolidation, while critique of the space from the likes of President Trump and Fed Chair Powell, along with worry associated with fallout in the global economy, are stories that could keep the more risk correlated crypto asset weighed down in the second half of the year. Risk off in the global economy is expected to result in ETH underperformance relative to Bitcoin.