Reconciling the disturbing disconnect in the global economy

GBPUSD – technical overview

The market has rebounded sharply, after collapsing to a +30 year low below 1.1500. This supports the longer-term constructive outlook, with a major bottom sought out ahead of the start to a big run to the topside back through 1.3000. Look for the major pair to hold up well into setbacks, and ultimately above 1.2000 on a monthly close basis for confirmation.

• R2 1.2648 – 8 May high – Strong
• R1 1.2634– 4 June high – Medium
• S1 1.2478 – 2 June low – Medium
• S2 1.2290 – 29 May low – Strong

GBPUSD – fundamental overview

There hasn't been a whole lot of productive talk with respect to Brexit negotiations, though it doesn't look like the market has been all too concerned at this stage. On Thursday, BOE Hauser was on the wires saying 'markets could come under strain again if there's another leg to the pandemic infection cycle or if economic data comes out persistently worse than expected.' Looking ahead, the US jobs report will be what gets most of the attention on the economic calendar.

USDJPY – technical overview

We're seeing signs of a pickup in volatility in the major pair, with the market chopping around quite a bit. Still, there is no clear directional insight, with the price confined to a larger triangle formation. Overall, rallies have been well capped above 110.00 and dips well supported below 104.00.

• R2 109.38 – 6 April high – Strong
• R1 109.24 – 5 June high – Medium
• S1 108.00 – Figure – Medium
• S2 107.08 – 29 May low  – Strong

USDJPY – fundamental overview

At the moment, the Yen has been confined to tighter trade overall, as we see offsetting flow from risk on and broad based US Dollar selling. There hasn't been much reaction to all of the tension on the global trade front, and tension around China relations with Hong Kong. Earlier, Japan household spending sunk to a record low on account of the impact from the coronavirus. Looking ahead, the US jobs report will be what gets most of the attention on the economic calendar.

EURCHF – technical overview

The market remains very well capped into offers and the medium-term picture continues to favour the downside. A weekly close back above 1.1000 would be required to take the immediate pressure off the downside.

• R2 1.0900 – Figure – Medium
• R1 1.0862 – 4 June high – Strong
• S1 1.0661 – 29 May low – Medium
• S2 1.0576 – 25 May 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 renewed risk liquidation in 2020, 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

Technical studies have turned up in recent weeks, after the market traded down to its lowest levels since 2003 earlier this year. There is evidence of a longer-term bottom, though the market will need to break back above the December 2019 high at 0.7032 to take the immediate pressure off the downside.

• R2 0.7000 – Figure – Psychological
• R1 0.6988 – 4 June high – Medium
• S1 0.6775 – 2 June low – Medium
• S2 0.6648 – 1 June low – Strong

AUDUSD – fundamental overview

Overall, Aussie has been well in demand, extending its recovery on the back of risk on flow, upbeat comments from the RBA, this week's better than expected GDP data, and broad based US Dollar outflow. There has been some buzz around the latest headlines that Australia will implement a tougher screening process on foreign investors looking to purchase sensitive Australian assets, due to national security concerns. This should be monitored as it relates to possible escalation in trade tension with China. The RBA injected AUD513m of liquidity in today's operations. Looking ahead, the US jobs report will be what gets most of the attention on the economic calendar.

USDCAD – technical overview

Has been in the process of correcting since topping out earlier this year above 1.4600. At this stage, with the correction well extended, the market is likely to find solid support in the 1.3300-1.3500 area, ahead of a resumption of gains. Ultimately, only a weekly close below 1.3300 would suggest otherwise.

• R2 1.3714 – 29 May low – Medium
• R1 1.3586 – 2 June high – Medium
• S1 1.3468 – 4 June low – Medium
• S2 1.3400 – Figure – Medium

USDCAD – fundamental overview

The BoC held its benchmark interest rate at 0.25% earlier this week and said 'as market function improves and containment restrictions ease, the bank's focus will shift to supporting the resumption of growth in output and employment.' On Thursday, the Canada trade deficit came in wider than forecast. Overall however, the Canadian Dollar has been well bid, with most of the recent gains coming from broad based US Dollar outflow and the recovery in the price of OIL. Looking ahead, we get the Canada jobs report and Canada Ivey PMIs, though these will be overshadowed by the US jobs report.

NZDUSD – technical overview

There's a case to be made for a meaningful bottom, after the market collapsed below massive psychological support at 0.5500 earlier this year. A break back above the 0.6600 area would be required to officially put this market in an uptrend on the weekly chart, though daily studies are now trending up with any setbacks expected to be well supported ahead of 0.6000.

• R2 0.6500 – Psychological – Strong
• R1 0.6491 –  5 June high – Medium
• S1 0.6300 – Figure – Medium
• S2 0.6263 – 2 June low – Strong

NZDUSD – fundamental overview

Overall, Kiwi has been better bid on account of the a continued push in stocks and concurrent round of broad based US Dollar outflow. Earlier today, the RBZNZ bought NZD325m of government bonds in its daily QE operations, meeting its target. FinMin Robertson was out on the wires with upbeat comments, saying the New Zealand economy seemed to be recovering quicker, and worst case estimates post coronavirus are now off the table. Meanwhile, the New Zealand government extended its wage subsidy program. Looking ahead, the US jobs report will be what gets most of the attention on the economic calendar.

US SPX 500 – technical overview

The market has been in recovery mode since bottoming out in March. Still, the recovery is classified as corrective, with a lower top sought out below the record high from February, ahead of the next major downside extension, eventually back below the March low.

• R2 3138 –  3 March high – Strong
• R1 3133 – 3 June high – Medium
• S1 2970 – 27 May low – Medium
• S2 909 – 22 May low – Strong

US SPX 500 – fundamental overview

Although we've seen attempts at recovery in response to unlimited QE from the Fed and massive US stimulus, with so little room for additional central bank accommodation, given an already depressed interest rate environment, the prospect for additional runs to the topside, on easy money policy incentives and government stimulus, should no longer be as enticing to investors. Meanwhile, tension on the global trade front, geopolitical risk, and ongoing worry associated with recovery post coronavirus, should weigh more heavily on investor sentiment in 2020.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, and suggests the market is in the early stages of a bullish move towards and through the record high (just ahead of 2000), following a multi-month consolidation. The next major level of resistance comes in around 1800 (measured move extension target, 2012 high), while in the interim, look for any setbacks to be well supported above 1500.

• R2 1796 – 2012 high – Strong
• R1 1765 – 18 May/2020 high – Medium
• S1 1641– 8 April low – Medium
• S2 1568 – 1 April low – 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, coronavirus fallout, 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

Setbacks should be very well supported ahead of the 2018 low, with a higher low sought out in favour of a bullish continuation back above the 2019 high and towards the record high from late 2017 further up. Ultimately, only a weekly close below 5,000 would compromise the constructive outlook. Back above 10,500 further encourages the bullish prospect. Shorter studies are however stretched and warn of a pullback ahead.

• R2 10,477– 9 February/2020 high – Strong
• R1 10,360 – 2 June high – Medium
• S1 8,000 – Psychological – Medium
• S2 7,704 – 29 April low – Strong

BTCUSD – fundamental overview

Bitcoin has enjoyed a nice recovery since bottoming in March, with the runup in stocks and hype around the halving event contributing to a lot of the momentum. Interest from well known traditional market participants is helping to generate plenty of buzz as well. At the same time, given the extended nature of technical readings into important resistance, we see this as timing well for a sell the fact with the halving event now officially behind us and global equities once again looking vulnerable.

BTCUSD - Technical charts in detail

ETHUSD – technical overview

The market is in the process of attempting to establish a meaningful base after stalling out in the latter half of 2019. Look for setbacks to be well supported above the 2018 low, in favour of another big bounce, eventually back towards and through the 2019 high up at 363.

• R2 289 – 15 February/2020 high – Strong
• R1 253 – 2 June high – Medium
• S1 176 – 11 May low – Medium
• S2 148 – 16 April low  – Strong

ETHUSD – fundamental overview

While there is plenty of Ether demand built up, with so much optimism around prospects for the blockchain, given all of the development going on in the decentralised finance space, macroeconomics will likely play a negative role in 2020, with Ether expected to underperform in a mostly risk off backdrop, in light of Ethereum's higher sensitivity and correlation with risk themes.