Uncertainty creeps in

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 and towards the 2019 high at 1.3515. Look for the pair to hold up ahead of 1.2500 into setbacks.

• R2 1.3201 – 9 March high – Strong
• R1 1.3186 – 6 August high – Medium
• S1 1.2982 – 4 August low – Medium
• S2 1.2838 – 28 July low – Strong

GBPUSD – fundamental overview

The Pound has not been immune to this latest wave of risk off, with currencies broadly under pressure against the Buck. Meanwhile, the FT has reported that UK Chancellor of the Exchequer Sunak is considering options to delay his autumn budget if the UK is hit by a second wave of coronavirus infections. If the budget is postponed, Sunak may produce a "mini-spending review" that allocates spending for individual government departments for 1 year. On Tuesday, UK PM Johnson blocked a proposal by cabinet office minister Gove to invite Scotland First Minister Sturgeon to cabinet meetings. Key standouts on Wednesday’s calendar include UK trade, GDP, construction output and industrial production, US inflation reads, and Fed speak.

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 107.54 – 20 July high – Strong
• R1 107.00 – Figure – Medium
• S1 105.30 – 6 August low – Medium
• S2 10419 – 31 July low  – Strong

Japan Finance Minister Aso said the government's stimulus measures are 'having some effect,' and the economy is 'showing signs of recovery.' Japan Foreign Minister Motegi said he is aiming to have a new trade deal with the UK in effect by the 1st of January 2021. Key standouts on Wednesday’s calendar include US inflation reads, and Fed speak.

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 1.0916 – 5 June/2020 high – Strong
• R1 1.0839 – 27 July high – Medium
• S1 1.0600 – Figure – Medium
• S2 1.0577 – 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 2020, after the market traded down to its lowest levels since 2003 earlier this year. There is evidence of a longer-term bottom following the latest push back through 0.7000, though at this stage, there is risk for a pullback to allow for shorter term studies to unwind. Next big resistance comes in the form of the 2019 high up at 0.7296. Setbacks should now be well supported ahead of 0.6500.

• R2 0.7296 – 2019 high – Strong
• R1 0.7244 – 7 August/2020 high – Medium
• S1 0.7064 – 24 July low – Medium
• S2 0.6921 – 14 July low – Strong

AUDUSD – fundamental overview

Weakness in the price of gold, a downturn in sentiment and a tumbling Aussie Westpac consumer confidence read, have all been behind the latest setbacks in the Australian Dollar. Key standouts on Wednesday’s calendar include US inflation reads, and Fed speak.

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 1.3000-1.3200 area, ahead of a resumption of gains. Ultimately, only a weekly close below 1.3000 would suggest otherwise.

• R2 1.3500 – Psychological – Strong
• R1 1.3460 – 30 July high – Medium
• S1 1.3234 – 5 August low – Medium
• S2 1.3202 – 21 February low – Strong

USDCAD – fundamental overview

Last week's solid run of data out of Canada, along with this latest run up in the price of OIL, are behind some of the Canadian Dollar's relative outperformance, despite broad based US Dollar demand in recent sessions. Key standouts on Wednesday’s calendar include US inflation reads, and Fed speak.

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. The latest break back above the 0.6600 area further strengthens this outlook, with the market back in uptrend mode as per the weekly Ichimoku cloud. Any setbacks are expected to be well supported ahead of 0.6200.

• R2 0.6740 – 2 January/2020 high – Strong
• R1 0.6708 –  31 July high – Medium
• S1 0.6524 – 12 August low – Medium
• S2 0.6503 – 14 July low – Strong

NZDUSD – fundamental overview

Some underperformance in the New Zealand Dollar on Wednesday, after the RBNZ announced it would expand and extend its QE program, while also referencing its discomfort with strength in the New Zealand Dollar, which was curtailing returns from commodity exports. And yet another source of weakness into Wednesday was the news of new coronavirus cases in Auckland, which had forced lockdown measures. Key standouts on Wednesday’s calendar include US inflation reads, and Fed speak.

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 3398 –  20 February/Record high – Strong
• R1 3386 – 11 August high – Medium
• S1 3114 – 9 July low – Medium
• S2 2936 – 15 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, opening the door for fresh record highs and an acceleration beyond the next major psychological barrier at 2000. Setbacks should now be well supported above 1700. Technical studies are however in the process of unwinding from overbought readings, with the market in search of a higher low ahead of a bullish continuation.

• R2 2100 – Round number – Strong
• R1 2075 – 7 August/Record high – Medium
• S1 1863– 12 August low – Medium
• S2 1800 – Round number – 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

A higher low is 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 8,000 would delay the constructive outlook. The latest push back above 10,500 further encourages the bullish prospect. Shorter-term studies are however stretched and warn of a pullback ahead.

• R2 13,000– Round number – Medium
• R1 12,135 – 2 August/2020 high – Strong
• S1 10,546 – 2 August low – Medium
• S2 10,000 – Psychological – Strong

BTCUSD – fundamental overview

Bitcoin has enjoyed a nice recovery since bottoming in March, with the runup in stocks and ongoing increased adoption and progress in the space contributing to the strong demand. News that US banks can custody Bitcoin and interest from well known traditional market participants is also helping to generate plenty of buzz. At the same time, given the extended nature of technical readings into important resistance, we see this as timing well for another period of weakness, especially with 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 200, in favour of a push back towards 500. Technical readings are extended, warning of some form of a correction before the market pushes to 500.

• R2 500 – Psychological – Strong
• R1 415 – 2 August/2020 high – Medium
• S1 325 – 2 August low – Medium
• S2 306 – 28 July 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 weighing influence into rallies, with Ether expected to underperform in a risk off backdrop, in light of Ethereum's higher sensitivity and correlation with risk themes.