Plenty of Economic Data in Thursday Trade

GBPUSD – technical overview

Setbacks have extended to fresh multi-year lows, with the latest break and daily close below previous support at 1.4080 setting the stage for the next major downside extension towards a measured move objective at 1.3500. The 1.3500 barrier also coincides with the critical multi-year base from 2009. Intraday rallies should be well capped below 1.4300, while only back above 1.4408 would take the immediate pressure off the downside.

• R2 1.4156 – 23Feb high – Strong
• R1 1.4027 – 24Feb high – Medium
• S1 1.3879 – 24Feb/2016 low  – Medium
• S2 1.3800 – Figure  – Strong

GBPUSD – fundamental overview

Another 7 year low for the Cable rate, with the market collapsing through the 1.4000 barrier and sinking to 1.3879 ahead of this latest minor bounce. It seems, at least for a short while, the market is ready for a breather from Brexit risk, with the Pound recovering a bit, mostly on profit taking and softer second tier US data. Dovish speak from Fed Bullard has further contributed to a minor bounce. More volatility is expected today, with participants focused on UK GDP, US initial jobless claims and US durable goods. On the official circuit, Fed Lockhart and Fed Williams are on the wires.

USDJPY – technical overview

The market is contemplating the formation of a lower top at 114.88 ahead of the next major downside extension below 110.98 and towards the 107.00 area further down. However, a break below 110.98 would be required to confirm the lower top and strengthen the bearish outlook. Still, while the market holds below 116.00 the immediate pressure remains on the downside.

• R2 113.39 – 22Feb high – Strong
• R1 113.05 – 23Feb high – Medium
• S1 111.77 – 23Feb low – Medium
• S2 110.98 – 11Feb/2016 low – Strong

USDJPY – fundamental overview

No strong reaction to comments from BOJ dissenter Kiuchi who discussed the limitations of QQE policy while also highlighting monetary policy alone could not solve the central bank’s inflation challenge. USDJPY was initially well offered in Wednesday trade on the back of a fresh wave of risk off flow, with the major pair stalling just shy of the recent critical multi-month low at 110.98. A late day recovery in risk then helped to rally the market into Thursday trade. Softer second tier US data and dovish Fed Bullard comments also failed to factor into price action. Looking ahead, the key focus for Thursday will be on US initial jobless claims and US durable good orders. Broader macro flows and risk sentiment will also continue to influence direction. On the official circuit, Fed Lockhart and Fed Williams are on the wires.

EURCHF – technical overview

The latest round of setbacks from fresh multi-month highs at 1.1200 are viewed as corrective, with the broader outlook still highly constructive. Look for any additional weakness in the sessions ahead to be well supported above 1.0715 on a daily close basis, in favour of a higher low and the next major upside extension through 1.1200 and towards 1.1400 further up. Only a close below 1.0715 would delay the outlook.

• R2 1.1029 – 23Feb high – Strong
• R1 1.0943 – 24Feb high – Medium
• S1 1.0865 – 24Feb low – Strong
• S2 1.0800 – Figure – Medium

EURCHF – fundamental overview

There has been a lot of talk in recent weeks of the threat to the SNB strategy of weakening the Franc in a world where other central banks are considering additional accommodation and global risk sentiment is deteriorating. If yield differentials narrow back in the Franc’s favour, even with the negative rates, and if the SNB is forced to consider intervening in a global backdrop that is seeing a mass exodus from risk, it will be very difficult for the SNB to prevent appreciation in the Franc. Perhaps SNB Jordan further contributed to Franc gains this week after highlighting the limitations of monetary policy, while also pointing out that ECB rate cuts would likely invite an appreciation in the Franc. Of course, Jordan continued to talk of an overvalued Franc, but this familiar message was lost in the face of his other comments.

AUDUSD – technical overview

The market has entered a period of correction out from the recent multi-year low at 0.6827. However, any additional upside should be limited to the 0.7265 area (78.6% fib retrace), with a lower top sought out ahead of a fresh downside extension and bearish continuation below 0.6827 and towards the next key barrier at 0.6500 further down. Ultimately, only back above 0.7385 would force a shift in the bearish structure.

• R2 0.7265 – 78.6% fib – Strong
• R1 0.7213 – 24Feb high – Medium
• S1 0.7136 – 22Feb low – Medium
• S2 0.7069 – 19Feb low – Strong

AUDUSD – fundamental overview

The Australian Dollar is lower on Thursday despite an above forecast CAPEX print. It seems, the setbacks have been driven off components within the the CAPEX data that are more concerning for the Australian economy. Specifically, it has been the plunge in investment expectations that has rattled the Australian Dollar on Thursday. Participants are already looking ahead to next week’s RBA decision and with recent employment data coming in softer and other data cooling off, there is a growing expectation the RBA will adopt a more dovish stance. Still, no change is seen on rates just yet, though the market is pricing additional cuts over the next twelve months. Looking ahead, the key focus for Thursday will be on US initial jobless claims and US durable good orders. Broader macro flows and risk sentiment will also continue to influence direction. On the official circuit, Fed Lockhart and Fed Williams are on the wires.

USDCAD – technical overview

The market has entered a period of correction following the recent surge to a near 13 year high at 1.4690. This most recent setback below 1.3800 opens the door for a deeper drop to the 1.3600 area, which coincides with medium-term rising trend line support. At this point, only back above 1.4017 would suggests the correction has run its course, with the market poised for bullish resumption.

• R2 1.3912 – 16Feb high – Strong
• R1 1.3859 – 24Feb high – Medium
• S1 1.3700 – Figure – Medium
• S2 1.3639 – 4Feb/2016 low – Strong

USDCAD – fundamental overview

Wednesday’s recovery in the price of OIL and rebound in stocks were all that would be needed for the Canadian Dollar to shift back to the bid side. Lack of economic data on the Canada calendar this week has left the Loonie trading almost exclusively on these OIL and sentiment flows. Still, US data could also be factoring a bit, with Wednesday’s softer round of second tier releases giving the Loonie an added excuse to close higher on the day. Looking ahead, the Canada economic calendar is empty again and the focus will continue to be on OIL, stocks and US data, this time in the form of the more significant initial jobless claims and durable goods orders. On the official circuit Fed Lockhart and Williams are scheduled to speak.

NZDUSD – technical overview

The market remains confined to a broader downtrend with any rallies seen very well capped. A recent correction has stalled out around 0.6750 with the market looking like it is in the process of carving a fresh lower top ahead of the next major downside extension. Look for a break below 0.6546 to strengthen the outlook and expose fresh declines towards next key support at 0.6347 further down. Ultimately, only back above 0.6900 negates the bearish outlook.

• R2 0.6752 – 5Feb high– Strong
• R1 0.6726 – 22Feb high – Medium
• S1 0.6587 – 24Feb low – Medium
• S2 0.6546 – 16Feb low – Strong

NZDUSD – fundamental overview

The latest round of Kiwi setbacks has been well supported into Thursday on the back of a recovery in risk sentiment, rebound in OIL, softer second tier US data and dovish Fed Bullard comments. Still, even with all of these positive drivers, market participants continue to look for opportunities to build into Kiwi shorts in an overall shaky environment, and particularly after last week’s round of horrid Kiwi data, which fueled increased expectations for additional RBNZ rate cuts in the months ahead. Looking ahead, the key focus for Thursday will be on US initial jobless claims and US durable good orders. Broader macro flows and risk sentiment will also continue to influence direction. On the official circuit, Fed Lockhart and Fed Williams are on the wires.

US SPX 500 – technical overview

Signs of a critical structural shift following an impressive multi-year rally to a fresh record high in 2015. The recent break back below the critical August base at 1834 strengths the newly adopted bearish outlook and from here, any rallies are expected to be well capped below previous support at 1993 in favour of the next major downside extension towards 1700. Ultimately, only a daily close back above 1993 will take the immediate pressure off the downside.

• R2 1993.00 – Previous Support – Strong
• R1 1947.00 – 22Feb high – Medium
• S1 1890.00 –24Feb low – Medium
• S2 1808.00 – 11Feb/2016 low – Strong

US SPX 500 – fundamental overview

Plenty of talk from central bankers in recent days about the limitations of accommodative monetary policy. This isn’t something that welcomes investment in stocks and could ultimately weigh more heavily going forward. Overall, with the OIL outlook still highly suspect, with central bank monetary policy exhausted and with fears escalating over a deterioration in China, it feels as though any rallies should continue to be well capped in favour of additional downside in the days and weeks ahead. Throw in evidence of rising inflation in the US, which only increases prospects the Fed will need to tighten in the months ahead, and there is very little to get too excited about right now. It’s also becoming increasingly apparent in 2016 that even if the Fed opts to scale back its rate hike timeline, this might not be as supportive as many had thought. Looking ahead, the key focus for Thursday will be on US initial jobless claims and US durable good orders. On the official circuit, Fed Lockhart and Williams are on the wires.

GOLD (SPOT) – technical overview

The market continues to show signs of a major structural shift, with the impressive recovery from the multi-year low in late 2015 at 1046, extending above the critical October 2015 peak at 1192. From here, any setbacks should be well supported ahead of 1200, in favour of a higher low and the next major upside extension to medium-term resistance at 1307. Ultimately, only a weekly close back below 1191 would delay the newly adopted constructive outlook.

• R2 1263.00 – 11Feb/2016 high – Strong
• R1 1253.00 – 24Feb high – Medium
• S1 1191.00 – 16Feb low – Medium
• S2 1164.00 – 8Feb low – Strong

GOLD (SPOT) – fundamental overview

GOLD continues to show impressive demand on dips. Massive outflows across equities, high yield and emerging markets have left investors looking for an alternative investment. GOLD has become increasingly attractive in the current market environment. The wave of risk liquidation in 2016 has catapulted the metal on its status as a compelling hedge against uncertainty and exhausted monetary policy.

Feature – technical overview

USDSGD has entered a period of correction after pulling back from the recent multi-year high from early January at 1.4445. But overall, the structure remains highly constructive, with dips well supported for now into the 1.3800s. Look for any additional setbacks to continue to be well supportive above 1.3800 in favour of an eventual resumption of the uptrend and retest of 1.4445. Ultimately, only back below 1.3730 would negate the highly constructive outlook.

• R2 1.4170 – 4Feb high – Strong
• R1 1.4110 –17Feb high – Medium
• S1 1.3965 – 16Feb low – Medium
• S2 1.3860 – 11Feb/2016 low – Strong

Feature – fundamental overview

Softer second tier US data, dovish Fed speak and a rebound in stocks and OIL have all contributed to this latest minor recovery in the Singapore Dollar. The currency had already attempted to rally earlier in the week on the well received local GDP data but continues to be a victim of broader macro flows. Overall, despite this latest bounce, it should continue to be a tough go for the emerging market currency going forward. Investors have been losing confidence in exhausted monetary policy and unless central bankers and governments come up with an alternative solution involving fiscal policy reform, risk assets are likely to see additional downside pressure, which will ultimately translate into a lower Singapore Dollar. Looking ahead, the key focus for Thursday will be on US initial jobless claims and US durable good orders. Broader macro flows and risk sentiment will also continue to influence direction. On the official circuit, Fed Lockhart and Fed Williams are on the wires.