Jackson Hole Kicks Off, US Durable Goods Ahead

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 1.3372 will take the immediate pressure off the downside and force a shift in the structure.

• R2 1.3372 – 3Aug high – Strong
• R1 1.3273 – 24Aug high – Medium
• S1 1.3129 – 23Aug low – Medium
• S2 1.3023 – 19Aug low – Strong

GBPUSD – fundamental overview

The Pound is one of the only currencies tracking higher against the Buck over the past 5 days, albeit marginally, with the UK currency benefitting from a rare dose of outperformance in the aftermath of the June referendum vote. This comes even in the face of some discouraging UK mortgage approvals data this week. It seems some of the driver behind the GBP demand comes from the chatter that Prime Minister May is mulling additional stimulus for the UK economy. Still, there are plenty of strong offers reported ahead of 1.3500. Looking ahead, UK CBI trends, US durable goods orders and US initial jobless claims are the notable standouts on the calendar, while participants will also be positioning ahead of tomorrow’s Fed Yellen’s Jackson Hole speech.

USDJPY – technical overview

The latest topside failure sets up a prospective lower top at 102.65 ahead 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 102.65 would delay this outlook and give reason for pause. Below 99.00 exposes the next major support level in the 95.00 area.

• R2 101.45 – 15Aug high – Strong
• R1 100.93 – 22Aug high – Medium
• S1 99.54 – 16Aug low – Medium
• S2 98.99 – 24Jun/2016 low – Strong

USDJPY – fundamental overview

There isn’t a whole lot going on with the Yen this week, with the currency comfortable trading within a tight consolidation range. Overall, the Yen is caught between flows, with USD demand from more hawkish Fed speak offset by the onset of some risk liquidation flow and general sense the BOJ will continue to underdeliver with policy stimulus. Looking ahead, US durable goods orders and initial jobless claims are the only notable standouts on the calendar for the remainder of the day. It’s worth noting the Jackson Hole Symposium kicks off today with the market also seen positioning ahead of tomorrow’s Fed Yellen speech at the symposium.

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 1.0945 – 12Jul high – Medium
• S1 1.0790 – 29Jul low – Medium
• S2 1.0778 – 16Jun low – Strong

EURCHF – fundamental overview

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. Overall, this is a market going nowhere right now and it seems sell-stops need to get taken out below 1.0750 or above 1.1000 for clearer insight. US stocks have been supporting EURCHF but are also looking extended which could invite Franc demand if the market starts to roll over from record highs in the sessions ahead. The latest Swiss UBS consumption indicator is getting digested in today’s trade.

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. The recent break back below 0.7637 strengthens this outlook and should accelerate declines towards 0.7400 in the sessions ahead. Ultimately, only back above 0.7758 will negate the newly adopted bearish outlook and invite a retest of the 2016 highs.

• R2 0.7758 – 11Aug high – Strong
• R1 0.7656 – 23Aug high – Medium
• S1 0.7584 – 22Aug low – Strong
• S2 0.7569 –3Aug low – Medium

AUDUSD – fundamental overview

Not a lot going on with the Australian Dollar this week, seemingly content on some consolidation in the quieter August month and ahead of an anticipated Fed Chair speech at tomorrow’s Jackson Hole Symposium. Wednesday’s softer Aussie construction data weighed a bit, though this was offset later in the day by the weaker than expected US existing home sales. Looking ahead, we get US durable goods orders and initial jobless claims.

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

• R2 1.3000 – Psychological – Strong
• R1 1.2976 – 15Aug high – Medium
• S1 1.2859 – 23Aug low – Medium
• S2 1.2764 – 18Aug low – Strong

USDCAD – fundamental overview

A round of softer US existing home sales data wasn’t much of a help to the Canadian Dollar on Wednesday, with the Loonie tracking mildly lower on the day, once again weighed down by weakness in OIL prices. We don’t get any data out of Canada on Thursday and the main focus will be on US durable goods orders and initial jobless claims. We could also see some volatility on positioning ahead of Friday’s anticipated Fed Chair Yellen speech at Jackson Hole.

NZDUSD – technical overview

Rallies to fresh 2016 highs above 0.7300 have been well capped, with the market looking to adhere to the broader downtrend. As such, look for this latest surge to once again fizzle out, in favour of a resumption of declines. Key support now comes in at 0.7087, but a break below 0.7199 will get things going to the downside.

• R2 0.7400 – Figure – Medium
• R1 0.7345 – 23Aug/2016 high  – Strong
• S1 0.7266 – 23Aug low – Medium
• S2 0.7199 – 16Aug low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar has done a really good job holding up at 2016 highs despite a wave of more hawkish Fed commentary and disappointing Kiwi trade data early Wednesday. It seems most of the relative strength has been coming from the Tuesday RBNZ Wheeler comments in which the central banker was critical of rapid rate cuts and sounded a lot less dovish than the market was expecting. Still, if the Fed Chair backs up this latest hawkish Fed rhetoric in her Friday speech and lays the groundwork for a rate hike in 2016, there is risk this Kiwi run could fizzle out in a hurry. Looking ahead, US durable goods orders and initial jobless claims stand out on Thursday’s calendar.

US SPX 500 – technical overview

The market continues to push to fresh record highs and there is scope from here for additional upside in the sessions ahead through next key psychological barriers at 2200. Still overall, the prospect for the formation of a longer-term top is very much alive and any signs of exhaustion and a rolling back over below 2147 in the sessions ahead will strengthen this outlook and invite renewed downside pressure.

• R2 2200.00 – Psychological – Strong
• R1 2194.00 – 15Aug/Record – Medium
• S1 2147.00 –2Aug low – Medium
• S2 2136.00 – 12Jul low– Strong

US SPX 500 – fundamental overview

Overall, there is a sense that even if the Fed continues to hold off, with monetary policy already exhausted and the limitations of policy being reached, there could be a more intense period of weakness off the recently established record highs over the coming days. Much of investor attention is now on the Jackson Hole Symposium and an anticipated Friday speech from the Fed Chair which could shed further light on the Fed’s monetary policy outlook. Certainly hawkish comments from Fed Fischer could be setting the stage for Yellen’s speech, which if confirmed, would add to downside pressure on record high stocks as the reality of a rate hikes this year discourages investors. Looking ahead, US durable goods orders and initial jobless claims are due on Wednesday.

GOLD (SPOT) – technical overview

The recent break above the previous 2015 peak at 1307 strengthens the case for a longer term base with the market confirming a medium-term higher low in the 1200 area, opening the door for the next major upside extension towards a measured move at 1450. Any setbacks should be very well supported ahead of 1300, with only a break below this level to compromise the outlook.

• R2 1375.20 – 6Jul/2016 high – Strong
• R1 1367.30 – 2Aug high – Medium
• S1 1320.20 – 14Jul low – Medium
• S2 1310.90 – 21Jul 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

USDTRY has recently broken up to another fresh record high after a period of multi-month consolidation. The latest break through the previous peak from 2015 now opens the door for a measured move upside extension towards 3.3500 in the weeks ahead. At this point, current setbacks should be limited to the 2.9000 area in favour of a higher low, with only a break back below 2.8395 to take immediate pressure off the topside.

• R2 3.0270 – 4Aug high – Strong
• R1 2.9705 – 10Aug high – Medium
• S1 2.9135 – 18Aug low – Medium
• S2 2.8755 – 14Jul low – Strong

Feature – fundamental overview

President Erdogan got more accommodation from his central bank this week but still isn’t satisfied with the degree of policy easing as he continues to call for more rate cuts to help stimulate the local economy. This was a major point of contention with the previous CBRT Governor, though the current Governor is cut more to the mold of Erdogan’s liking. The challenge for the CBRT going forward is to balance the need for stimulatory measures amidst rising inflation. All of this paints a gloomy picture for the Lira going forward, with the currency already battling a recent coup attempt and downgrades from the rating agencies. Looking ahead, much of the price action here will hinge on the tone of tomorrow’s Fed Chair Yellen speech.