September Door Closing, But Not Shut

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 1.3353 – 2Sep high – Medium
• S1 1.3158 – 31Aug high – Medium
• S2 1.3023 – 19Aug low – Strong

GBPUSD – fundamental overview

The Pound enters Monday trade as the best performing major currency over the past week and it isn’t all that surprising considering an uptick in UK data. Clearly Friday’s softer US employment report has also been supporting the recovery in the Pound, though at this point, with the market putting in a healthy rebound, there is talk of the emergence of fresh offers from medium-term players not willing to let go of the structural deficiencies posed by Brexit risk. Looking ahead, volumes will be lighter with the US market out for the long holiday, but the market will take in some UK services PMIs and official reserves.

USDJPY – technical overview

Although we’ve seen an impressive bounce in recent trade, overall, the pressure remains on the downside with a lower top sought out ahead of 107.49 in favour 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 105.00 would delay this outlook and give reason for pause. Below 99.00 exposes the next major support level in the 95.00 area.

• R2 105.64 – 29Jul high – Strong
• R1 104.32 – 2Sep high – Medium
• S1 102.80 – 2Sep low – Medium
• S2 102.39 – 29Aug high – Strong

USDJPY – fundamental overview

BOJ Kuroda has let down the doves into the new week after offering no clear indication of additional accommodation this month, while also rejecting the use of helicopter money in its purest form. The major pair had been up Friday following the disappointing US employment report but has since eaten away at those gains post Kuroda. Looking ahead, with the US out for the long holiday weekend, volumes are expected to be quite thin and the focus will be on broader macro flows.

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 1.1001 – 1Sep high – Medium
• S1 1.0870 – 24Aug 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 towards 1.1000. Overall, this is a market going nowhere right now and it seems 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.

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 0.7693 – 26Aug high – Strong
• R1 0.7616 – 2Sep high – Medium
• S1 0.7491 –31Aug low – Medium
• S2 0.7421 –27Jul low – Strong

AUDUSD – fundamental overview

The Australian Dollar has been bid up in the aftermath of a disappointing US employment report, with the market trading back into the more risk correlated currencies. Still, the door for  September Fed rate hike hasn’t been completely closed and with the RBA on tap tomorrow, additional upside should prove hard to come by. The RBA is widely expected to leave rates unchanged on Tuesday and the focus will be on the tone of the central bank’s statement. More easings are priced in down the road, but after cutting to record lows in August, the odds of a follow up cut in September are virtually zero. Looking ahead, volumes will be on the lighter side with the US out for a long holiday weekend and the focus will be on broader macro flows.

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 1.3148 – 1Sep high – Strong
• R1 1.3050 – Mid-Figure – Medium
• S1 1.2950 – Mid-Figure – Medium
• S2 1.2900 – Figure – Strong

USDCAD – fundamental overview

No surprise to see the Canadian Dollar so well bid in Friday trade. Everything went the Loonie’s way. Clearly the disappointing US monthly employment report was a major driver of CAD gains, but higher oil prices and stronger Canada data in the form of labour productivity and trade also contributed to the gains. But overall, Canada data hasn’t been all that impressive and this could limit additional Loonie upside this week, particularly with the Bank of Canada on tap. Looking ahead, long holiday weekends in Canada and the US will make for a much lighter Monday trade.

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 0.7381 – 26Aug/2016 high – Strong
• R1 0.7300 – Figure  – Medium
• S1 0.7199 – 16Aug low – Medium
• S2 0.7087 – 8Aug low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar is right back at it in Monday trade, with the currency once again pushing above 0.7300 and threatening a break to another fresh 2016 high. Friday’s softer US employment report has been sourced as a primary driver behind the rally, though Kiwi has received an added push on Monday following upbeat ANZ commodities prices and China Caixin PMI services. Looking ahead, volumes will be on the lighter side with the US out for a long holiday weekend and the focus will be on broader macro flows.

US SPX 500 – technical overview

Signs of a potential top after the market put in a bearish reversal week off fresh record highs. But a break and daily close below critical support at 2147 will be required to strengthen this outlook and accelerate declines. Inability to establish below 2147 will leave the market consolidating and focused on a push to fresh record highs through 2200.

• 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

US equities have come under pressure off record highs following this latest wave of hawkish commentary signaling the possibility for a rate hike as soon as September. But overall, there is a sense that even if the Fed ends up doing nothing in 2016 and holds off, with monetary policy already exhausted and the limitations of policy being reached, there is still the risk for a more intense period of weakness off the recently established record highs. Right now, the odds for a September hike have pulled back just a bit post Friday’s disappointing US employment report and now stand at about 32%. Looking ahead, not a lot is expected with the US market out for the long holiday weekend.

GOLD (SPOT) – technical overview

The market has come under pressure over the past several weeks and is now gravitating back towards the 100-Day SMA just below 1300. But overall, the structure remains highly constructive and the current dip is viewed as nothing more than a healthy correction within a broader uptrend. As such, look for additional setbacks to be limited in favour of the next major higher low and fresh upside extension beyond the 2016 peak at 1375. Ultimately, only below 1250 gives reason for concern.

• R2 1358.10 – 16Aug high – Strong
• R1 1344.80 – 23Aug high – Medium
• S1 1302.50 – 1Sep low – Medium
• S2 1296.50 – 100-Day SMA – 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

USDZAR has come under a good deal of pressure in recent months, trading down to a fresh 2016 low around 13.2000. However, it now appears as though the market is finally ready to turn back up in favour of a resumption of the broader uptrend. In the interim, look for any setbacks to be well supported ahead of 13.2000, with fresh upside seen towards 15.0000 in the sessions ahead. Only back below 13.2000 gives reason for pause.

• R2 15.0000 – Psychological – Strong
• R1 14.9540 – 6Jul high – Medium
• S1 13.8850 – 24Aug low – Medium
• S2 13.2000 – 10Aug/2016 low – Strong

Feature – fundamental overview

A nice recovery for the Rand in Friday trade, with the emerging market currency finding bids on more than just the disappointing US employment report. SARB Governor Kganyago told CNBC Africa the central bank remained concerned about the potential for price rises stemming from Rand volatility and that chatter over the possibility for additional rate cuts had no foundation. There were also encouraging headlines relating to cooperation between FinMin Gordhan and the policy, while asset manager Futuregrowth was in talks with the government after pulling funds from banks in the previous week.