Go figure

GBPUSD – technical overview

The market is in a consolidation phase in the aftermath of the run to fresh 2021 and multi-month highs. At this stage, additional setbacks should be limited to the 1.3200 area ahead of the next major upside extension towards a retest and break of critical resistance in the form of the 2018 high.

• R2 1.3800 – Figure – Strong
• R1 1.3775 – 19 October high – Medium
• S1 1.3653 – 14 October low – Medium
• S2 1.3544 – 6 October low – Strong

GBPUSD – fundamental overview

The Pound continues to race higher on the back of the weekend comments from BOE Bailey, who all but sealed the deal on a rate hike before year end after saying the MPC would need to act in response to rising inflation. Key standouts on today’s calendar include Eurozone construction output, US housing starts and building permits, and a batch of Fed speak.

USDJPY – technical overview

The longer-term trend is bearish despite the recent run higher. Look for additional upside to be limited, with scope for a topside failure and bearish resumption back down towards the 100.00 area. It would take a clear break back above 114.55 to negate the outlook.

• R2 115.00 – Psychological– Strong
• R1 114.55 – 2018 high – Medium
• S1 113.00 – 12 October low – Medium
• S2 112.08 – 30 September high – Strong

USDJPY – fundamental overview

Monetary policy divergence continues to be a fundamental catalyst driving Yen underperformance. But we have seen some Yen demand on Tuesday, given weaker UST yields and broad USD selling. Key standouts on today’s calendar include Eurozone construction output, US housing starts and building permits, and a batch of Fed speak.

AUDUSD – technical overview

The Australian Dollar has been in the process of a healthy correction following the impressive run towards a retest of the 2018 high earlier this year. At this stage, there is risk for additional declines, though setbacks are expected to be well supported down into the 0.7000 area. Look for a weekly close above 0.7500 to force a shift in the structure.

• R2 0.7479 – 3 September high – Strong
• R1 0.7459 – 19 October high – Medium
• S1 0.7372 – 14 October low – Medium
• S2 0.7323 – 13 October low – Strong

AUDUSD – fundamental overview

There were some initial attempts to sell the Australian Dollar on a dovish leaning RBA Minutes, but all of that has been reversed as the day pushes on. We're seeing strong demand on the back of risk on flow and broad US Dollar outflows. It also seems as though the Aussie rates market is pricing an outdated Minutes that will likely need to be reconsidered as inflation continues to rise. Key standouts on today’s calendar include Eurozone construction output, US housing starts and building permits, and a batch of Fed speak.

USDCAD – technical overview

Finally signs of a major bottom in the works after a severe decline from the 2020 high. A recent weekly close back above 1.2500 encourages the constructive outlook and opens the door for a push back towards next critical resistance in the 1.3000 area. Any setbacks should be well supported into the 1.2200s.

• R2 1.2563 – 8 October high – Strong
• R1 1.2499 – 12 October high – Medium
• S1 1.2336– 15 October low – Medium
• S2 1.2252 – 23 June low – Strong

USDCAD – fundamental overview

The Canadian Dollar is bid on the back of risk on flow, oil demand, and broad US Dollar weakness. However, we have seen some relative weakness, given a recent run of softer economic data out of Canada. Key standouts on today’s calendar include Eurozone construction output, US housing starts and building permits, and a batch of Fed speak.

NZDUSD – technical overview

The market has entered a period of consolidation after running up to a yearly and multi-month high. At this stage, rallies should be well capped and there is still room for deeper setbacks into the 0.6500-0.6800 area before we see an attempt at a higher low and resumption of upside pressure. Back above the April high at 0.7317 would be required to force a shift in the structure.

• R2 0.7171 – 3 September high – Strong
• R1 0.7130 – 19 October high – Medium
• S1 0.6860 – 29 September low – Medium
• S2 0.6809 – 19 August/2021 low – Strong

NZDUSD – fundamental overview

Risk on flow and ramped up RBNZ rate hike expectations are driving Kiwi higher on Tuesday. We've also seen broad based US Dollar outflows contribute as well. The market is now starting to talk about the possibility for a surprise 50bp rate hike in November. Key standouts on today’s calendar include Eurozone construction output, US housing starts and building permits, and a batch of Fed speak.

US SPX 500 – technical overview

Longer-term technical studies are looking quite exhausted and the market is showing signs of wanting to roll over after racing to another record high. Look for rallies to be well capped ahead of 4600, with a break back below 4353 to strengthen the outlook.

• R2 4552 – 3 September/Record high – Strong
• R1 4500 – Psychological – Medium
• S1 4436 – 15 October low – Medium
• S2 4272 – 1 October low – Strong

US SPX 500 – fundamental overview

We're trading just off fresh record highs, and yet, with so little room for additional central bank accommodation, given an already depressed interest rate environment, the prospect for sustainable runs to the topside on easy money policy incentives and government stimulus, should no longer be as enticing to investors. Meanwhile, ongoing worry associated with coronavirus fallout and risk of rising inflation should weigh more heavily on investor sentiment in Q4 2021.

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 1600.

• R2 1917 – 1 June high – Strong
• R1 1835 – 15 July high – Medium
• S1 1700 – Round number – Medium
• S2 1677 – 8 March/2021 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, and coronavirus fallout. 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. [audio mp3="https://www.lmax.com/blog/wp-content/uploads/sites/4/2021/09/15seplmaxaudio.mp3"][/audio]