Market versus the Fed

GBPUSD – technical overview

Signs have emerged of the market wanting to put in a longer-term base after collapsing to a record low in September 2022. The door is now open for the next major upside extension towards the 2023 high at 1.3143. Any setbacks should be well supported ahead of 1.2000.

• R2 1.2894 – 8 March/2024 high – Strong
• R1 1.2740 – 19 June high – Medium
• S1 1.2622 – 21 June low – Medium
• S2 1.2578 – 15 May low – Medium

GBPUSD – fundamental overview

The Pound has been outperforming of late, acting as a kind of safe haven alternative to the Euro in light of the political turmoil. Key standouts on Wednesday’s calendar come from UK CBI, ECB speak, Canada wholesale sales, and US new home sales.

USDJPY – technical overview

The market remains confined to a strong uptrend, most recently extending to a multi-year high through 160.00. Key support comes in at 151.95, with only a weekly close below to delay the constructive outlook.

• R2 160.21 – 29 April/2024 high – Strong
• R1 159.93 – 24 June high – Medium
• S1 157.52 – 18 June low – Medium
• S2 156.57 – 13 June low – Medium

USDJPY – fundamental overview

The market knows talk has been especially cheap when it comes to the Yen and verbal intervention. This has kept the focus on the glaring monetary policy divergence and yield differential, which continues to drive the Yen towards fresh multi-year low territory. Key standouts on Wednesday’s calendar come from UK CBI, ECB speak, Canada wholesale sales, and US new home sales.

AUDUSD – technical overview

There are signs of the potential formation of a longer-term base with the market trading down into a meaningful longer-term support zone. Only a monthly close below 0.6200 would give reason for rethink. Back above 0.6900 will take the big picture pressure off the downside and strengthen case for a bottom.

• R1 0.6715– 16 May high – Strong
• R2 0.6705 – 12 June high – Medium
• S1 0.6576– 10 June low – Medium
• S2 0.6558 – 8 May low – Strong

AUDUSD – fundamental overview

Copper sinking to its lowest level since April had weighed on the Australian Dollar before we saw a reversal of flow today after Aussie inflation data came out hotter than expected. Key standouts on Wednesday’s calendar come from UK CBI, ECB speak, Canada wholesale sales, and US new home sales.

USDCAD – technical overview

Above 1.3000 signals an end to a period of longer-term bearish consolidation and suggests the market is in the process of carving out a more significant longer-term base. Next key resistance now comes in up into the 1.4000 area. Setbacks should be very well supported down into the 1.3000 area.

• R2 1.3847 – 16 April/2024 high – Strong
• R1 1.3792 – 11 June high – Medium
• S1 1.3620 – 4 June low – Medium
• S2 1.3586 – 10 May low – Strong

USDCAD – fundamental overview

The Canadian Dollar has generated some added demand, albeit marginal demand on the back of a hotter round of Canada inflation data. Odds for a July Bank of Canada cut have dropped to 35% from 60% since the inflation reading. Key standouts on Wednesday’s calendar come from UK CBI, ECB speak, Canada wholesale sales, and US new home sales.

NZDUSD – technical overview

Overall pressure remains on the downside with the market continuing to stall out on runs up into the 0.6500 area. At the same time, there are some signs of the market wanting to put in a longer-term base. Ultimately, a break back above 0.6500 would be required to take the medium-term pressure off the downside and encourage this prospect. A monthly close below 0.5800 will intensify bearish price action.

• R2 0.6222 – 12 June high – Strong
• R1 0.6200 – Figure – Medium
• S1 0.6083 – 22 May low – Medium
• S2 0.6031 – 15 May low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar hasn't been moving much in recent sessions. Absence of first-tier data has left the currency focused on bigger picture themes and with US equities not doing much, the Kiwi rate has been confined to some tighter trading ranges. Key standouts on Wednesday’s calendar come from UK CBI, ECB speak, Canada wholesale sales, and US new home sales.

US SPX 500 – technical overview

Longer-term technical studies continue to look quite extended, begging for a deeper correction ahead. At the same time, the latest bullish breakout to a fresh record high beyond the 2024 high opens the door for the next measured move upside extension targeting the 5650 area. Key support comes in at 5194.

• R2 5600 – Round Number – Strong
• R1 5524 – 20 June/Record high – Medium
• S1 5394 – 14 June low – Medium
• S2 5321 – 7 June low – Strong

US SPX 500 – fundamental overview

Though we have seen a healthy adjustment of investor expectations towards the amount of rate cuts in 2024, the market still hopes policy will end up erring more towards the investor friendly, accommodative side of things. This bet has kept stocks well bid into dips and consistently pushing record highs. Still, if there is a sense the Fed will need to be more sensitive towards erring on the side of higher rates, it could invite major disruption to the stock market.

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 this next major upside extension into the 2500-3000 area. Setbacks should now be well supported above 2000 on a monthly close basis.

• R2 2451 – 20 May Record high – Strong
• R1 2388 –7 June high – Medium
• S1 2277 – 3 May low – Strong
• S2 2223– 21 March high – Strong

GOLD (SPOT) – fundamental overview

The yellow metal has pushed record highs in 2024 with solid demand from medium and longer-term accounts. These players are more concerned about inflation, geopolitical risk and a less upbeat global growth outlook. 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 end.