Some relief….but not out of the woods

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 1.2500.

• R2 1.2861 – 12 June high – Strong
• R1 1.2800 – Figure – Medium
• S1 1.2673 – 6 August low – Medium
• S2 1.2613 – 27 June low – Strong

GBPUSD – fundamental overview

An upswing in UK construction PMIs was overlooked, with the bigger focus on all of the social unrest. Meanwhile, the UK Chancellor has declined to rule out a capital gains tax hike. Key standouts on Wednesday’s calendar come from German trade, German industrial production, Canada Ivey PMIs, and the Bank of Canada summary of deliberations.

USDJPY – technical overview

The market has entered a period of correction after extending the uptrend to a multi-year high through 160.00. Critical support comes in around 140.00, with only a monthly close below the barrier to compromise the bullish outlook. A higher low is ideally sought out over the coming sessions in favor of a bullish continuation.

• R2 149.78 – 2 August high – Medium
• R1 146.57 – 5 August high – Medium
• S1 143.00 – Figure – Medium
• S2 141.69 – 5 August low – Strong

USDJPY – fundamental overview

Yen gains have stalled out for now after the currency had rocketed high in recent days. The risk off flow and massive carry unwind has clearly been the driving force behind the price action, after the Yen was already finding bids post the BOJ decision to raise rates. Still, recent wage data has reaffirmed the central bank's decision to raise rates. Key standouts on Wednesday’s calendar come from German trade, German industrial production, Canada Ivey PMIs, and the Bank of Canada summary of deliberations.

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 0.6618– 24 July high – Strong
• R2 0.6583 – 25 July high – Strong
• S1 0.6472 – 6 August low– Medium
• S2 0.6349 – 5 August/2024 low – Strong

AUDUSD – fundamental overview

The Australian Dollar has enjoyed a nice recovery from the recent spike yearly low. The currency has been helped along by the latest RBA hold and hawkish communication. RBA Bullock said rate cuts weren't on the agenda and no cuts were seen before year end. The market is less certain about this pricing 85% odds for a rate cut in December. Key standouts on Wednesday’s calendar come from German trade, German industrial production, Canada Ivey PMIs, and the Bank of Canada summary of deliberations.

USDCAD – technical overview

A sustained hold above 1.3000 over the past several months 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, with a break to open a retest of the 2020 high just ahead of 1.4700. Setbacks should be very well supported down into the 1.3000 area.

• R2 1.3947 – 5 August/2024 high – Strong
• R1 1.3900 – Figure – Medium
• S1 1.3757 – 6 August low – Medium
• S2 1.3700 – 19 July low – Medium

USDCAD – fundamental overview

The Canadian Dollar hasn't been getting much help from global sentiment and oil prices of late. At the same time, we have seen some demand in recent sessions on the back of well received Canada trade data that produced a surplus in June. Key standouts on Wednesday’s calendar come from German trade, German industrial production, Canada Ivey PMIs, and the Bank of Canada summary of deliberations.

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 0.6028 – 22 July high – Strong
• R1 0.6000 – Psychological– Medium
• S1 0.5900 – Figure – Medium
• S2 0.5850 – 5 August/2024 low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar is getting a nice lift on Wednesday on the back of a better than expected round of New Zealand employment data. Key standouts on Wednesday’s calendar come from German trade, German industrial production, Canada Ivey PMIs, and the Bank of Canada summary of deliberations.

US SPX 500 – technical overview

Longer-term technical studies are in the process of unwinding from overbought levels. There is now room for a pullback towards previous resistance turned support in the form of the previous record high from January 2022 at 4820 before the market considers a resumption of the bigger picture uptrend.

• R2 5443 – 2 August high – Medium
• R1 5318 – 5 August high – Medium
• S1 5093 – 5 August low – Medium
• S2 4928 – 19 April 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 a much bigger disruption to stocks than what we've already seen.

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 2200 on a monthly close basis.

• R2 2500 – Psychological– Strong
• R1 2484 – 17 July/Record high – Medium
• S1 2350 – 4 July low – Strong
• S2 2287– 7 June low – 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.