US jobs report overshadows virus worry

Today’s report: US jobs report overshadows virus worry

We don’t think the market should expect all that much in the way of volatility on this Monday. We’re into the less active summer months and we’re also going to be without a US market presence on account of the July 4th long weekend holiday.

Wake-up call

Chart talk: Technical & fundamental highlights

Choose pair:

EURUSD – technical overview

The market has been looking for a higher low since topping out in 2021 up at 1.2350. Ideally, this next higher low is sought out ahead of 1.1600 in favour of the next major upside extension back through 1.2350 and towards a retest of the 2018 high at 1.2555 further up.

  • R2 1.1976 – 25 June high– Strong
  • R1 1.1910 - 30 June high – Medium
  • S1 1.1807 - 2 July low – Medium
  • S2 1.1704 – 31 March/2021 low – Strong

EURUSD – fundamental overview

The Euro put in a nice rebound out from Friday's low, getting most of its help from broad based Dollar selling in reaction to the US jobs report. The market concluded the data wasn't good enough to qualify as 'substantial further progress' and yield differentials moved back out of the Buck's favour as a consequence. We did see some early Euro selling on the back of ECB Lagarde concerns about the Delta variant and a banking oversight official saying European banks were vulnerable after a rapid expansion. Key standouts on Monday’s calendar come in the form of services and composite PMIs out of Germany, the Eurozone and UK, a speech from ECB Lagarde, and the Bank of Canada Business Outlook Survey. US markets are closed for the 4th of July long weekend celebration.

EURUSD - Technical charts in detail

GBPUSD – technical overview

Technical studies are in the process of consolidating from stretched levels after the push to fresh multi-month highs. This leaves room for additional consolidation, before the market considers a meaningful bullish continuation towards a retest of the 2018 high. But look for setbacks to now be very well supported into the 1.3500 area.

  • R2 1.4002 – 23 June high – Strong
  • R1 1.3884 – 29 June high – Medium
  • S1 1.3732 – 2 July low – Medium
  • S2 1.3669 – 12 April low – Strong

GBPUSD – fundamental overview

There was some initial downside pressure in Friday trade from all of the new virus cases in the UK. But ultimately, the market then focused in on the US jobs report and the massive US Dollar outflows in the aftermath. The market concluded the data wasn't good enough to qualify as 'substantial further progress' and yield differentials moved back out of the Buck's favour as a consequence. Key standouts on Monday’s calendar come in the form of services and composite PMIs out of Germany, the Eurozone and UK, a speech from ECB Lagarde, and the Bank of Canada Business Outlook Survey. US markets are closed for the 4th of July long weekend celebration.

USDJPY – technical overview

The major pair has run into massive resistance in the form of the monthly Ichimoku cloud. This translates to a longer-term trend that is still bearish despite the latest run higher. Look for additional upside to be limited, with scope for a topside failure and bearish resumption over the coming sessions. It would take a clear break back above 113.00 to negate the outlook.

  • R2 112.00 – Figure– Medium
  • R1 111.66 – 2 July/2021 high – Strong
  • S1 110.42 – 30 June low – Medium
  • S2 109.71 – 21 June low – Strong

USDJPY – fundamental overview

The Yen got an initial Friday boost from the news of Japan's GPIF reporting a huge 25% return in the fiscal year. But most of the Friday gains came despite another record surge in US stocks, with the Yen more sensitive to the broad based US Dollar outflows in the aftermath of the jobs report. Key standouts on Monday’s calendar come in the form of services and composite PMIs out of Germany, the Eurozone and UK, a speech from ECB Lagarde, and the Bank of Canada Business Outlook Survey. US markets are closed for the 4th of July long weekend celebration.

AUDUSD – technical overview

Technical studies have turned up in recent months, after the market traded down to its lowest levels since 2003 in 2020. There is evidence of a longer-term bottom following the latest push back through 0.7000, though at this stage, there is risk for a deeper pullback to allow for shorter term studies to unwind. Setbacks should now be well supported ahead of 0.7000.

  • R2 0.7617 – 25 June high – Strong
  • R1 0.7571 – 29 Jun high – Medium
  • S1 0.7444 – 2 July/2021 low – Strong
  • S2 0.7400 – Figure – Medium

AUDUSD – fundamental overview

PM Morrison will be looking to cut international traffic in half in an effort to contain the latest uptick in the virus. Still, the Australian Dollar was ultimately better bid in Friday trade, recovering out from yearly lows on the back of surging US equities and broad based US Dollar outflows in reaction to the US jobs report. Key standouts on Monday’s calendar come in the form of services and composite PMIs out of Germany, the Eurozone and UK, a speech from ECB Lagarde, and the Bank of Canada Business Outlook Survey. US markets are closed for the 4th of July long weekend celebration.

USDCAD – technical overview

Has been in major decline since topping out in 2021 above 1.4600. At this stage, with the decline now well extended, the market is likely to find solid support into the 1.2000 area ahead of a resumption of gains. Ultimately, only a weekly close below 1.2000 would suggest otherwise. Back above 1.2500 will strengthen the outlook.

  • R2 1.2487 – 21 June high – Strong
  • R1 1.2450 – 2 July high – Medium
  • S1 1.2252– 23 June low – Medium
  • S2 1.2204 – 13 June high – Strong

USDCAD – fundamental overview

Softer economic data out of Canada on Friday was no bother to the Canadian Dollar, which managed to run higher on the back of surging Canada and US equities, OIL prices at their highest level since September 2018 and broad based US Dollar outflows in the aftermath of the US jobs report. Key standouts on Monday’s calendar come in the form of services and composite PMIs out of Germany, the Eurozone and UK, a speech from ECB Lagarde, and the Bank of Canada Business Outlook Survey. US markets are closed for the 4th of July long weekend celebration.

NZDUSD – technical overview

The market has been very well supported in recent months and there is evidence of a longer-term base. Look for setbacks to hold up above 0.6800, with sights set on a run back towards the 0.7500 area.

  • R2 0.7096 – 25 June high – Strong
  • R1 0.7052 – 29 June high – Medium
  • S1 0.6947 – 2 July low– Medium
  • S2 0.6923 – 18 June/2021 low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar got some initial Friday support on the uptick in New Zealand consumer confidence data, before rallying more sharply later in the day on record US stocks and broad based US Dollar outflows in reaction to the mixed US jobs report. Key standouts on Monday’s calendar come in the form of services and composite PMIs out of Germany, the Eurozone and UK, a speech from ECB Lagarde, and the Bank of Canada Business Outlook Survey. US markets are closed for the 4th of July long weekend celebration.

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 4400, with a break back below 4139 to strengthen the outlook.

  • R2 4400 – Psychological – Strong
  • R1 4358– 2 July/Record high – Medium
  • S1 4281 – 30 June low – Medium
  • S2 4218 – 22 June low – Medium

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 into the second half of 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 1826 – 17 June high – Medium
  • S1 1750 – 29 June low – Medium
  • S2 1724 – 13 April 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.

Peformance chart: 30 Day Performance vs. US dollar (%)

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