When bad news is no longer good news

GBPUSD – technical overview

The market is in a corrective phase in the aftermath of the run to fresh 2021 and multi-month highs. At this stage, additional setbacks should be limited to the 1.3500 area ahead of the next major upside extension towards a retest and break of critical resistance in the form of the 2018 high.

• R2 1.3846 – 17 August high – Medium
• R1 1.3808 – 31 August high – Medium
• S1 1.3680 – 27 August low – Medium
• S2 1.3572 – 20 July low – Strong

GBPUSD – fundamental overview

The Pound got another boost on Wednesday, this time from strong house prices. UK house prices were up 2.1% month on month, the second largest gain in 15 years. Key standouts on Thursday’s calendar come in the form of Aussie trade, Eurozone producer prices, Canada trade and building permits, and US data featuring trade, jobless claims, and factory orders.

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 113.00 to negate the outlook.

• R2 111.00 – Figure– Medium
• R1 110.81 – 11 August high – Strong
• S1 108.72 – 4 August low – Medium
• S2 108.34 – 7 May low – Strong

USDJPY – fundamental overview

The Nikkei extended its run to a six week high, helped along buy bullishness around a possible government reshuffle. PM Suga said he would consider dissolving the lower house, with a general election in October. Still, the Yen didn't weaken all that much on this flow, perhaps with US equities showing signs of possible rollover. Elsewhere, BOJ Wakatabe said the central bank might downgrade its assessment of the economy. Key standouts on Thursday’s calendar come in the form of Aussie trade, Eurozone producer prices, Canada trade and building permits, and US data featuring trade, jobless claims, and factory orders.

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.

• R2 0.7390 – 11 August high – Medium
• R1 0.7342 – 31 August high – Medium
• S1 0.7222 – 27 August low – Medium
• S2 0.7106 – 20 August/2021 low – Medium

AUDUSD – fundamental overview

Most of the latest gains in the Australian Dollar have come from this week's bullish performance in Chinese markets despite what has been softer China data. Key standouts on Thursday’s calendar come in the form of Aussie trade, Eurozone producer prices, Canada trade and building permits, and US data featuring trade, jobless claims, and factory orders.

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 1.2808 – 19 July high – Medium
• R1 1.2709 – 27 August high – Medium
• S1 1.2565– 17 August low – Medium
• S2 1.2500 – Psychological – Medium

USDCAD – fundamental overview

Justin Trudeau is doing his best to fight against his performance in the polls, announcing a promise of CAD $78 billion in new spending. Meanwhile, Wednesday's round of Canada data was solid, with ,manufacturing PMIs improving from the previous print. Key standouts on Thursday’s calendar come in the form of Aussie trade, Eurozone producer prices, Canada trade and building permits, and US data featuring trade, jobless claims, and factory orders.

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.

• R2 0.7089 – 4 August high – Strong
• R1 0.7069 – 31 August high – Medium
• S1 0.6930 – 25 August low – Medium
• S2 0.6879 – 24 August low – Medium

NZDUSD – fundamental overview

It's back to pressure on the RBNZ to be thinking about raising rates, this after the latest run of surging New Zealand house prices. All of this has resulted in a solid rally for the New Zealand Dollar. Key standouts on Thursday’s calendar come in the form of Aussie trade, Eurozone producer prices, Canada trade and building permits, and US data featuring trade, jobless claims, and factory orders.

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 above 4500, with a break back below 4353 to strengthen the outlook.

• R2 4550 – Psychological – Strong
• R1 4546 – 31 August/Record high – Medium
• S1 4353 – 19 August low – Medium
• S2 4233 – 19 July 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 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 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.