Sample Category Title

USD/CAD - 1.3284

 
Recent wave: Only wave v of c has ended at 0.9407 and wave C of major A-B-C correction is underway for headway to 1.4700

Trend:  Near term down

 
Original strategy       :

Sold at 1.3295, Target: 1.3130, Stop: 1.3355

Position: - Short at 1.3295

Target:  - 1.3130

Stop: - 1.3355

 
New strategy             :

Hold short entered at 1.3295, Target: 1.3130, Stop: 1.3355

Position: -

Target:  -

Stop:-

Although the greenback has rebounded after finding support at 1.3208 and further consolidation would be seen, as long as indicated resistance at 1.3348 holds, prospect of another retreat remains, below said support would bring test of 1.3191 but break there is needed to signal the rebound from 1.3165 low has ended, bring retest of this support later. Looking ahead, only a break below there would confirm recent decline from 1.3794 top has resumed and extend fall to 1.3100-10 and later towards previous support at 1.3078.

In view of this, we are holding on to our short position entered at 1.3295. Only break of said resistance at 1.3348 would defer and risk a stronger rebound to previous support at 1.3387 (now resistance), however, still reckon upside would be limited to 1.3420-25 and price should falter well below resistance at 1.3471, bring another decline later.

To recap, wave B from 1.3066 is unfolding as an a-b-c and is sub-divided as a: 1.2192, b: 1.2716 and wave c is a 5-waver with i: 1.1983, ii: 1.2506, extended wave iii with minor iii at 1.0206, wave iv ended at 1.0781 and wave v as well as wave iii has ended at 0.9931, hence the subsequent choppy trading is the wave iv which is unfolding as (a)-(b)-(c) with (a) leg of iv ended at 1.0854, followed by (b) leg at 1.0108 and (c) leg as well as the wave iv ended at 1.0674. The wave v is sub-divided by minor wave (i): 0.9980, (ii): 1.0374, (iii): 0.9446, (iv): 0.9913 and (v) as well as v has possibly ended at 0.9407, therefore, consolidation with upside bias is seen for major correction, indicated target at 1.3700 and 1.4000 had been met and further gain to 1.4700 would be seen later.

Canadian dollar fell back to 1.3300 against the greenback, retracing the largest part of Thursday's rise, inspired by better than expected Canada retail sales. Loonie came under pressure on disappointing CPI data, as Canadian inflation rose less than expected in May. Consumer price index increased in May by 0.1% from the previous month, falling below forecast for a 0.2% increase and 0.4% rise in April. Annualized inflation rose by 1.3% in May, undershooting 1.5% forecast and 1.6% increase in April. Fresh rally improved near-term technicals and left another base at 1.3200 zone which acts as very strong support. Lift above initial barriers at 1.3255 (falling Tenkan-sen / 10SMA), eased downside pressure, turning near-term focus higher and seeing scope for renewed attempt at 1.3340 (200SMA) which repeatedly capped correction from 1.3164 (14 June low).

Res: 1.3306; 1.3340; 1.3351; 1.3387

Sup: 1.3255; 1.3200; 1.3190; 1.3164

USD/CHF - 0.9708

Original strategy :

Bought at 0.9705, stopped at 0.9690

Position : - Long at 0.9705

Target :  -

Stop : - 0.9690

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Dollar’s intra-day breach of previous support at 0.9695 dampened our bullishness and erratic fall from 0.9771 top may extend weakness to 0.9660, however, as broad outlook remains consolidative, still reckon downside would be limited to 0.9641 support, risk from there is seen for another rise to take place next week.

On the upside, expect recovery to be limited to the upper Kumo (now at 0.9739) and bring another decline. Only a firm break above resistance at 0.9743 would revive bullishness and signal an intra-day low is formed, bring test of 0.9766-71 resistance first. Once this resistance is penetrated, this would confirm recent rise from 0.9613 low has resumed for test of resistance at 0.9808, then towards another previous resistance at 0.9825.

Consumer price inflation decelerated to1.3% (year-on-year) in May from 1.6% in April. Prices fell 0.2% month-on-month (seasonally adjusted), following a 0.4% gain in April.

A deceleration in energy prices weighed on the headline number, particularly gasoline prices. Energy prices were up 3.3% year-on-year, slowing from 9.6% in the month prior.

Food prices rose 0.3% (month-on-month) bringing the year-on-year rate to -0.1%, up from -1.1% in April.

The Bank of Canada's core measures were either flat or down, with CPI-median edging down to 1.5 % (from 1.6%), CPI-trim to 1.2% (from 1.3%), and CPI-common unchanged at a feeble 1.3%.

Key Implications

Inflation pressures remain muted in Canada. Even outside of energy prices, core measures show little in the way of burgeoning price pressures. In the past the weakness has been concentrated in goods categories, but even services decelerated in May.

The soft inflation environment is likely enough for the Bank of Canada to hold off on raising interest rates at its next meeting in July. Nonetheless, a continuation of above-trend economic growth should reduce slack and help turn inflation higher over the second half of this year, allowing the Bank of Canada to nudge up the overnight rate in October.

Highlights:

• The year-over-year rate of headline CPI inflation fell to a six-month low of 1.3% in May.
• Expectations were for a modest decline to 1.5% from April's 1.6% reading.
• Electricity prices fell in May as another round of rebates began rolling out in Ontario.
• Gasoline prices declined in the month with the year-over-year increase slipping to 6.8% from as high as 23% in February.
• Food prices rose in May and are now almost flat relative to a year ago following a period of deflation.
• Year-over-year inflation excluding food and energy prices fell for a fourth consecutive month, hitting three-year low of 1.4% in May.
• The BoC's three core measures averaged 1.3% after rounding, down from 1.4% in April and 2.0% a year ago. May's average is the lowest since 1999.

Our Take:

Today's CPI report is the first since the Bank of Canada's hawkish turn last week. Senior Deputy Governor Wilkins's comments put a positive slant on recent economic developments. Additionally, she was somewhat dismissive of recent softer inflation numbers, noting both the transitory impact of lower food prices and the lagged effect of excess capacity on core measures. Nonetheless, another broad-based shortfall in inflation in May will likely have markets re-evaluate the odds of a rate hike as soon as July. Broadening economic growth and progress in the energy sector's adjustment, along with the central bank's acknowledgement that inflation lags the cycle, seem to make rising inflation in the near term less of a precondition for removing accommodation. However, we still think policymakers will want to see some progress toward 2% before raising rates and that was clearly absent in May. Next week's Business Outlook Survey, GDP report and comments from Governing Council members will help firm up expectations around July's policy meeting but we think prospects of a move next month have been dealt a blow today.

The GBP/JPY has made a recovery from the bottom which was supported by M L4 camarilla pivot. At this point the pair is rejected by a trend line coming from May's highs. We might see a rejection from 141.70 if the price doesn;t break the trend line, but if it does watch for 141.95-142.10 POC zone ( 61.8, ATR Pivot, historical sellers). In that case W H3 camarilla / ATR high would be the interim resistance and we might see a rejection to the downside. Targets are 141.00, 140.50 and 140.30. Have in mind that today is Friday so we might see a volatility based on weekly profit taking.

GBP/USD - 1.2718

Original strategy :

Sold at 1.2695, stopped at 1.2710

Position : -  Short at 1.2695

Target :  -

Stop : - 1.2710

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Cable’s intra-day rebound dampened our bearishness and suggests a temporary ow has been formed at 1.2589, hence upside risk remains for this move to bring retracement of recent decline to 1.2755-60, however, reckon upside would be limited to 1.2780-85 (50% Fibonacci retracement of 1.2978-1.2589) and price should falter well below resistance at 1.2818, bring another selloff next week.

In view of this, would not chase this move here and would be prudent to stand aside for now. Below 1.2690-95 would bring weakness towards 1.2640-50 but break of latter level is needed to signal the rebound from 1.2589 has ended, bring retest of this level later.

Daily Pivots: (S1) 111.02; (P) 111.23; (R1) 111.52; More...

USD/JPY is still bounded in the consolidation below 111.78 temporary top. Intraday bias remains neutral for the moment. With 110.63 minor support intact, further rise is still expected. Break of 111.78 will target near term channel resistance (now at 112.85). Sustained break there will suggest that whole pull back from 118.65 has completed at 108.12 already. In such case, further rise should be seen to 114.36 resistance for confirmation. However, break of 110.63 will turn bias back to the downside for 108.81 instead.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. It's uncertain whether it's completed yet. But in case of another fall, downside should be contained by 61.8% retracement of 75.56 to 125.85 at 94.77 to bring rebound. Overall, rise from 75.56 is still expected to resume later after the correction from 125.85 completes.

Daily Pivots: (S1) 0.9705; (P) 0.9723; (R1) 0.9735; More.....

USD/CHF continues to gyrate in range above 0.9613 and intraday bias stays neutral first. With 0.9087 resistance intact, near term outlook stays bearish. Break of 0.9613 will extend the whole decline from 1.0342 to 0.9548 support and below. We'd start to look for bottoming signal again as it approaches 0.9443 key support level. However, considering bullish convergence condition in 4 hour MACD, break of 0.9807 will indicate near term reversal and turn outlook bullish for 1.0099 resistance next.

In the bigger picture, USD/CHF is still bounded in medium term range of 0.9443/1.0342 for the moment. Consolidative trading would likely continue and medium term outlook remains neutral. Break of 1.0342 key resistance is needed to confirm underlying bullish momentum in the pair. Meanwhile, downside attempts should be contained by 0.9443 key support level. However, sustained break of 0.9443 will carry larger bearish implication and target 0.9 handle.

EUR/USD - 1.1180

Original strategy  :

Sell at 1.1200, Target: 1.1100, Stop: 1.1235

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.1210, Target: 1.1110, Stop: 1.1245

Position : -

Target :  -

Stop : -

The single currency found support just below 1.1140 and has recovered, retaining our view that further consolidation above this week’s low at 1.1119 would be seen and near term upside risk remains for retracement to 1.1207-13 (50% Fibonacci retracement of 1.1296-1.1119 and previous resistance), however, upside should be limited and bring another decline later, below 1.1135-40 would suggest the rebound from 1.1119 has ended, bring retest of this level, below there would confirm recent decline has resumed for further weakness to previous support at 1.1109, then towards 1.1075-80.

In view of this, we are looking to sell euro on recovery as 1.1205-10 should limit upside. Only a firm break above 1.1213 resistance would defer and risk a stronger rebound to 1.1230-35 but upside should be limited to 1.1260-70, bring another decline later.