Sample Category Title

Daily Pivots: (S1) 1.3239; (P) 1.3319; (R1) 1.3360; More...

USD/CAD reaches as low as 1.3151 so far. Intraday bias remains on the downside and fall from 1.3564 should target 1.3052/68 cluster support next. On the upside, above 1.3257 minor resistance will turn intraday bias neutral for consolidations. But risk will remain on the downside as long as 1.3432 resistance holds, in case of strong recovery.

In the bigger picture, medium term outlook stays neutral for now even though the case of bearish reversal is building up. Decisive break of 1.3068 cluster support (38.2% retracement of 1.2061 to 1.3664 at 1.3052) will confirm completion of up trend from 1.2061 (2017 low). Further fall should be seen to 61.8% retracement at 1.2673 next. On the upside, sustained break of 61.8% retracement of 1.4689 (2016 high) to 1.2061 at 1.3685, is needed to confirm resumption of up trend from 1.2061 (2017 low). Otherwise, risk will stay on the downside.

Daily Pivots: (S1) 1.1191; (P) 1.1223; (R1) 1.1259; More......

Intraday bias in EUR/USD remains mildly on the upside for 1.1347 resistance first. Break there will add to the case of medium term bottoming and target 1.1660 key fibonacci level next. On the downside, below 1.1255 minor support will turn intraday bias back to the downside for 1.1181 support instead.

In the bigger picture, considering bullish convergence condition in daily and weekly MACD, a medium term bottom could be in place at 1.1107 after hitting 61.8% retracement of 1.0339 (2016 low) to 1.2555 (2018 high) at 1.1186. Hence, for now, risk will stay on the upside as long as 1.1107 low holds. Break of 1.1347 will extend the rebound towards 38.2% retracement of 1.2555 to 1.1107 at 1.1660. However, sustained break of 1.1107 will confirm resumption of down trend from 1.2555.

Daily Pivots: (S1) 1.2561; (P) 1.2617; (R1) 1.2701; More....

Intraday bias in GBP/USD remains on the upside for the moment. Rebound from 1.2506 short term bottom would target 55 day EMA (now at 1.2808). For now, we'd expect strong resistance from 38.2% retracement of 1.3381 to 1.2506 at 1.2840 to bring fall resumption. On the downside, below 1.2626 minor support will turn intraday bias back to the downside for 1.2506 first. Nevertheless, sustained break of 1.2850 will bring stronger rise to 61.8% retracement at 1.3047 next.

In the bigger picture, medium term decline from 1.4376 (2018 high) is possibly ready to resume. Decisive break of 1.2391 would target a test on 1.1946 long term bottom (2016 low). For now, we don't expect a firm break there yet. Hence, focus will be on bottoming signal as it approaches 1.1946. In any case, medium term outlook will stay bearish as long as 1.3381 resistance holds, in case of strong rebound.

Daily Pivots: (S1) 107.79; (P) 108.21; (R1) 108.50; More...

Intraday bias in USD/JPY remains on the downside for the moment. Fall from 112.40 has just resumed. Sustained trading below 61.8% retracement of 104.69 to 112.40 at 107.63 will pave the way back to 104.62/9 key support. On the upside, break of 108.80 resistance is needed to indicate short term bottoming. Otherwise, outlook will remain bearish in case of recovery.

In the bigger picture, decline from 118.65 (Dec 2016) is still in progress, with the pair staying inside long term falling channel. Break of 104.62 will target 100% projection of 118.65 to 104.62 from 114.54 at 100.51. For now, we'd expect strong support above 98.97 (2016 low) to contain downside to bring rebound.

Markets

Talk of town in today’s trading session obviously was the outcome of yesterday’s FOMC meeting. Markets fully discount a July Fed rate cut with the only remaining question being whether it will be a 25 bps or 50 bps one. UK Gilts outperformed after the BoE acknowledged downside risks to the growth outlook. US Treasuries remained close to the highs reached in Asian trading with the US 10-yr yield extensively testing the 2017 low (2.01%). A disappointing Philly Fed Business Outlook was unable to provide US Treasuries with another boost, which could be a first hint that sufficient softness is discounted short term. Stock markets extended their rally with a new all-time high for the S&P 500. The US yield curve dropped 1.4 bps (30-yr) to 2.5 bps (5-yr). The German yield curve bull flattened with yields down between 1.7 bps (2-yr) and 4.1 bps (30-yr). 10-yr yield spread changes vs Germany are close to unchanged with Italy outperforming (-5 bps). The prospect of additional ECB easing continues to outweigh the bleak economic reality. The country’s statistic office indicated that GDP probably shrank again in Q2 while maintaining the 0.3% forecast for 2019.

The dollar remained in the defensive as the Fed yesterday indicated that it might be close to substantial easing in a not that distant future. Follow-through USD selling set EUR/USD on course for a steady uptrend during the morning session. Headlines that Italian growth might turn negative again in Q2 hardly had any immediate impact on the EUR/USD performance. EUR/USD surpassed the 1.13 barrier at the start of the US trading session. The Philly Fed business outlook was materially weaker than expected. However, an attempt of the dollar to decline further didn’t succeed. EUR/USD trades currently in the 1.13 area. USD/JPY is also trading off the intraday lows (107.65 area). That said, the loss of additional interest rate support clearly weighs on the US currency. First important resistance in EUR/USD at 1.1348 is again on the radar.

The UK calendar was quite well filled with the May Retail sales and the BoE policy decision. UK May retail sales were close to expectations and a small downward revision of the April sales didn’t change the overview of the economy. EUR/GBP hovered in at tight range just below 0.89 in the run-up to the BoE policy announcement. The BoE left its policy unchanged and basically kept its assessment of the May inflation report, implying a limited and gradual tightening over the policy horizon. At the same time, the BoE sees that global trade tensions have intensified and that the likelihood of a no-deal Brexit has increased. The bank also recognized the divergence between market pricing and the BoE rate path. Investors expect that the BoE ultimately will have to bring its assessment more in line with the easing bias of the Fed and the ECB. Sterling lost slightly ground after the publication of the minutes. EUR/GBP is trading in the 0.8910 area. Cable is trading in the 1.2685 area. The focus for sterling trading will now return the politics and Brexit.

News Headlines

The Norges Bank increased policy rates with 25 bps to 1.25% today and expects to hike again later this year, citing solid economic growth, capacity utilization somewhat above a normal level and core inflation slightly overshooting the inflation target. Increasing trade tensions warrant a cautious normalization approach however.

Turkish president Erdogan said the central bank needs to reverse the current interest rate policy and lower rates rather than increase them. Erdogan holds a controversial view that high interest rates (currently at 24%) are the reason the country is grappling with high inflation (18.7% in May).

WTI oil futures for August delivery managed to break resistance around the 50% Fibonacci of the 42.53-66.57 upleg and pick up steam towards a new three-week high of 56.33 on Thursday.

However, buyers would like to see prices running above the 38.2% Fibo of 57.37 and the 200-period simple moving average (SMA) in the four-hour chart to put faith in the recent rally. Should the MACD and the red Tenkan-sen continue sloping upwards such a case may occur in the near-term.

Slightly up, the 58.16 number may attract some attention ahead of the 59.13 mark.

Otherwise, if the market proves overbought, as the RSI has already jumped above the 70 level, the price could reverse south to retest the 50% Fibonacci of 54.55. Lower, the 50-period SMA would be the next target before a bigger battle starts around the 51.70 barrier.

In brief, WTI oil futures are looking cautiously bullish in the short-term.

Bitcoin is stubbornly testing the 38.2% Fibonacci ratio of the long 19,384-3,187 bearish wave for the fourth consecutive session that the bulls failed to successfully breach a year ago. While the slowdown in the red Tenkan-sen and the blue Kijun sen could be a warning sign that the bullish action may soon fade, the market could chart another rally if the MACD continues to trend higher and above its red signal line.

Crossing above the 38.2% Fibo of 9,331, nearby resistance could be detected around 9,762, taken from the peak on April 2018. Should the market beat the 10,330 congested area too, the door would open for the 50% Fibo of 11,250.

On the flip side, a decisive close below 8,367 and the 20-day simple moving average (SMA) could be followed by additional losses towards the 7,372 support level before attention shifts to the 23.6% Fibo of 6,973. Deeper, a drop under 6,522 could provide more comfort to the bears, shifting the bigger picture from positive to neutral. Yet the latter may take some time as the 50-day SMA shows no sign of correcting its bullish cross with the 200-day SMA.

In brief BTCUSD is looking cautiously positive in the short-term and bullish in the medium-term.

Spot gold is holding within narrow consolidation under new high at $1393 (the highest in more than five years) in early hours of US session on Thursday, following strong bullish acceleration in late Wed/early Thu trading. Gold price rallied Fed reiterated its dovish stance and signs of rate cut as early as July and accelerated higher on comments from US President Trump about his authority to replace Fed chairman Powell. Adding to strong bullish stance was increased safe-haven demand after Iran downed US military drone. Fresh rally (gold was 2.4% up for the day at one point) broke through some important barriers at $1366 (25 Jan / 8 Apr 2018 double-top); $1375 (6/11 July 2016 highs) and $1382 (Fibo 38.2% of larger $1923/$1047 fall) which generated strong bullish signal which would need confirmation on weekly close above. Psychological $1400 barrier is in focus, with further advance to expose target at $1433 (28 Aug 2013 high). Bulls may show stronger hesitation ahead of $1400 barrier, as traders start to take profit that would keep the price in extended consolidative/corrective phase. Former tops at $1375/66 should contain dips to keep bulls intact for eventual attack at $1400 barrier.

Res: 1393; 1396; 1400; 1427
Sup: 1375; 1366; 1358; 1346

WTI oil rallied over 3.5% on Thursday, boosted by newest tensions in the Middle East after Iran shot down US military drone. The latest case adds to heated situation after two tankers were attacked near-the straight of Hormuz. Oil prices were also boosted by agreement of OPEC+ members on a date for a meeting to discuss the extension of production cut deal which expires at the end of June. Today's rally broke above 20SMA ($54.54) and pressure pivotal barriers at $56.70 (Fibo 38.2% of $66.58/$50.59) and $56.97 (falling 30SMA), break of which will generate fresh bullish signal for extension of recovery leg from $50.59 (5 June low).

Res: 56.70; 56.97; 57.32; 58.60
Sup: 55.61; 55.42; 54.79; 54.54

Week of June 17-21

The prospect of a new era of easy money continues to resonate through global financial markets. Yields are tumbling to record lows, the dollar plummeting and US stocks resume their march to all-time highs after the Fed’s dovish capitulation.

U.S Treasuries are leading the sovereign bond rally, with 10’s falling below +2% for the first time in three-years as expectations grow that “most” G7 central banks will ease policy.

The U.S. 10-year yield has fallen to +1.9719% after the Fed signaled Wednesday it was ready to cut interest rates. Powell and co. dropped a reference to being “patient” on rates and forecasted a larger miss of their +2% inflation target this year in its statement. Alongside post-decision press comments and a shift in the dot plot, it was basically about as ‘dovish’ as the Fed could go without an actual cut. Futures are now signaling four rate cuts before the end of 2020, with one at the July 30-31 meeting fully priced in.

Japan’s JGB benchmark yield dropped to -0.185%, near the bottom of the BoJ’s targeted range after Governor Kuroda suggested policy makers “would not step in to prevent further declines,” while similar rates in Germany have fallen deeper into the negative, approaching a record low reached earlier this week.

Already this week, the European Central Bank (ECB) suggested it may cut interest rates as soon as its next policy meeting, along with the Fed, however, this maybe be premature for stock ‘bulls’ as the effect should ultimately be negative for equities since it would provide little actual economic stimulus while stoking recession fears.

The Bank of England (BoE) kept rates steady in an unanimous vote (9-0), surprising some who expected Haldane and Saunders to follow through on their recent ‘hawkish’ comments. Governor Carney mentioned that the market is not agreeing with their Brexit assumption view. No-deal risks are rising and since the BoE was expecting a smooth Brexit, we will likely see a long pause on a rate hike from the BoE. The bank cut their Q2 outlook from +0.2% to +0.0%.

Downunder, Reserve Bank of Australia’s (RBA) Lowe indicated its “not unrealistic” to expect another rate cut, after policy makers lowered their benchmark for the first time in three-years this month.

The outlier in the Northern hemisphere is Norway’s Norges Bank, who hiked rates for the third time Thursday since last September and indicated that “there is more to come.”

Sino- U.S trade watch

President Trump said he would meet with Chinese President Xi Jinping at the G20 summit later this month and said talks between the two countries would restart after a recent lull.

Brexit, what next?

Many believe that sterling has already baked in a Boris Johnson win. But, what’s next? Consensus sees Boris becoming the new PM and he won’t get a deal with the EU before the October deadline; hence, he will go for a “no deal.” If so, then most likely, U.K Parliament will block it with a vote of “no confidence” and the country will probably head to the polls. This could open the door to a Labour/Libs/Brexit party gaining seats and a hung parliament or Labour winning a small majority – a mess by all accounts.

Iran

Tensions continue to run high in the Middle East as Iran now claims to have taken down a U.S drone. Apparently a “spy drone” was shot down after it entered Iranian airspace near the Strait of Hormuz. The US blames Iran for the recent attacks on tankers in the Gulf of Oman and is sending more troops to the region in response to Iran’s “hostile behavior.”

Commodities

Gold has gained +8.5% over the past month, boosted by mounting expectations that the Fed and other central banks will ease monetary policy, as well as heightened geopolitical tensions in the Middle East and elsewhere.

Economic events

There are no events on the Economic Calendar for this weekend.

Market concerns

• UK leadership scramble & Brexit fallout
• US-Sino trade
• Trans-Atlantic trade tensions to intensify
• OPEC, Saudis, Venezuela, Libya & Trump
• Iran is threatening to close the Strait of Hormuz
• Venezuela/Russia/U.S tension
• Geo-political concerns in Iran, Russia, Ukraine & France
• U.S ramps up trade talks with India and Turkey
• Turkey’s Erdogan posturing
• Italian deputy PM Salvini is threatening to end the Govt tenure

Next week: U.S consumer confidence & RBNZ monetary policy announcement (June 25), U.S core durable goods, NZD business confidence & U.K inflation hearings (June 26), U.S GDP & G20 meetings (June 27), U.K current a/c, G20, CAD GDP & business outlook (June 28), CNY manufacturing PMI (June 29).