Sample Category Title

Market movers today

A key focus today will be inflation releases in the eurozone and the US, while the EU summit discussion in Brussels will be in focus notably with German Chancellor Merkel under pressure to bring back an EU-wide agreement on immigration.

In the eurozone, the June HICP figures are due for release. Headline inflation surprised on the upside in May, reaching 1.9% y/y, driven by higher oil prices. This has led the ECB to revise up its inflation forecast for 2018 to 1.7% (from 1.4%) in its new staff project ions (see also ECB Review, 14 June 2018). We estimate the June figure at 2.0% y/y, but emphasise that headline inflation will only remain at this level for a few months before declining back to around 1.5-1.6% as the energy price base effects wear off. We expect core inflation to remain unchanged at 1.1%.

In the UK, GfK consumer confidence is being released. Lloyds business barometer and not least the final revision to the Q1 GDP estimate are probably not market movers as such, but might attract some at tent ion as the Bank of England has left the door open for a rate hike in August depending on data in Q2. (See Bank of England review: BoE leaves the door open for an August hike,, 21 June, for details).

In the US, PCE core inflation numbers for May will be released today. Based on CPI, we expect PCE to rise +0.2% m/m, which translates into 1.9% y/y, up from 1.8%. We still believe there are upside risks to US inflation, which underpins our view of a total of four rate hikes being more likely.

Selected market news

Italy's Prime Minister Giuseppe Contethreatened to veto the European Union summit conclusions, while the EU stand-off deepened in Brussels on large discussions over migration. The move could jeopardise Germany's Chancellor Angela Merkel coalition back home. At the summit , the UK Prime Minister Theresa May blamed the EU for hindering a large Brexit deal on security.

Russia's Vladimir Put in and US President Donald Trump will meet on 16 July in Helsinki, both the Kremlin and the White House announced. Bilateral relations and security issues will be discussed.

Most of emerging markets (EM) currencies and stock tumbled further on Thursday, depressed by cont radictory messages on global trade wars from the US. The Trump administration seemed to retreat from a full scale trade war with China. Yet , the Director of the National Economic Council under the US President Trump Larry Kudlow stated afterwards that Trump was not getting any softer on China. The INR slid to all-time low, the IDR weakened to a three-year low, the decline in the CNH accelerated and the ARS turmoil deepened.

Daily Pivots: (S1) 143.96; (P) 144.33; (R1) 144.86; More...

GBP/JPY recovered after hitting 143.76 and intraday bias is turned neutral again. Another fall is in favor as long as 146.63 minor resistance holds. Below 143.76 will bring retest 143.18 low. Firm break there will resume larger decline from 156.59 and target 139.25/47 cluster support level. On the upside, above 146.63 minor resistance will target 148.10 instead.

In the bigger picture, no change in the view that decline from 156.59 is a corrective move. In case of another fall, strong support should be seen above 139.29 cluster support (50% retracement of 122.36 to 156.59 at 139.47) to contain downside and bring rebound. Meanwhile, break of 153.84 should confirm that the correction is completed and target 156.59 and above to resume the medium term up trend.

Daily Pivots: (S1) 127.34; (P) 127.64; (R1) 128.13; More....

EUR/JPY rises sharply higher to 129.14 today but stays well below 130.33 resistance. Intraday bias remains neutral at this point. On the upside, break of 130.33 resistance will confirm resumption of rise from 124.61. That will also revive the case of near term reversal and turn bias to the upside for 133.47 key resistance. On the downside, break of 127.13 will resume the fall from 130.33 and target a test on 124.61 low. This will also affirm the case that larger decline from 137.49 is still in progress.

In the bigger picture, despite rebounding strongly ahead of 124.08 resistance turned support, there was no clear follow through buying. Note again that there is bearish divergence in daily MACD. Firm break of 124.08 will confirm trend reversal. That is, whole rise from 109.03 (2016 low) has completed at 137.49 already. In that case, deeper fall should be seen back to 61.8% retracement of 109.03 to 137.49 at 119.90 and below. Nonetheless, decisive break of 133.47 key resistance will likely extend the rise from 109.03 through 137.49 high.

Daily Pivots: (S1) 0.8811; (P) 0.8841; (R1) 0.8876; More...

Intraday bias in EUR/GBP remains on the upside. Current rise from 0.8620 is in progress for 0.8967 cluster resistance (50% retracement of 0.9305 to 0.8620 at 0.8963). On the downside, below 0.8829 minor support will turn intraday bias neutral first and bring consolidation. But downside should be contained above 0.8724 support to bring another rally.

In the bigger picture, for now, the decline from 0.9305 is seen as a leg inside the long term consolidation pattern from 0.9304 (2016 high). Such consolidation pattern could extend further. Hence, in case of strong rally, we'd be cautious on strong resistance by 0.9304/5 to limit upside. Meanwhile, in another decline attempt, we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside.

Daily Pivots: (S1) 1.5700; (P) 1.5745; (R1) 1.5776; More....

Intraday bias in EUR/AUD remains neutral for consolidation below 1.5823 temporary top. Another rise is in favor as long as 1.5617 minor support holds. Break of 1.5823 will extend the rebound from 1.5271 towards 1.6139 high. However, break of 1.5617 will turn bias to the downside for 1.5425 minor support first.

In the bigger picture, current development suggests that fall from 1.6189 is a corrective move and has completed at 1.5217 already. Key support levels of 1.5153 and 38.2% retracement of 1.3624 to 1.6189 at 1.5209 were defended. And rise medium term rise from 1.3624 (2017 low) is not completed yet. Break of 1.6189 will target 1.6587 key resistance (2015 high).

Daily Pivots: (S1) 1.1515; (P) 1.1540; (R1) 1.1568; More....

Breach of 1.1585 minor resistance argues that pull back from 1.1656 has completed at 1.1478. Intraday bias is mildly on the upside for 1.1656 and above. But we'd expect upside to be limited by 61.8% retracement of 1.2004 to 1.1366 at 1.1760 to complete the corrective rebound from 1.1366. On the downside, below 1.1478 will target 1.1366 low instead.

In the bigger picture, current development suggests solid rejection by prior SNB imposed floor at 1.2000. Considering bearish divergence condition in daily and weekly MACD, 1.2004 should be a medium term top. And price action from 1.2004 is correcting the up trend from 1.0629. Such correction is expected to extend for a while and therefore, we're not anticipating a break of 1.2004 in near term. Another decline cannot be ruled out yet. But in that case, strong support should be seen at 1.1198 (2016 high), 61.8% retracement of 1.0629 to 1.2004 at 1.1154 to contain downside.

Daily Pivots: (S1) 0.7335; (P) 0.7348; (R1) 0.7368; More...

AUD/USD formed a temporary low at 0.7322 and recovered. But it's staying below 0.7443 resistance. Intraday bias remains neutral first. Deeper fall is expected as long as 0.7443 resistance holds. Sustained break of 0.7326/8cluster support (61.8% retracement of 0.6826 to 0.8135 at 0.7326) cluster support (61.8% retracement of 0.6826 to 0.8135 at 0.7326) will extend larger fall from 0.8315 to 61.8% projection of 0.8135 to 0.7411 from 0.7676 at 0.7229 next. Though, break of 0.7443 resistance will suggest short term bottoming and bring lengthier consolidations.

In the bigger picture, medium term rebound from 0.6826 (2016 low) is seen as a corrective move that should be completed at 0.8135. Deeper decline would be seen back to retest 0.6826 low. Firm break there will resume the long term down trend from 1.1079 and take 0.6008 support next (2008 low). This will now remain the favored case as long as 0.7676 resistance holds.

Daily Pivots: (S1) 1.3211; (P) 1.3282; (R1) 1.3324; More...

USD/CAD's pull back from 1.3385 extends lower today and intraday bias is mildly on the downside. Fro now, we'd expect strong support from 1.3067 to contain downside to bring rise resumption. On the upside, firm break of 1.3385 will resume recent rally for 1.3685 medium term fibonacci level next.

In the bigger picture, current development solidify the view of bullish trend reversal. That is fall from 1.4689 (2015 high) has completed at 1.2061, ahead of 50% retracement of 0.9406 (2011 low) to 1.4689 (2015 high) at 1.2048. Further rally should be seen for 61.8% retracement of 1.4689 to 1.2061 at 1.3685 and above. This will now be the preferred case as long as 1.2916 resistance turned support holds, even in case of deep pull back.

Daily Pivots: (S1) 110.09; (P) 110.38; (R1) 110.80; More...

USD/JPY rises further today but it's still staying below 110.89 resistance. Intraday bias remains neutral for the moment. On the upside, break of 110.89 will resume the rise from 108.10 and target 111.39. Firm break there will resume the rally from 104.62 and target 114.73 key resistance. On the downside, below 109.36 will extend the consolidation from 111.39 with another decline. But we'd expect strong support from 61.8% retracement of 104.62 to 111.39 at 107.20 to contain downside and bring rebound.

In the bigger picture, at this point, we're slightly favoring the case that corrective decline from 118.65 (2016 high) has completed with three waves down to 104.62. Above 111.39 will affirm this view and target 114.73 for confirmation. However, it should be noted that USD/JPY is bounded in medium term falling channel from 118.65 (2016 high). Sustained break of 61.8% retracement of 104.62 to 111.39 at 107.20 will likely resume the fall from 118.65 through 104.62 low.

Daily Pivots: (S1) 0.9954; (P) 0.9973; (R1) 0.9996; More...

Intraday bias in USD/CHF is turned neutral as its failed to break through 0.9989 decisively and retreated. Outlook is unchanged though. On the upside, firm break of 0.9989 will resume the rebound from 0.9787 and target 1.0056 high. Break will resume whole rally from 0.9186. On the downside, below 0.9855 will likely resume the correction from 1.0056 through 0.9787 support. But downside should be contained by 38.2% retracement of 0.9186 to 1.0056 at 0.9724 to bring rebound.

In the bigger picture, medium term decline from 1.0342 has completed with three waves down to 0.9186. Rise from there is currently viewed as a leg inside the long term range pattern. Hence, while further rally would be seen, we'd be cautious on strong resistance from 1.0342 to limit upside. For now, further rise is expected as long as 38.2% retracement of 0.9186 to 1.0056 at 0.9724 holds. However, sustained break of 0.9724 will dampen this bullish view and would at least bring deeper fall to 61.8% retracement at 0.9518.