Sample Category Title

USDCAD bounced to a two-week high of 1.2618 after rising for four consecutive days from a multi-year low below 1.2500.

Momentum signals are shifting from bearish to neutral, suggesting a weakening in downside pressure. RSI has moved out of oversold territory to rise above 30 while MACD has flattened out and is no longer sloping down.

The market was unable to record a daily close above the key psychological 1.2600 level yesterday. This is now a strong resistance level. Breaking above this could see gains towards 1.2700, another important level that was tested in the past. However, prices would need to rise to the 1.3200 handle to weaken the overall bearish market structure on the daily chart.

The technical structure remains bearish since USDCAD is below the daily Ichimoku cloud while the Tenkan-sen and Kijun-sen lines are negatively aligned. Also highlighting the bearish outlook was the crossover of the 50-day moving average below the 200-day MA on July 13.

A rounded low may be developing at just below the 1.2500 level and this may keep the market from extending lower in the near-term but bearish momentum could pick up again if USDCAD breaks support at 1.2500 and falls past the July 27 low at 1.2413. Such a move would accelerate a deeper decline towards the next major trough in the 1.2100 area.

Consolidation is expected in the 1.2500 handle in the near-term. The overall bearish market structure remains intact with no clear signals of a reversal in the underlying trend.

The Bank of England kept rates at their record low on Thursday, following their latest Monetary Policy Committee meeting. However, the BoE cut forecasts for growth and wages, as Brexit weighs on the UK economy. The BoE expects the UK economy to grow by 1.7% this year (in May the forecast was 1.9%), 1.6% (from 1.7% forecast in May) in 2018 and 1.8% in 2019. This pessimistic outlook for the next 2 years has reduced market expectations of any imminent hike in UK rates. However, Bank of England Governor Carney suggested there is scope to potentially hike rates at least once next year.

Following this grim outlook for the UK, GBP gave up recent gains against both USD & EUR. GBPUSD lost 1.56 cents falling from 1.3268 to 1.3112 on the day. EURGBP climbed from 0.89234 to a high, not seen since October of 2016, of 0.90483 on the day.

In the US, reports are that Special Counsel Robert Mueller has issued grand jury subpoenas in his investigation of alleged Russian interference in the 2016 U.S. elections, adding to an already unsteady US political landscape. Market attention now turns to todays, always impactful, US Nonfarm Payroll and Unemployment data, with many hoping to see a sustained improvement in payrolls and a steady, or reducing, unemployment rate that may help improve the economic outlook for the US.

EURUSD gained on the day, on the back of lackluster US PMI and Factory Orders, to trade up to 1.18926. Currently, EURUSD is trading around 1.1880.

USDJPY, reacting to the latest US data, was 0.6% lower on the day to trade as low as 109.946. Currently, USDJPY is trading around 110.10.

GBP suffered against USD & EUR, following a pessimistic economic outlook from the Bank of England, losing 0.7% on the day against USD and 0.8% against EUR. Currently, GBPUSD is trading around 1.3145 and EURGBP around 0.9040.

Gold saw a modest gain of 0.25% on Thursday and currently trades around $1,269.50.

Recent modest US inventory drawdowns kept demand relatively strong for Oil, although continued high production is impeding further gains. WTI is currently trading around $49.00pb.

At 13:30 BST, the US Department of Labor releases Nonfarm Payrolls & the Unemployment Rate for July. June witnessed a significant rebound in NFP, with 222,000 new positions added, and unemployment remaining at 4.4%. This release is expected to be lower, at 183,000, which is still a strong enough figure to absorb new entrants into the labour market and potentially push the unemployment rate to 4.3%, from the previous release of 4.4%. While we can expect market volatility following this week’s release, many will be looking to see if hourly earnings are growing, as June saw 2.5% and July is expected to remain the same. Without an increase in hourly earnings the markets do not expect consumer spending to gather pace, which would likely fuel upward inflationary pressure and consequently provide the Federal Reserve with more grounds to hike rates before the end of the year.

At the same time as NFP Statistics, Canada will release Canadian Unemployment Rate & the Net Change in Employment for July. Consensus calls for the unemployment rate to remain at 6.5% with the Net Change in Employment expected at 10K. Whilst any positive number is good for CAD, this release is significantly lower than the previous release of 45.3K. Regardless, the Canadian economy is benefitting from a strong employment market and recent healthy economic indicators.

Asia Summary

Asian equity markets are currently trading mixed, in line with what was seen during the New York session. Overall markets have traded cautiously ahead of the later release of US monthly employment data and quarterly earnings out of auto giant Toyota.

In Singapore, shares of large banking name DBS have declined by over 1.5% after its quarterly profits missed expectations.

The Reserve Bank of Australia (RBA) issued its quarterly monetary policy statement in which it lowered its 2017 GDP growth forecast, but kept underlying inflation forecasts unchanged. The central bank also reiterated its concerns about the recent gains in the Australian dollar, after it suggested in its Aug 1st policy decision that the gains in the Aussie could impact growth and inflation.

Key economic data

(AU) AUSTRALIA JUNE RETAIL SALES M/M: 0.3% V 0.2%E; Q/Q: 1.5% V 1.2%E

(AU) RBA QUARTERLY STATEMENT ON MONETARY POLICY: REITERATES RECENT AUD (A$) RISE HAD MODEST EFFECT ON GDP FORECASTS

(JP) JAPAN JUNE LABOR CASH EARNINGS Y/Y: -0.4% V 0.5%E; REAL CASH EARNINGS Y/Y: -0.8% V 0.1%E

(PH) PHILIPPINES JULY CPI M/M: 0.3% V 0.2%E; Y/Y: 2.8% V 2.8%E; Core Y/Y: 2.1% v 2.7%e

Speakers and Press

Japan

(JP) Former BoJ Official Kiuchi: Hope other members consider 'serious' policy side effect; may reach limit of JGB purchases in middle of 2018

(JP) Japan Economic Revitalization Minister Motegi: Reiterates to maintain FY2020 primary balance surplus goal

Asian Equity Indices/Futures (00:30ET)

Nikkei -0.3%, Hang Seng +0.1%, Shanghai Composite +0.2%, ASX200 -0.3%, Kospi +0.2%

Equity Futures: S&P500 flat ; Nasdaq flat , Dax flat , FTSE100 flat

FX ranges/Commodities/Fixed Income (00:30ET)

EUR 1.1869-1.1888; JPY 109.85-110.19; AUD 0.7934-0.7975; NZD 0.7423-0.7450

Aug Gold -0.4% at 1,267/oz; Aug Crude Oil -0.4% at $48.86/brl; Sept Copper +0.3% at $2.89/lb

GLD SPDR Gold Trust ETF daily holdings unchanged at 791.9 metric tons

(AU) Australia sells A$500M in 1.75% Nov 2020 bonds, avg yield 1.9447%, bid to cover 5.04x

(CN) PBOC SETS YUAN REFERENCE RATE AT: 6.7132 V 6.7211 PRIOR

(CN) China PBOC OMO injects CNY120B in 7 and 14-day reverse repos v CNY60B in 7-day reverse repo prior

Equities notable movers

Australia

Sims Metal Management, SGM.AU Announces succession plan for CEO and CFO, along with FY17 guidance; -12.7%

Commonwealth Bank, CBA.AU Austrac initiated civil penalty proceedings related to anti-money laundering and counter-terrorism financing laws

Crown Ltd, CWN.AU FY17 profits below estimates; -2%

Tabcorp, TAH.AU Reported FY17 results; +1.3%

Hong Kong/China

CK Hutchsion Holdings, 1.HK H1 Profits below estimates; -4.5%

Japan

Mazda, 7261.JP Speculated capital tie-up with Toyota; +4.5%

US markets on close: Dow flat, S&P500 -0.2%, Nasdaq -0.4%, Russell -0.6%

Best Sector in S&P500: Utilities, Industrials +0.5%

Worst Sector in S&P500: Energy -1.4%

At the close: VIX 10.44 (+0.16 pts); Treasuries: 2-yr 1.34% (-2bps), 10-yr 2.22% (-5bps), 30-yr 2.79% (-6bps)

US Market Summary

Blue chips continued to hit higher ground, with the Dow marking a new all-time high again at 22,040 before trading lower towards day end. Apple and Amazon both lost nearly 1%, putting the most pressure on the S&P. Attention shifts to tomorrow's jobs data. Yesterday's lower than expected ADP weekly increase reduced forecasts for tomorrow's NFP data, with consensus at +178k.

US Afterhours Movers

After Market Movers

GPRO Reports Q2 -$0.09 v -$0.26e, Rev $296.5M v $271Me; Guides Q3 R$290-310M v $279Me, Gross Margin 36-38% range; +16% afterhours

YELP Reports Q2 $0.25 v $0.20e, Rev $208.9M v $205Me; authorizes $200M share buyback; +14.8% afterhours

WTW Reports Q2 $0.67 v $0.50e, Rev $341M v $334Me; Raises FY17 $1.57-1.67 v $1.28e (prior FY17 $1.40-1.50); +14.3% afterhours

MDRX Reports Q2 $0.15 v $0.15e, Rev $428M v $424Me; Raises FY17 R$1.79-1.82B v 1.72Be; +12.2% afterhours

FLR Reports Q2 -$0.17* v $0.59e, Rev $4.70B v $4.94Be; -9.0% afterhours

SYNA Reports Q4 $1.18 v $1.16e, Rev $426.5M v $427Me; Guides Q1 Rev $380-420M v 447Me; -14.6% afterhours

PI Reports Q2 $0.06 v $0.03e, Rev $34.1M v $33.9Me; Guides Q3 -$0.08 to -$0.01 v $0.08e, R$31.8-33.3M v $38Me, Adj EBITDA -$1.7M to -$0.2M ; -23.3% afterhours

AAOI Reports Q2 $1.54 v $1.35e, Rev $117.4M v $116Me; Guides Q3 $1.30-1.43 v $1.36e; R$107-115M v $123Me; Sees softer than expected demand for 40G solutions with a large customer; -29.3% afterhours

USD/CHF - 0.9682

Most recent candlesticks pattern : N/A

Trend                                    : Near term up

Tenkan-Sen level                  : 0.9680

Kijun-Sen level                    : 0.9695

Ichimoku cloud top                 : 0.9693

Ichimoku cloud bottom              : 0.9673

Original strategy :

Buy at 0.9600, Target: 0.9700, Stop: 0.9565

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 0.9600, Target: 0.9700, Stop: 0.9565

Position : -

Target :  -

Stop : -

As the greenback has eased after faltering below indicated resistance at 0.9727, retaining our view that further consolidation below this level would be seen and risk of another retreat to 0.9655-50 cannot be ruled out, however, reckon downside would be limited to 0.9596 (previous resistance turned support) and bring another rise later. A break of indicated resistance at 0.9727 is needed to signal recent upmove has resumed and extend gain to 0.9750-60, then 0.9780, however, near term overbought condition should limit upside to 0.9800-10, bring retreat later. 
 
In view of this, would not chase this rise here and would be prudent to buy dollar on subsequent pullback as previous resistance at 0.9596 should turn into support and contain dollar’s downside. Below 0.9580 (61.8% Fibonacci retracement of 0.9490-0.9727) would defer and suggest a temporary top is formed instead, bring correction to 0.9540-50 but price should stay well above support at 0.9490, bring another rise later. 

GBP/USD - 1.3141

Most recent candlesticks pattern   : N/A

Trend                                 : Near term up

Tenkan-Sen level                 : 1.3137

Kijun-Sen level                    : 1.3191

Ichimoku cloud top              : 1.3222

Ichimoku cloud bottom        : 1.3221

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Despite yesterday’s brief rise to 1.3269, lack of follow through buying and the subsequent selloff suggests a temporary top has been formed and consolidation with downside bias is seen for test of support at 1.3097, however, break there is needed to add credence to this view, bring retracement of recent upmove to 1.3070-75 and later towards support at 1.3052 but price should stay well above support at 1.2999, bring another rise later.

In view of this, would be prudent to stand aside in the meantime. Above 1.3170-75 would bring recovery to 1.3200, however, as temporary top has been formed at 13269, reckon upside would be limited to 1.3220-30 and price should falter well below resistance at 1.3269, bring another retreat later.

Key Highlights

• The US Dollar remains in a downtrend against the Japanese Yen with a close below 111.00.
• There is a major descending channel with resistance near 110.40 forming on the 4-hours chart of USD/JPY.
• The US Factory orders figure for June 2017 was recently released, which posted an increase of 3% (MoM).
• Today, the US Nonfarm payrolls figure for July 2017 will be released, which is slated for 183K, against the previous 222K.

USDJPY Technical Analysis

The US Dollar started a downtrend in July 2017 from 114.50 against the Japanese Yen. The USD/JPY pair remains on the edge and awaits the US NFP report for the next move.

The pair is currently consolidating losses above the 110.00-109.80 support. There is a major descending channel with resistance near 110.40 forming on the 4-hours chart.

Above the channel resistance, there is a bearish trend line at 110.55. Furthermore, the 50% Fib retracement level of the last decline from the 110.98 high to 109.84 low is at 110.41.

Therefore, it seems like there is a major resistance forming near 110.50-60 ahead of a crucial release. Any major deviation from the market forecast could result in a significant break for USD/JPY either above 110.50 or below 109.80.

US Factory Orders

Recently, the US saw the release of the Factory orders figure for June 2017 by the US Census Bureau. The market was looking for an increase of around 2.9% compared with the previous month.

However, the outcome was better, as there was a rise of 3%. And, the last reading was revised up from -0.8% to -0.3%. The report added that:

New orders for manufactured goods in June, up following two consecutive monthly decreases, increased $14.0 billion or 3.0 percent to $481.1 billion.

Overall, the result was positive, which helped USD/JPY and the pair held the 109.80 support level.

US Nonfarm Payrolls

Today, the US nonfarm payrolls for July 2017 will be released by the US Department of Labor. The market is looking for 183K, less than the last 222K. Moreover, the US Unemployment Rate is forecasted to decline from 4.4% to 4.3% in July 2017.

If the actual result come in line with the forecast or exceeds it, the US Dollar may recover above 110.50 against the Japanese Yen. On the other hand, if it disappoints, the USD/JPY pair may decline towards 109.40.

EUR/USD - 1.1880

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 1.1880

Kijun-Sen level                  : 1.1862

Ichimoku cloud top             : 1.1852

Ichimoku cloud bottom      : 1.1848

Original strategy  :

Sold at 1.1880, Target: 1.1780, Stop: 1.1915

Position : - Short at 1.1880

Target :  - 1.1780

Stop : - 1.1915

New strategy  :

Hold short entered at 1.1880, Target: 1.1780, Stop: 1.1915

Position : - Short at 1.1880

Target :  - 1.1780

Stop : - 1.1915

Although the single currency has maintained a firm undertone after rebounding from 1.1830 (yesterday’s low), as long as indicated resistance at 1.1910 holds, further consolidation would take place and risk remains for another retreat, below said support at 1.1830 would bring weakness to 1.1810-15, however, break of 1.1780-85 (50% Fibonacci retracement of 1.1650-1.1910 and previous support) is needed to signal top is formed, bring retracement of recent rise to 1.1745-50 (61.8% Fibonacci retracement) but support at 1.1723 would remain intact.

In view of this, we are holding on to our short position entered at 1.1880. Above said resistance at 1.1910 would signal recent upmove is still in progress and may extend headway to 1.1940-50 and possibly towards 1.1970-75 before correction takes place. 

USD/JPY - 110.09

Most recent candlesticks pattern   : N/A

Trend                      : Near term down

Tenkan-Sen level              : 110.02

Kijun-Sen level                  : 110.30

Ichimoku cloud top             : 110.67

Ichimoku cloud bottom      : 110.45

Original strategy  :

Exit short entered at 110.90

Position :  - Short at 110.90

Target :  -

Stop : -

New strategy  :

Stand aside

Position :  -

Target :  -

Stop : -

Although the greenback broke below previous support at 109.92 and fell to 109.85 as suggested, lack of follow through selling suggests consolidation would be seen and recovery to the Kijun-Sen (now at 110.30) cannot be ruled out, however, reckon upside would be limited to the upper Kumo (now at 110.67) and price should falter below resistance at 110.98, bring another decline later.

In view of this, would not chase this fall here and would be prudent to stand aside in the meantime. Below said support at 109.85 would signal recent selloff from 114.50 top is still in progress and may extend weakness to 109.70 but loss of downward momentum should limit downside to 109.50, risk from there has increased for a rebound to take place later.

Weekly
    •    Last Candlesticks pattern: Window
    •    Time of formation: 24 April 2017
    •    Trend bias: Up

Daily
    •    Last Candlesticks pattern: Hammer
    •    Time of formation: 18 May 2017
    •    Trend bias: Up



EUR/JPY – 131.26




As the single currency has continued edging higher after resuming recent upmove, suggesting medium term uptrend from 109.49 low is still in progress and may extend headway to 131.50-60, then 132.00-10, however, loss of near term upward momentum should prevent sharp move beyond previous resistance at 132.33 and reckon 133.00-10 would hold from here, risk from there has increased for a correction to take place later.

On the downside, whilst initial pullback to the Tenkan-Sen (now at 130.14) cannot be ruled out, reckon downside would be limited to 129.50-55 and support at 128.57 should hold, bring another rise later. A drop below support at 127.44 would defer and suggest a temporary top is possibly formed, bring test of 127.00, break there would add credence to this view, then retracement of recent upmove would take place for weakness to 126.50, then towards 126.00-10, however, reckon previous resistance at 125.82 would hold from here, bring rebound later. 

Recommendation: Buy at 128.65 for 131.50 with stop below 127.65.

On the weekly chart, as the single currency has continued trading with a firm bias after resuming recent major upmove from 109.49 low, reinforcing our bullish view for this medium term rise to extend further gain to 131.00, then 131.50-60, however, overbought condition should limit upside to previous chart resistance at 132.33 and reckon 133.00-10 would hold from here, risk from there is seen for a retreat to take place later.

On the downside, although initial pullback to 129.50-60, then 128.90-00 cannot be ruled out, reckon 128.50-60 would limit downside and euro shall head north again from there to aforesaid upside targets. A drop below support at 127.81 would defer and risk test of the Tenkan-Sen (now at 126.59) but a weekly close below there is needed to signal a temporary top is formed, bring retracement of recent upmove to previous resistance at 125.82 (now support) but downside should be limited to 125.00 and reckon 124.00-10 would remain intact.

Weekly
    •    Last Candlesticks pattern: Shooting doji
    •    Time of formation: 01 May 2017
    •    Trend bias: Sideways

Daily
    •    Last Candlesticks pattern: Bearish engulfing
    •    Time of formation: 5 May 2017
    •    Trend bias: Down



USD/CAD – 1.2555




Although the greenback has recovered after falling to 1.2414 and consolidation above this level would be seen, reckon upside would be limited to the Kijun-Sen (now at 1.2729) and resistance at 1.2771 should hold, bring another decline later, below said support at 1.2414 would extend recent selloff to 1.2400, then 1.2350-60, however, oversold condition should limit downside to 1.2300 and price should stay well above 1.2240-50, risk from there has increased for a rebound to take place later. 

On the upside, whilst initial recovery to 1.2620-25, then the Kijun-Sen (now at 1.2729) cannot be ruled out, reckon resistance at 1.2771 would limit upside and bring another decline later. Above previous support at 1.2859 (now resistance)  would defer and suggest a temporary low is formed instead, bring a stronger rebound to 1.2900-05, however, still reckon upside would be limited to 1.2940-45 and price should falter below resistance at 1.3015. 

Recommendation: Sell at 1.2700 for 1.2400 with stop above 1.2800.


On the weekly chart, as the greenback found support at 1.2414 and has recovered, a white candlestick looks set to be formed this week, hence consolidation with mild upside bias is seen for retracement of recent decline to 1.2700-05, however, reckon upside would be limited to 1.2770-75 and price should falter below 1.2800-05 and bring another decline later. Below 1.2414 would signal medium term fall from 1.4690 top has resumed and extend weakness to 1.2300-10 but near term oversold condition should prevent sharp fall below 1.2240-50 and price should stay above 1.2175 (61.8% Fibonacci retracement of 1.0621-1.4690), risk from there has increased for a rebound later. 

On the upside, although initial recovery to 1.2700-05 cannot be ruled out, reckon upside would be limited to 1.2771 resistance and bring another decline later. Above previous support at 1.2589 (now resistance) would suggest a temporary low is possibly formed, bring a stronger rebound to 1.2900, then towards resistance at 1.2944, however, reckon the Tenkan-Sen (now at 1.2978) would hold. Only a weekly close above the Tenkan-Sen (now at 1.2978) would shift risk to upside for a strong rebound to to 1.3015 resistance, then 1.3050-60 but price should falter below the Kijun-Sen (now at 1.3104) and bring another selloff in late Q3.