Sample Category Title

Daily Pivots: (S1) 1.2926; (P) 1.2979; (R1) 1.3026; More...

GBP/USD is still staying in range of 1.2811/3125 and intraday bias remains neutral. Another rise is mildly in favor with 1.2811 intact. Break of 1.3125 will target 61.8% projection of 1.2108 to 1.3047 from 1.2588 at 1.3168. Overall, choppy rebound from 1.1946 is seen as a corrective pattern, hence, we'd be cautious on strong resistance from 1.3168 to limit upside. But firm break of 1.3168 will bring further rise towards 1.3444 key resistance. Meanwhile, break of 1.2811 support will be the first sign of reversal and will turn bias to the downside to target 1.2588 key support next.

In the bigger picture, overall, price actions from 1.1946 medium term low are seen as a corrective pattern that is still in progress. While further upside is expected, overall outlook remains bearish as long as 1.3444 key resistance holds. Larger down trend from 1.7190 is expected to resume later after the correction completes. And break of 1.2588 will indicate that such down trend is resuming.

GBP/USD - 1.2980

Original strategy :

Sell at 1.3030, Target: 1.2930, Stop: 1.3065

Position : - 

Target :  -

Stop : -

New strategy  :

Sell at 1.3030, Target: 1.2930, Stop: 1.3065

Position : -

Target :  -

Stop : -

Cable recovered after falling to 1.2933 yesterday and minor consolidation would be seen, however, as the drop from 1.3126 signals a temporary top has possibly been formed there, reckon upside would be limited to 1.3025-30 and bring another decline later, below 1.2932-33 (61.8% Fibonacci retracement of 1.2812-1.3126 and said support would bring test of previous support at 1.2912 but break of latter level is needed to retain bearishness and extend the fall from 1.3126 top to 1.2880-85 first. 

In view of this, we are looking to sell cable on recovery as 1.3025-30 should limit upside. Only break of resistance at 1.3062 would abort and signal an intra-day low is formed instead, bring a stronger rebound towards 1.3090-00 but resistance at 1.3126 should remain intact. 

Daily Pivots: (S1) 0.9464; (P) 0.9541; (R1) 0.9590; More...

Intraday bias in USD/CHF remains on the downside at this point. Current fall from 1.0342 should target target 0.9443 key support level next. At this point, we'd expect strong support from there to bring rebound. On the upside, break of 0.9699 resistance is needed to confirm short term bottoming. Otherwise, outlook will remain bearish in case of recovery.

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 - 1.1643

Original strategy  :

Buy at 1.1580, Target: 1.1680, Stop: 1.1545

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.1580, Target: 1.1680, Stop: 1.1545

Position : -

Target :  -

Stop : -

Yesterday’s rally after finding renewed buying interest at 1.1479 signals recent upmove has resumed and bullishness remains for this move to extend further gain to indicated upside target at 1.1680, then towards previous chart resistance at 1.1714, however, break there is needed to retain bullishness for the rise from 1.0340 low to head towards 1.1750. 

In view of this, we are looking to buy euro on pullback as previous resistance at 1.1583 should limit downside. Below the upper Kumo (now at 1.1544) would abort and suggest an intra-day top is formed, bring correction to 1.1510-15 but said support at 1.1479 should remain intact.

Canadian Dollar stays firm against dollar in early US session even though it's mixed against other currencies. USD/CAD, trading at 1.2550, has been losing some downside momentum this week, but is still on course to test 2016 low at 1.2460. Headline Canadian CPI dropped -0.1% mom in June. The annual rate slowed to 1.0% yoy, down from 1.3% yoy and missed expectation of 1.1% yoy. That's also the lowest level since October 2015. Nonetheless, two of the three core inflation measures of BoC picked up in the same month. CPI core common rose to 1.4% yoy, up from 1.3% yoy. CPI core median rose to 1.6% yoy, up from 1.5% yoy CPI core trim was unchanged at 1.2% yoy. Meanwhile, Canadian retail sales rose solidly by 0.6% mom in May, beating expectation of 0.4% mom. Ex-auto sales dropped -0.1% mom, missing expectation of 0.4% mom.

Meanwhile, Dollar is set to end the week as the second weakest currency, just after Sterling. Politics and its impact on Fed's tightening path is seen as the main factor driving the greenback down. Investors are also like having no clue on when US President Donald Trump would start the work on pushing his economic policies and tax reforms through the Congress. At the same time Trump is persistently being distracted by other issues. Special counsel Robert Mueller's Russia investigation is currently under the spot light. It's reported that Mueller has expanded his investigations regarding the possible ties between Trump's election campaign and Russia. The investigations will now cover transactions involving Trump's businesses as well as his associates'. And it's now reported the Trump's legal team is seeking ways to control and block Mueller's investigations.

Earlier today, Australian Dollar dipped notably on comments from RBA Deputy Governor Guy Debelle. Debelle urged the markets not to read too much into the board's discussion on neutral rate. He said that "no significance should be read into the fact the neutral rate was discussed at this particular meeting" And, "most meetings, the board allocates some time to discussing a policy-relevant issue in more detail, and on this occasion it was the neutral rate." He also emphasized that "other central banks increase their policy rates does not automatically mean that the policy rate here needs to increase."

EUR/AUD Daily Outlook

Daily Pivots: (S1) 1.4474; (P) 1.4561; (R1) 1.4701; More...

EUR/AUD's strong rebound indicates short term bottoming at 1.4421, after hitting 100% projection of 1.5226 to 1.4625 from 1.4472. The development also suggests completion of the correction from 1.5226, with three waves down to 1.4421. Intraday bias is back on the downside. Sustained trading above 55 day EMA (now at 1.4744) will target 1.5073 resistance. Break there will indicate resumption of whole rise from 1.3624. On the downside, below 1.4585 minor support will turn focus back to 1.4421 instead.

In the bigger picture, we're holding on to the view that corrective decline from 1.6587 medium term has completed at 1.3624. Rise from 1.3624 is expected to resume to retest 1.6587. The corrective structure of the fall from 1.5226 is affirming this view. Above 1.5226 will target a test on 1.6587 key resistance. However, further downside acceleration will dampen our view and would drag EUR/AUD lower to retest key support zone around 1.3624.

Economic Indicators Update

USD/JPY - 111.38

New strategy  :

Stand aside

Position :  -

Target :  -

Stop : -

Although the greenback has fallen again after brief bounce above 112.00 level and downside risk remains for recent decline from 114.50 top to extend weakness to 111.20-25, however, reckon 110.90-00 would hold from here due to near term oversold condition, bring rebound later. 

In view of this, would not chase this fall here and would be prudent to stand aside in the meantime. Above the Kijun-Sen (now at 111.81) would suggest an intra-day low is possibly formed but break of resistance at 112.08 is needed to signal low is formed, bring a stronger rebound to indicated resistance at 112.42 next.

Daily Pivots: (S1) 111.44; (P) 111.93; (R1) 112.38; More...

Intraday bias in USD/JPY remains on the downside as the decline from 114.49 is still in progress. As noted before, sustained trading below 55 day EMA will bring deeper decline to 108.81 support. Break there will extend the whole correction from 118.65 to 61.8% retracement of 98.97 to 118.65 at 106.48. Nonetheless, break of 112.41 will turn focus back to 114.49 resistance instead.

In the bigger picture, the corrective structure of the fall from 118.65 suggests that rise from 98.97 is not completed yet. Break of 118.65 will target a test on 125.85 high. At this point, it's uncertain whether rise from 98.97 is resuming the long term up trend from 75.56, or it's a leg in the consolidation from 125.85. Hence, we'll be cautious on topping as it approaches 125.85. If fall from 118.65 extends lower, down side should be contained by 61.8% retracement of 98.97 to 118.65 at 106.48 and bring rebound.

USD/CAD downside paused

Price changed little today and awaits the Canadian data to bring life again, we may have some action in the upcoming hours as the fundamental factors will take the lead again. Maintains a bearish perspective on the Daily Chart, will drop much below the 1.2540 previous low if the Canadian data will come in better than expected.

You should be careful in the afternoon because we may have a high volatility if we'll economic data will produce a big surprise, will be better to keep an eye on the economic calendar to see what will move price till the end of the day.

Canada is to release the inflation and the retail sales reports, the CPI could decrease by 0.1% in June, could drop in the negative territory after 6-months, the Core CPI will be released as well by Statistics Canada. The Retail Sales could increase by 0.3% in May, less versus the 0.8% growth in the previous reporting period, while the Core Retail Sales could increase only by 0.0% in May, less versus the 1.5% in the former reading period.

Price stays above the 1.2540 yesterday's low, could drop much below this level if the Canadian data will come in better, only a huge disappointment will send the rate higher. The sentiment is bearish as long as is trading within the descending pitchfork's body.

The next major downside target will be at the 1.2460 swing low, could rebound from there if the USDX will found strong support as well. Could found support also at the fourth warning line (wl4) of the former minor ascending pitchfork. Will start another leg higher only after a minor accumulation, needs to recapture more directional energy before will jump much higher. A failure to reach the 1.2460 and the lower median line (lml) will signal an oversold and a potential rebound.

Gold buying opportunity

The yellow metal resumes the minor rebound, has managed to climb above two significant resistance level and is trying to take out another in the upcoming hours. Will climb much above the 1250 psychological level if the USDX will drop much deeper.

Continues to move sideways on the Daily chart, has broken above the upper median line (UML) of the major descending pitchfork and above the upper median line (uml) of the minor descending pitchfork and now is pressuring the 38.2% retracement level. A valid breakout above the UML and above the upper median line (uml) will favor an increase towards the major 38.2% retracement level.

AUD/USD dropped as expected

AUD/USD decreased today, this was natural after the impressive rally, but the correction could be only temporary because the USDX could slide further. Has dropped after the fasle breakout above the warning line (wl1) of the minor ascending pitchfork, now has support again at the upper median line (uml), the perspective remains bullish as long as stays above this level.

WTI Oil is holding within narrow range around $47.00 handle on Friday, following previous day's spike to $47.72, the highest since 07 June.

Oil price failed to clearly break above key barrier at $47.30 (04 July former high) and ended Wednesday's trading in red candle with long upper wick which could be seen as initial signal of stall of recovery rally from $43.63 (10 July low).

Thickening and descending daily cloud continues to weighs on near-term action, along with bearish divergence on daily slow stochastic.

Initial support at $46.66 is provided by 55SMA, with break here needed to generate bearish signal for deeper pullback. Pivotal support lies at $45.80 (18 July trough, reinforced by rising 20SMA) break of which will be bearish.

On the other side, inverted H&S pattern that was completed on 4-hr chart, continues to underpin for renewed attempts through daily cloud base ($47.20) for retest of Wednesday's high at $47.72 and possible extension towards $48.18 (Fibo 61.8% of $51.98/$42.04) in extension.

Scenario will be valid while the price holds above $46.66 support.

Res: 47.19, 17.30, 47.72, 48.18
Sup: 46.66, 46.13, 45.80, 44.97

Friday July 21: Five things the markets are talking about

The EUR's has surged to a new two-year high outright earlier this morning (€1.1679) while most major stock exchanges consolidated as the markets assess an investigation into the U.S. president that may stall his economic agenda – special counsel Mueller is reportedly expanding his Russia probe into Trump's business transactions, as well as the financial dealings of his associates.

Yesterday's meeting of the ECB did just enough to show that regional policymakers seem to be on course to rein in their two-year old emergency program of QA without upsetting the ‘apple cart.' As expected, the ECB left rates unchanged and their lack of concern on a stronger EUR was enough to give the green light to investors to own even more.

President Draghi is now expected to use the Jackson Hole Federal Reserve conference in August (24-26) to prepare the ground for a bond-buying program tapering announcement in September.

This morning, Canada is expected to report a soft +1.1% rise in y-o-y inflation at 08:30 am EDT, while retail sales should come in at a +0.3% monthly gain.

1. Stocks finish on a flattish note

Following the flattish session in the U.S yesterday, most of the equity markets in Asia and Europe are slightly weaker overnight.

Global equities have continued hitting new fresh highs week amid corporate results that have reinforced faith in earnings and the economy. Asian shares are up more than +4% in the past fortnight, with markets in Japan and Hong Kong near two-year highs.

In Japan, the Nikkei share average retreated overnight as investors took profits on steelmakers and a firmer yen (¥111.68) also soured investors' mood. For the week, the benchmark index dipped -0.1%. The broader Topix dropped -0.2%.

In Hong Kong, shares ended their nine-day winning streak, pulling back from their two-year highs. The Hang Seng index shed -0.1%, ending its longest streak of gains since April 2015. However, it rose +1.3% this week, its second week in the black. The Hang Seng China Enterprises Index was -0.6% lower.

In China, stocks slipped, but ended the week higher, led by strong gains in blue chips. The CSI300 index fell -0.3%, retreating from its 18-month high, while the Shanghai Composite Index lost -0.2%.

In Europe, equities trade are mixed in a lackluster session. The FTSE 100 is a tad higher with help from the telecommunications sector's higher Q1 results.

U.S stocks are set to open in the black (+0.1%).

Indices: Stoxx600 +0.1% at 384, FTSE 0.3% at 7511, DAX +0.1% at 12457, CAC-40 +0.2% at 5208, IBEX-35 -0.1% at 10556, FTSE MIB flat at 21441, SMI +0.2% at 9046, S&P 500 Futures +0.1%

2. Oil nudges higher ahead of OPEC meeting, gold shine's

Ahead of the U.S open, oil prices have pushed higher ahead of a key meeting of major oil producing nations next week.

However, Brent crude is holding below the psychological +$50 per barrel level that was briefly breached yesterday for the first time in six-weeks.

Brent crude futures are up +10c, or +0.2%, at +$49.40 per barrel, while U.S West Texas Intermediate (WTI) crude futures are up +7c, or +0.2% at +$46.99 per barrel.

Note: Both benchmarks hit their highest levels yesterday, having been pushed higher by data showing U.S crude and fuel inventories fell sharply last week.

A global glut is putting pressure on oil prices and key members of OPEC are scheduled to meet non-members in St. Petersburg, Russia, on Monday (July 24) to discuss market conditions and whether more action is needed to support prices.

The ‘bears' don't believe there will be any action from Monday's OPEC/non-OPEC working committee meeting – It's OPEC itself that needs to take further steps to being inventories back to quasi-normal levels.

Gold hit a three-week high this morning and is on track for a second consecutive weekly gain as the dollar tumbled to a 13-month low. Spot gold is up +0.2% at +$1,247.17 per ounce, after hitting its highest since June 29 at +$1,248.30. It has gained about +1.5% so far this week.

3. Yields fall on ECB's dovish comments

The ECB continues to struggle to push up inflation to its desired target, making it difficult for policy makers to dial back monetary stimulus even as the global economy has been showing broad improvement. Draghi's ‘dovish' remarks yesterday gave the green light to own more sovereign debt.

Fixed income buying sent the yield on the benchmark 10-year Treasury note to as low as +2.239% intraday, before settling at +2.25%, its lowest level since June 28. German Bunds fell -3 bps to +0.52%, while U.K Gilts eased -1 bps to+1.19%.

Down-under, comments from Reserve Bank of Australia (RBA) Deputy Governor Debelle stating that the central bank was far from tightening its policy (differs from recent minutes) had yields under pressure. Aussie 10-year yield fell -4 bps to +2.70%, while the three-year yield fell -7 bps to +2.02%.

In Canada, bonds are likely to be more reactive to today's release of CPI and retail sales figures given the Bank of Canada (BoC) recent emphasis on economic data.

4. Dollar under pressure from all sides

The EUR (€1.1645) continues where it left off yesterday, trading atop its two-year high outright and eight-month high against sterling (€0.8973). In yesterday's ECB's press conference, Draghi failed to communicate any unwanted deflationary implications of EUR strength. Also providing support is the markets fixation that the ECB will announce its plan to taper or recalibrate its stimulus at the September 7 meet.

The ‘big' dollar is broadly weaker versus G20 pairs on concerns about the U.S Trump administration, while the pound (£1.2995) is struggling on worries about lack of progress in Brexit talks.

Elsewhere, the AUD at one point tumbled -0.7% overnight to A$0.7880 after RBA commented on 'neutral' interest rate (see below).

5. Comments from the Reserve Bank of Australia (RBA) Deputy Governor

Overnight, RBA Deputy Governor Debelle has cleared up any confusion around the central bank's communication this week.

The AUD had surged after the release of the July minutes on Tuesday – the publication of the RBA's thinking on the 'neutral' cash rate suggested, to some, that Aussie policy makers thought that the current level of official interest rates were too low, and needed to rise soon.

Debelle insisted that that there was 'no' significance to the discussion contained in the RBA's minutes. The discussion was merely procedural. He also said there is nothing compelling the RBA to follow other central banks in hiking interest rates. The RBA makes policy based on domestic fundamentals.

Net result, the RBA seemingly regrets making that discussion public and is a strong sign that it was unhappy with the tightening in financial conditions.

Note: Governor Philip Lowe is due to speak next week.