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Market movers today

Today, PMI services indices in June for several countries are due out . Especially the UK index may at tract attention, as both the manufacturing and construction indices fell, suggest ing GDP growth might have remained weak in Q2 after the slow growth in Q1.

In the Nordics, Swedish production data for May is due out at 09:30 CET and Norwegian house prices in June at 11:00 CET.

In the US, the FOMC minutes from the June meeting are due out at 20:00 CET. We will look out for comments on when the Fed will start ‘quantitat ive tightening' (shrinking the balance sheet ) and internal discussions about how the FOMC members see the trade-off between low unemployment and low inflation.

We expect the Polish central bank to maintain the policy rate at 1.50%. See also Flash Comment: Too early for NBP to join the hawkish camp, 4 July 2017.

Selected market news

It has been a quiet night both in terms of market news and price act ion. Most important is the escalation of the North Korea crisis after the missile launch yesterday, see also Flash Comment: Further escalation of the North Korea crisis, 4 July 2017. The launch is further testimony that North Korea is continuing to move on with its nuclear ambit ions. Today at 20:00 CET, t he UN Security Council is due to meet to discuss the situation. It will also be discussed at the upcoming G20 meeting, as Japan, South Korea and the US are scheduled to have trilateral meeting about what t o do. Japan's P rime Minist er Shinzō Abe has also said he wants to discuss it with his Russian and Chinese counterparts.

Yesterday, the Riksbank kept the policy rate unchanged and removed its small rate cut probability in the updated rate path as expected. There were no signs of hawkishness in the statement . Indeed, quite the opposite. The Riksbank argues that growth is strong and inflation is approaching 2%, but adds that a continued expansionary policy is needed to stabilise inflation around 2%. The international economic backdrop has improved and setback risks have declined, but global inflationary pressures are deemed to st ill be subdued. It seems the Riksbank is uncertain about the stability of inflation expectations given the long-term sub-target development

Daily Pivots: (S1) 1.0937; (P) 1.0947; (R1) 1.0961; More...

EUR/CHF edges higher with weak momentum. Intraday bias is cautiously on the upside for 1.0986/0999 resistance zone. Break there will extend whole rally from 1.0629 to 61.8% projection of 1.0652 to 1.0986 from 1.0830 at 1.1036. Meanwhile, below 1.0931 minor support will bring more consolidation before staging another rally.

In the bigger picture, the price actions from 1.1198 are seen as a corrective move. Such correction could have completed after defending 38.2% retracement of 0.9771 to 1.1198 at 1.0653. Decisive break of 1.0999 resistance will target a test on 1.1198 high. For now, this will be the preferred case as long as 1.0830 support holds.

A note on lower timeframe confirming price action...

Waiting for lower timeframe confirmation is our main tool to confirm strength within higher timeframe zones, and has really been the key to our trading success. It takes a little time to understand the subtle nuances, however, as each trade is never the same, but once you master the rhythm so to speak, you will be saved from countless unnecessary losing trades. The following is a list of what we look for:

• A break/retest of supply or demand dependent on which way you're trading.
• A trendline break/retest.
• Buying/selling tails ... essentially we look for a cluster of very obvious spikes off of lower timeframe support and resistance levels within the higher timeframe zone.
• Candlestick patterns. We tend to only stick with pin bars and engulfing bars as these have proven to be the most effective.

We typically search for lower-timeframe confirmation between the M15 and H1 timeframes, since most of our higher-timeframe areas begin with the H4. Stops are usually placed 1-3 pips beyond confirming structures.

EUR/USD

For those who read Tuesday's report you may remember the desk highlighting the H4 resistance area at 1.1372-1.1390 as a possible sell zone. As you can see, price respected this area so well done to any of our readers who managed to jump aboard this move.

With the unit now seen consolidating around the 1.1350 mark, we still believe that there's room for price to drive lower today, at least until we reach the top edge of the daily support area at 1.1327: the next downside target on that timeframe. Moreover, let's not forget that weekly price is also trading within the walls of a major supply zone drawn from 1.1533-1.1278, which has capped upside since May 2015!

Our suggestions: Selling at current prices is not something our team would agree to, simply because the risk/reward would be unfavorable. However, should H4 price retest the said resistance area again today, this may tempt us to begin looking to sell again. What would be ideal here is for price to fake above the area and tag in offers positioned around the 1.14 handle lurking above. This move would trigger stops/breakout buyers' orders lurking above 1.1372-1.1390 and likely provide the big boys enough liquidity to short from 1.14.

Data points to consider: FOMC meeting minutes at 7pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1.1372-1.1390 – Ideally looking for price to fake this area and connect with 1.14 before a sell is permitted (stop loss: beyond the fakeout candle's wick).

GBP/USD

In recent trading, May's opening level at 1.2927 failed to offer support to this market and is, at the time of writing, being retested as a resistance. Selling this line is difficult given that just beneath here sits the 1.29 handle, followed closely by June's opening level at 1.2869. Whilst either line could halt further selling, it may be worth noting that the weekly timeframe shows that the bears are beginning to make an appearance from the supply zone marked at 1.3120-1.2957. In addition to this, the pair is also seen interacting with a supply zone at 1.3058-1.2979, which is essentially a partner supply to the aforementioned weekly area.

Our suggestions: Technically speaking, the path south would only be clear for selling once June's opening level at 1.2869 is cleared. According to H4 structure, the 1.28 handle would then likely be the next hurdle on the hit list. Nevertheless, traders will need to be prepared for price to stall/reverse above this number since let's remember that the top edge of a daily support area is located at 1.2818.

Therefore, until we see a H4 close beyond 1.2869, we are going to remain on the sidelines for the time being.

Data points to consider: UK Services PMI at 9.30am. FOMC meeting minutes at 7pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

AUD/USD 

In response to the RBA's rate statement on Tuesday the commodity currency plunged south, consequently breaking through both the H4 mid-level support at 0.7650 and April's opening level at 0.7632. It was only once price shook hands with the H4 trendline support etched from the high 0.7635 (and its converging round number 0.76/H4 61.8% Fib support at 0.7603), did we see any sign of stabilization. What's also notable from a technical perspective is that the recent move south brought weekly price down to the top edge of a support area coming in at 0.7610-0.7543. Daily action on the other hand shows room to continue pushing lower down to the support area formed at 0.7556-0.7523, which happens to be glued around the lower edge of the current weekly support area.

Our suggestions: The space seen on the daily timeframe for price to move lower is a little concerning. Nevertheless, the 0.76 boundary on the H4 chart not only boasts attractive H4 confluence, it is also bolstered nicely by the said weekly support area. As such, we firmly believe that this unit is going to touch gloves with 0.7632, and possibly even the 0.7650 level today.

In the event that the current H4 candle closes as is, we will long this market with stops tightly positioned beneath the candle's tail at 0.7597, and look to ride this market up to at least 0.7650.

Data points to consider: FOMC meeting minutes at 7pm GMT+1.

Levels to watch/live orders:

• Buys: Looking to buy the current H4 candle should it close as is (stop loss: 0.7597).
• Sells: Flat (stop loss: N/A).

USD/JPY

Reporting from the weekly timeframe this morning, we can see that price is currently lurking just ahead of a supply coming in at 115.50-113.85. Assuming that the unit connects with this area, it could also form a possible AB=CD correction (see pink arrows). Looking down to the daily timeframe, there's now a trendline resistance taken from the high 115.50 in play, which could, despite what we've noted on the weekly timeframe, bring the pair back down to a support area seen at 111.35-112.37.

In recent hours, H4 price crossed swords with the 113 handle. Unfortunately, it's tricky to know whether this handle will hold firm or give way, since we have conflicting signals on the higher timeframes at the moment (see above).

Our suggestions: Personally, there is very little that interests us in this market this morning. No matter which way once chooses to trade, you will be going up against higher-timeframe flow!

Data points to consider: FOMC meeting minutes at 7pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

USD/CAD

For those who read Tuesday's report on the USD/CAD you may recall our desk suggesting that they were willing to sell this market should we see a H4 bearish close form below 1.30. As you can see this did come to fruition, consequently permitting us to sell at 1.2989, with a stop-loss order positioned a little above 1.3015. Price came within a few pips of our stop but somehow managed to survive and drive down to the H4 demand at 1.2910-1.2923: the first take-profit zone. We still have 30% of our position running in this market, since both weekly and daily charts show room for lower prices, with the closest area of support coming in at a daily demand drawn from 1.2822-1.2883. Well done to any of our readers who managed to jump aboard this move!

Our suggestions: As noted above, we still have some of our current position in the market, so we have absolutely no intention of trying to buy from the current H4 demand, or the 1.29 handle lurking below it!

Data points to consider: FOMC meeting minutes at 7pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (Stop loss: N/A).
• Sells: 1.2989 ([live] stop loss: breakeven).

USD/CHF 

For those who have been following recent reports you may recall that our team is long from 0.9567. Our reasoning behind the position came down to the higher-timeframe picture. The green area shown on the H4 chart is comprised of a weekly support level at 0.9581 and a daily support level pegged at 0.9546.

Initially, we had our stop beneath the green zone at 0.9544, but seeing as how the Swissy recently took off north, the stop was placed at breakeven. In addition to this, we also removed 70% of the position off the table once price struck weekly resistance at 0.9639.

We're going to hold the remaining 30% in the market since if the weekly resistance level is taken out, which we feel may well occur, June's opening level at 0.9680 will be the next area in the firing range, thus making it an ideal place to close the remainder of our position.

Our suggestions: Apart from our current trade, we do not see a lot to hang our hat on.

Data points to consider: FOMC meeting minutes at 7pm GMT+1.

Levels to watch/live orders:

• Buys: 0.9567 ([live] stop loss: breakeven).
• Sells: Flat (stop loss: N/A).

DOW 30

The DOW 30, as you can see, is effectively unchanged this morning. Price spent yesterday loitering around the H4 trendline support extended from the high 21541. With that in mind, the following report will echo thoughts put forward in Tuesday's analysis…

In Friday's report, we mentioned that our desk took a long trade at 21323, following the large H4 bull candle that formed off the H4 support level marked at 21268. What attracted us to this point was that the H4 level converged with a H4 61.8% Fib support level at 21275 taken from the low 21108 as well as a H4 127.2% Fib ext. point 21237 drawn from the high 21541 and also because of the daily demand at 21192-21254. Our stop-loss order has now been moved to breakeven and 50% of our position was taken off the table once price connected with the said H4 trendline. We have left the remaining 50% in the market to run as we believe that this index has the potential to punch much higher yet!

Our suggestions: Given our current long position, our desk is watching for the H4 trendline to now hold as support. This could, given that the weekly, daily and H4 charts show absolutely no overhead resistance, also be a reasonable level to look for possible long opportunities.

Should price break into fresh highs today, however, we are going to move our stop-loss order up to the 21400 neighborhood.

Data points to consider: FOMC meeting minutes at 7pm GMT+1.

Levels to watch/live orders:

• Buys: 21323 ([live] stop loss: breakeven).
• Sells: Flat (stop loss: N/A).

GOLD

Recent action shows that the yellow metal extended its bounce from the H4 demand base at 1216.7-1219.3, and is now within striking distance of a H4 resistance area seen at 1229.1-1231.6. Surrounding the demand zone is both a weekly demand at 1194.8-1229.1 and a daily demand (seen within the walls of the weekly barrier) at 1214.1-1225.5.

While a bounce from the aforementioned H4 resistance area may come to fruition, we would not be keen sellers here. This is largely due to the higher-timeframe demands currently in play. A level that has sparked some interest, however, is the H4 resistance base penciled in at 1235.0, due to its connection with the daily trendline resistance seen extended from the low 1180.4. Still, shorting from this line would still entail one going against potential weekly buying power.

Our suggestions: For us personally, we are not going to be taking any trades in this market at the moment. Typically, we try to avoid trading against higher-timeframe flow.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

Global Markets:

• Asian stock markets: Nikkei down 0.45 %, Shanghai Composite gained 0.80 %, Hang Seng rose 0.40 %, ASX 200 fell 0.10 %
• Gold at $1228, Silver at $16.15, WTI Oil at $47.00, Brent Oil at $49.50
• US 10 year yield at 2.32, UK 10 year yield at 1.25, German 10 year yield at 0.48

News & Data:

• Chinese Caixin Services PMI Jun: 51.6 (prev 52.8)
• Chinese Caixin Composite PMI Jun: 51.1 (prev 51.6)
• New Zealand ANZ Commodity Price Jun: 2.1% (prev 3.20%)
• Australian AiG Perf of Services Index Jun: 54.8 (prev 51.5)
• UK BRC Shop Price Index (Y/Y) Jun: -0.3% (prev -0.4%)
• PBoC Fixes USDCNY Reference Rate At 6.7922 (prev fix 6.7981 prev close 6.8005)

Markets Update:

The Dollar remained bid overnight. However, this seems more like a small recovery before the downtrend continues rather than the beginning of a reversal. The Fed's rate path is now quite clear, and unless economic data surprises, there will not be a rate hike until December. Meanwhile, rate expectations in other countries are rising – which is making the Dollar less attractive.

The Euro is likely to find good support ahead of 1.1320. Buying interest remains high and the charts suggest further gains are ahead. In the near-term, the pair could soon test 1.15, especially if US jobs data on Friday disappoints.

GBPUSD came slightly under pressure, but managed to stay above 1.29. Key support is seen at 1.2850. Meanwhile, the Australian Dollar is struggling following yesterday's RBA meeting. Short-term technicals remain slightly positive as long as AUDUSD is above 0.75. A break below 0.75 support could signal a pullback to at least 0.72.

Economic Calendar:

• 08:45 BST – Italian Services PMI
• 08:50 BST – French Services PMI
• 08:55 BST – German Services PMI
• 09:00 BST – Euro Zone Services PMI
• 10:00 BST – Euro Zone Retail Sales
• 19:00 BST – FOMC Meeting Minutes

Daily Pivots: (S1) 1.1327; (P) 1.1352 (R1) 1.1368; More.....

EUR/USD is staying in consolidation from 1.1444 and intraday bias remains neutral for the moment. Downside of retreat should be contained by 1.1291 support to bring rise resumption. Break of 1.1444 will extend the rally from 1.0339 low to 1.1615 resistance next.

In the bigger picture, the firm break of 1.1298 resistance further affirm medium term reversal. That is an important bottom was formed at 1.0339 on bullish convergence condition in weekly MACD. Further rise would be seen to 55 month EMA (now at 1.1776). Sustained break there will pave the way to 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516 next. This will now remain the favored case as long as 1.1118 support holds.

For the 24 hours to 23:00 GMT, the AUD declined 0.69% against the USD and closed at 0.7608.

LME Copper prices declined 0.8% or $47.0/MT to $5847.0/MT. Aluminium prices declined 0.7% or $14.0/MT to $1903.5/MT.

In the Asian session, at GMT0300, the pair is trading at 0.7621, with the AUD trading 0.17% higher against the USD from yesterday's close.

Data released overnight showed that Australia's AiG performance of services index climbed to a level of 54.8 in June, expanding for the fourth straight month and notching its highest level since December 2016. In the prior month, the index had registered a level of 51.5.

Elsewhere in China, Australia's largest trading partner, the Caixin/Markit services PMI eased to a level of 51.6 in June, compared to a level of 52.8 in the prior month.

The pair is expected to find support at 0.7580, and a fall through could take it to the next support level of 0.7540. The pair is expected to find its first resistance at 0.7672, and a rise through could take it to the next resistance level of 0.7724.

Moving ahead, Australia's trade balance data for May, slated to release tomorrow, will be on investors' radar.

The currency pair is trading between its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the EUR declined 0.13% against the USD and closed at 1.1353.

Macroeconomic data showed that the Euro-zone's producer price index (PPI) rose less-than-expected by 3.3% on a yearly basis in May, rising at its weakest pace in five months. The PPI had recorded a gain of 4.3% in the prior month, while markets had anticipated a rise of 3.5%.
In the Asian session, at GMT0300, the pair is trading at 1.136, with the EUR trading 0.06% higher against the USD from yesterday's close.

The pair is expected to find support at 1.1339, and a fall through could take it to the next support level of 1.1319. The pair is expected to find its first resistance at 1.1377, and a rise through could take it to the next resistance level of 1.1395.

Looking ahead, investors will closely monitor the final Markit services PMI for June across the Euro-zone coupled with the region's retail sales data for May, both slated to release in a few hours. Moreover, market participants will direct their attention towards the FOMC June meeting minutes, due to release later today, to get clues on the timing of the next interest rate hike and Fed's plans to trim the balance sheet. Also, the US factory orders and final durable goods orders, both for May will be eyed by traders.

The currency pair is trading above its 20 Hr moving average and showing convergence with its 50 Hr moving average.

Daily Pivots: (S1) 1.2900; (P) 1.2929; (R1) 1.2946; More...

GBP/USD is staying in consolidation below 1.3029 and intraday bias remains neutral first. While deeper retreat cannot be ruled out, downside should be contained above 1.2849 support to bring rise resumption. Break of 1.3029 should then send GBP/USD through 1.3047 to 61.8% projection of 1.2108 to 1.3047 from 1.2588 at 1.3168 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 now in favor, 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.

Daily Pivots: (S1) 0.9630; (P) 0.9644; (R1) 0.9668; More......

USD/CHF is staying in consolidation above 0.9551 and intraday bias remains neutral. Near term outlook remains bearish as long as 0.9777 resistance holds. Below 0.9551 will will extend the decline from 1.0342 to 0.94443 key support level. At this point, we'd expect strong support from there to bring rebound. Meanwhile, break of 0.9777 will now indicate short term reversal, on bullish convergence condition in 4 hour MACD.

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.

For the 24 hours to 23:00 GMT, the GBP declined 0.12% against the USD and closed at 1.2928, on the back of downbeat construction sector data in the UK.

Data indicated that Britain's Markit construction PMI dropped to a level of 54.8 in June, more than market expectations for a fall to a level of 55.0, further muddying the growth picture of economy. The PMI had recorded a level of 56.0 in the prior month.

In the Asian session, at GMT0300, the pair is trading at 1.2938, with the GBP trading 0.08% higher against the USD from yesterday's close.

Overnight data revealed that the nation's BRC shop price index fell 0.3% in June, following a drop of 0.4% in the previous month.

The pair is expected to find support at 1.2914, and a fall through could take it to the next support level of 1.2891. The pair is expected to find its first resistance at 1.2960, and a rise through could take it to the next resistance level of 1.2983.

Going ahead, market participants will focus on UK's Markit services PMI for June, slated to release in a few hours.

The currency pair is trading above its 20 Hr moving average and showing convergence with its 50 Hr moving average.