Sample Category Title

GBP/USD - 1.2650

Original strategy :

Sell at 1.2780, Target: 1.2680, Stop: 1.2815

Position : - 

Target :  -

Stop : -

New strategy  :

Sell at 1.2715, Target: 1.2615, Stop: 1.2750

Position : -

Target :  -

Stop : -

As cable has fallen again and broke below indicated support at 1.2690, adding credence to our view that the rebound from last week’s low at 1.2635 has ended at 1.2818 earlier and below this level would extend recent decline to 1.2600-05, however, near term oversold condition would limit downside to 1.2575-80 and reckon 1.2550 would hold from here, risk from there is seen for a rebound later. 

In view of this, we are looking to sell cable on recovery but at a lower level as 1.2715-20 should limit upside. Only above 1.2755-60 would abort and suggest an intra-day low is formed instead, bring a stronger rebound to 1.2780 but price should falter below said resistance at 1.2818.

EUR/USD - 1.1151

Original strategy  :

Sell at 1.1185, Target: 1.1085, Stop: 1.1220

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.1185, Target: 1.1085, Stop: 1.1220

Position : -

Target :  -

Stop : -

The single currency met resistance at 1.1213 and retreated quite sharply from there, suggesting the rebound from 1.1132 has ended there and retest of said support would be seen, however, break there is needed to confirm recent decline has resumed and extend weakness to previous support at 1.1109, a drop below this level would encourage for subsequent fall to 1.1075-80 which is likely to hold on first testing.

In view of this, we are looking to sell euro on recovery as 1.1185-90 should limit upside. Only above 1.1213-14 (said resistance and 50% Fibonacci retracement of 1.1296-1.1132)  would defer and risk a stronger rebound to 1.1230-35 (61.8% Fibonacci retracement) but upside should be limited to 1.1260-70, bring another decline later.

USD/JPY - 111.45

Original strategy  :

Buy at 111.25, Target: 112.25, Stop: 110.90

Position :  -

Target :  -

Stop : -

New strategy  :

Buy at 111.10, Target: 112.10, Stop: 110.75

Position :  -

Target :  -

Stop : -

As the greenback has maintained a firm undertone after breaking above previous resistance at 111.42, adding credence to our bullish view that the rise from 108.82 low is still in progress for retracement of recent decline from 114.37, hence further gain to 111.90-95 (50% projection of 108.82-111.42-110.65) would be seen, however, overbought condition should prevent sharp move beyond resistance at 112.13 and 112.25 (61.8% Fibonacci retracement of 114.37-108.82 and 61.8% projection) should hold on first testing, price should falter below 112.50.

In view of this, we are looking to buy dollar on pullback as 111.00-05 should limit downside. Below 110.85-90 would defer and suggest a temporary top is formed instead, risk retreat towards previous support at 110.65 but reckon previous resistance at 110.35 would turn into support and contain downside.

The CAC index has posted gains in the Tuesday session. The index has gained 0.37% and is currently trading at 5330.57 points. On the release front, the Eurozone's current account surplus dropped sharply to EUR 22.2 billion, well below the estimate of EUR 31.3 billion. This was the lowest surplus since July 2016.

The Federal Reserve issued a hawkish rate statement at last week's meeting, and the Federal Reserve of New York President Charles Dudley continued the upbeat message on Tuesday. Dudley cautioned the Fed against halting its current tightening cycle. Dudley said that he was not concerned with inflation levels, which are at 1.5 percent. Dudley's upbeat remarks have sent global stock markets higher. If other FOMC members also wax positive about the economy, the odds of a December (or even September) rate hike could increase.

France's long election season is finally over, after the second round of parliamentary elections on Sunday. President Emmanuel Macron's En Marche easily won a majority of seats in the National Assembly, garnering about 61% of the vote. This was somewhat lower than recent polls, which had predicted that Macron would win as much as 80% of the seats in parliament. Still, it's an impressive victory for the young and charismatic Macron, whose party is barely a year old. Macron ran on a pro-business agenda, promising to relax regulations and reform labor laws in order to make the French economy more competitive, but France's powerful trade unions are sure to push back against any legislation that will take away rights or benefits from workers. The unions have not shied away from going on strike or organizing mass protests in past conflicts with the government, so Macron will be hard-pressed to implement reforms while keeping peace on the labor front.

One year after the Brexit referendum, which stunned Britain and the European Union, the two sides formally commenced negotiations on Monday in Brussels. The first day was primarily a photo-shoot opportunity, and the sides were on their best behavior. The parties published a concise Terms of Reference for the negotiations, which provided an outline of the talks as set by the Europeans. The paper pointedly did not mention trade talks, but rather listed the initial issues that will be discussed: 1) legal status of EU citizens in the UK; (2) Northern Ireland/Ireland border; and (3) financial obligations of the UK to the EU. With Prime Minister May trying to cobble together a minority government, her position is much weaker than before the disastrous election, and the British position has become more flexible. Philip Hammond, the British finance minister, has said that he wants a business-friendly and pragmatic Brexit and that no deal would be bad for the UK. Hammond did, however, warn the Europeans not to craft an agreement that punished the UK for leaving the club. The negotiations are expected to resume on July 10, when the parties will delve into substantial issues.

The cross fell back below daily cloud on Tuesday after dovish comments from BoE's Carney. Penetration into daily cloud (spanned between 141.85 and 144.07) and probe above 142.27 (Fibo 38.2% of 148.28/138.66 downleg) was short-lived and generated initial signal of stall.

Thick daily cloud weighs on the pair, along with bearishly aligned technical studies (20/55 SMA bear cross was formed at 142.18 yesterday) and uncertainty at the beginning of Brexit talks.

Fresh bearish acceleration through 100SMA (141.23) and 10SMA/Fibo 38.2% of 138.66/142.54 upleg (141.06) further weakens near-term structure, with daily Tenkan-sen (140.71) coming under increased pressure.

Daily close below 141.06 will be seen as strong bearish signal, while firm break below Tenkan-sen would generate initial signal of an end of corrective phase from 138.66.

Res: 141.23; 141.48; 141.85; 142.27

Sup: 140.71; 140.34; 140.14; 139.58

Daily Pivots: (S1) 1.1122; (P) 1.1167 (R1) 1.1192; More....

EUR/USD is still staying in range of 1.1109/1295 and intraday bias remains neutral. Focus stays on 1.1298 key resistance. Decisive break there will carry larger bullish implication and target 1.1615 resistance next. On the downside, break of 1.1109 support will indicate short term topping and rejection from 1.1298. In such case, intraday bias will be turned to the downside for 1.0838 support.

In the bigger picture, the case for medium term reversal continues to build up with EUR/USD staying far above 55 week EMA (now at 1.0932). Also, bullish convergence condition is seen in weekly MACD. Focus will now be on 1.1298 key resistance. Rejection from there will maintain medium term bearishness and would extend the whole down trend from 1.6039 (2008 high). However, firm break of 1.1298 will indicate reversal. In such case, further rally would be seen back to 1.2042 support turned resistance next.

Daily Pivots: (S1) 0.9714; (P) 0.9737; (R1) 0.9778; More.....

USD/CHF is staying in consolidation above 0.9613 and intraday bias remains neutral at this point. As long as 0.9807 resistance holds, near term outlook remains bearish and deeper fall is expected. Below 0.9613 will extend the whole decline from 1.0342 to 0.9548 support and below. We'd start to look for bottoming signal again as it approaches 0.9443 key support level. However, considering bullish convergence condition in 4 hour MACD, break of 0.9807 will indicate near term reversal and turn outlook bullish for 1.0099 resistance next.

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.

Daily Pivots: (S1) 1.2700; (P) 1.2757; (R1) 1.2792; More...

GBP/USD's fall accelerates today but for the moment, it's still staying above 1.2614/33 support zone. Intraday bias stays neutral at this point. overall, we're still favoring the bearish case. That is, consolidation pattern from 1.1946 has completed at 1.3047 already. Break of 1.2614 resistance turned support should confirm our bearish view and target a test on 1.1946 low next. However, break of 1.2813 resistance will dampen our view and turn bias back to the upside for 1.3047 and above.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. Price actions from 1.1946 medium term low are seen as a consolidation pattern, which could have completed after hitting 55 week EMA. Break of 1.1946 low will target 61.8% projection of 1.5016 to 1.1946 from 1.3047 at 1.1150 next. In case the consolidation from 1.1946 extends, outlook will stay remain bearish as long as 1.3444 resistance holds.

Sterling dives broadly today after BoE Governor Mark Carney tried to talk down rate hike expectations and said it's not the time yet. Meanwhile, Canadian dollar was also pressured as WTI crude oil tumbles through 43.76 support to as low as 42.93, hitting the lowest level since November. The Japanese Yen rebounds as risk appetite recedes. Meanwhile, Dollar and Euro are trading mixed. Technically, key focuses in US session will be on whether GBP/USD would take out 1.2633 support, and whether EUR/GBP would take out 0.8865 resistance.

BoE Carney: "Now is not yet the time"

BoE Governor Mark Carney said in his Mansion House speech that "now is not yet the time to begin that adjustment" of monetary policies. He added that "different members of the MPC will understandably have different views about the outlook and therefore on the potential timing of any Bank Rate increase. But all expect that any changes would be limited in scope and gradual in pace." For him, he would like to see "the extent to which weaker consumption growth is offset by other components of demand, whether wages begin to firm, and more generally, how the economy reacts to the prospect of tighter financial conditions and the reality of Brexit negotiations."

Talking about Brexit, Chancellor of Exchequer Philip Hammond said in the Mansion House speech and urged to ensure a "smooth pathway to a deep and special future partnership with our EU neighbors". And he emphasized a way that "protects jobs, prosperity, and living standards in Britain will require every ounce of skill and diplomacy." And, the government must avoid "unnecessary disruption and dangerous cliff edges."

SNB Jordan: Stimulus exit will be difficult, bumpy

SNB Chairman Thomas Jordan said in a conference that exit from the current monetary stimulus will be "difficult" and "may be a bumpy road". But, by then, "it is also positive that we are at the point where we can talk about normalization." For now, negative interest rates and currency market intervention help keep the Swiss Franc on track. The Swiss State Secretariat for Economic Affairs cut the country's GDP forecast for 2017 to 1.4%, down from 1.6%. For 2018, growth projection was held unchanged at 1.9%. SECO kept 2017 inflation projection unchanged at 0.5%. However, for 2018, inflation forecast was lowered to 0.2%, down from 0.3%.

RBA minutes added nothing new

RBA minutes showed that the central bank was confident that growth will pick up again the the weak Q1. Nonetheless, the board cautioned the developments in labor and housing markets and said they "warranted careful monitoring". In particular, the minutes said that "members observed that low growth in incomes, along with high levels of household debt, appeared to have been constraining growth in household consumption." Overall, the minutes added little to what Governor Philip Lowe said yesterday. Lowe painted an optimistic picture and said that growth over the next couple of years will be "a bit stronger than it has been recently".

On the data front

US current account deficit widened to USD -116.8b in Q1. Canada wholesale sales rose 1.0% mom in April. Eurozone current account surplus narrowed to EUR 22.2b in April. German PPI dropped -0.2% mom, rose 2.8% yoy in May. Australia house price index rose 2.2% qoq in Q1.

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.2700; (P) 1.2757; (R1) 1.2792; More...

GBP/USD's fall accelerates today but for the moment, it's still staying above 1.2614/33 support zone. Intraday bias stays neutral at this point. overall, we're still favoring the bearish case. That is, consolidation pattern from 1.1946 has completed at 1.3047 already. Break of 1.2614 resistance turned support should confirm our bearish view and target a test on 1.1946 low next. However, break of 1.2813 resistance will dampen our view and turn bias back to the upside for 1.3047 and above.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. Price actions from 1.1946 medium term low are seen as a consolidation pattern, which could have completed after hitting 55 week EMA. Break of 1.1946 low will target 61.8% projection of 1.5016 to 1.1946 from 1.3047 at 1.1150 next. In case the consolidation from 1.1946 extends, outlook will stay remain bearish as long as 1.3444 resistance holds.

Economic Indicators Update

Sterling was in trouble during Tuesday’s trading session with prices tumbling to a weekly low at 1.2668 after Mark Carney suggested that interest rates should be kept on hold amid Brexit uncertainty. It is becoming clear that the rising fears of Brexit negotiations negatively impacting economic growth continues to weigh heavily on sentiment while prolonged periods of uncertainty has ensured Pound weakness remains a recurrent theme. With both consumer spending and business investments dishing out mixed signals,and tepid wage growth still a cause for concern, 'now is not yet the time to raise interest rates' according to Mark Carney.

While last week’s unexpected hawkish rebellion at June’s BoE meeting supported expectations of the central bank taking action, the ongoing Brexit woes coupled with political instability in Westminster should encourage the Bank of England to 'stand pat' moving forward. Although raising interest rates may curb inflation, it could end up punishing borrowers, consequently sapping business confidence and hitting consumers further.

EU secures first victory on Brexit timetable

Sterling bears were back in actionon Monday after the first round of the formal Brexit negotiations concluded with Britain backing down and accepting the European Union’s timetable for Brexit. With the European Union already leading the way and making demands in the early stages of talks, it does raise questions over who is really in charge. The Pound may turn extremely sensitive as the talks get under way with any signs of complications likely exposing the currency to further downside.

From a technical standpoint, the GBPUSD is coming under increasing pressure on the daily charts. Ongoing weakness below 1.2775 should offer sellers enough inspiration to send prices towards 1.2600.

Equity bulls are back in town

Financial markets have roared back to life after a solid rebound in technology stocks and optimism over French President Emmanuel Macron’s extraordinary electoral victory boosted risk sentiment. European stock markets ventured into the green territory on Monday while US equities concluded at record highs amid the renewed appetite for risk.

Although Asian indexes were mostly mixed during early trading on Tuesday, equity bulls could receive enough inspiration to elevate Asian markets higher if MSCI decides to include China A-shares in its globally tracked Emerging Market Index. An acceptance by MSCI would be highly beneficial for the second largest economy in the world and may mark a crucial step for Beijing as it embarks on opening its financial markets in a bidto attractforeign investment.

Dollar boosted by Fed hawks

Dollar bullish investors were injected with inspiration on Monday following hawkish comments from New York Federal Reserve Bank President William Dudley thatsupported expectations of the Federal Reserve raising rates further this year. Although Dudley displayed optimism over the health of the US economy, I feel the macro-fundamentals from the States need to display ongoing signs of stability before investors adopt a similar school of thought. With the data calender relatively light this week, the Greenback could edge higher if other Fed officials share similar hawkish viewsto Dudley.

From a technical standpoint, the Dollar Index has found some ground on the daily charts. A breakout above the 97.75 lower high should encourage a further incline towards 98.00.

Commodity spotlight – Gold

Gold was exposed to heavy losses on Monday with prices descending towards $1240 as the Dollar appreciated. The downside was complimented by hawkish comments from a top Federal Reserve official which boosted hopes of the Fed raising US rates again this year. Although the ongoing uncertainty over Brexit talks and political uncertainty in the US may support the commodity in the medium to longer term, short term bears still remain in control below $1260. From a technical standpoint, Gold is pressured on the daily charts with bears eyeing $1240.