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RBA’s Governor Lowe Expects Stronger Growth In Australia In Coming Years
For the 24 hours to 23:00 GMT, the AUD rose 0.5% against the USD and closed at 0.7624 on Friday.
LME Copper prices rose 0.3% or $18.5/MT to $5655.5/MT. Aluminium prices declined 0.2% or $3.0/MT to $1861.0/MT.
In the Asian session, at GMT0300, the pair is trading at 0.7622, with the AUD trading a tad lower against the USD from Friday's close.
Overnight, the Reserve Bank of Australia's (RBA) Governor, Philip Lowe, remained upbeat over Australian economy, stating that Australia's economic growth over the next couple of years will be a bit stronger than it has been recently.
The pair is expected to find support at 0.7589, and a fall through could take it to the next support level of 0.7555. The pair is expected to find its first resistance at 0.7643, and a rise through could take it to the next resistance level of 0.7663.
Moving ahead, market participants will focus on the Reserve Bank of Australia's (RBA) June meeting minutes, scheduled to release tomorrow.
The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.
Trade Idea : EUR/USD – Sell at 1.1235
EUR/USD - 1.1203
Most recent candlesticks pattern : N/A
Trend : Near term down
Tenkan-Sen level : 1.1199
Kijun-Sen level : 1.1174
Ichimoku cloud top : 1.1214
Ichimoku cloud bottom : 1.1163
Original strategy :
Sell at 1.1220, Target: 1.1120, Stop: 1.1255
Position : -
Target : -
Stop : -
New strategy :
Sell at 1.1235, Target: 1.1135, Stop: 1.1270
Position : -
Target : -
Stop : -
As the single currency has continued trading with a firm undertone and near term upside risk remains for the rebound from 1.1132 (last week’s low) to extend gain towards 1.1230-35 (61.8% Fibonacci retracement of 1.1296-1.1132), however, if our view that top has been formed at 1.1296 is correct, upside should be limited and bring retreat later, below 1.1155-60 would bring retest of 1.1132, break there would extend recent decline from 1.1296 top to previous support at 1.1109.
In view of this, we are looking to sell euro on further recovery as 1.1230-35 (61.8% Fibonacci retracement of 1.1296-1.1132) should limit upside and bring another decline. Above 1.1260-70 would defer and risk a stronger rebound but price should falter well below said resistance at 1.1296, bring another decline later.
Euro-Zone’s Annual Inflation Confirmed At 1.4% In May
For the 24 hours to 23:00 GMT, the EUR rose 0.45% against the USD and closed at 1.1200 on Friday.
Macroeconomic data showed that the Euro-zone's final consumer price index advanced 1.4% on an annual basis in May, confirming the flash estimate and following a gain of 1.9% in the previous month.
The greenback lost ground against a basket of major currencies on Friday, following downbeat US economic data that raised fresh doubts over the state of the nation's economy.
The US flash Reuters/Michigan consumer sentiment index dropped more-than-expected to a level of 94.5 in June, suggesting that consumers are losing confidence over the country's growth prospects amid ongoing political unrest in Washington. In the preceding month, the index had registered a reading of 97.1, while market participants expected for drop to a level of 97.0. Moreover, the nation's housing starts dipped to an eight-month low level on a monthly basis in May, after it unexpectedly fell 5.5%, to an annual rate of 1092.0K, compared to a revised reading of 1156.0K in the previous month. Markets were expecting housing starts to rise to a level of 1220.0K. Further, the nation's building permits surprisingly eased 4.9% MoM, to an annual rate of 1168.0K in May, while investors had envisaged it to climb to a level of 1249.0K and following a revised reading of 1228.0K in the previous month. Also, the nation's labour market conditions index declined more-than-expected to a level of 2.3 in May, compared to a revised reading of 3.7 in the previous month.
In the Asian session, at GMT0300, the pair is trading at 1.1196, with the EUR trading slightly lower against the USD from Friday's close.
Over the weekend, the French President, Emmanuel Macron, won a decisive majority in French parliamentary elections.
The pair is expected to find support at 1.1154, and a fall through could take it to the next support level of 1.1113. The pair is expected to find its first resistance at 1.1222, and a rise through could take it to the next resistance level of 1.1249.
Going ahead, investors will look forward to the Euro-zone's construction output data for April, slated to release in a few hours. Moreover, in the US, a speech by William Dudley, due later in the day, will be on investors' radar.
The currency pair is trading above its 20 Hr and 50 Hr moving averages.
UK Set To Kick-Off Brexit Negotiations Today
For the 24 hours to 23:00 GMT, the GBP rose 0.24% against the USD and closed at 1.2784 on Friday.
In the Asian session, at GMT0300, the pair is trading at 1.2770, with the GBP trading 0.11% lower against the USD from Friday's close, as political uncertainty continues to run high as Britain begins its negotiations to exit the European Union today.
Overnight data revealed that UK's Rightmove house prices declined 0.4% MoM in June, following a gain of 1.2% in the previous month.
The pair is expected to find support at 1.2751, and a fall through could take it to the next support level of 1.2732. The pair is expected to find its first resistance at 1.2797, and a rise through could take it to the next resistance level of 1.2824.
The currency pair is trading below its 20 Hr moving average and showing convergence with its 50 Hr moving average.
Japanese Adjusted Merchandise Trade Surplus Unexpectedly Narrowed In May
For the 24 hours to 23:00 GMT, the USD slightly declined against the JPY and closed at 110.83 on Friday.
The Bank of Japan (BoJ) Governor, Haruhiko Kuroda, stated that inflation is still far from reaching the BoJ’s 2.0% target and thus it is “inappropriate” to say how the central bank would exit its massive stimulus programme.
In the Asian session, at GMT0300, the pair is trading at 110.99, with the USD trading 0.14% higher against the JPY from Friday’s close.
Overnight data showed that Japan’s adjusted merchandise trade surplus surprisingly narrowed to a level of ¥133.8 billion in May, compared to market expectations for it to widen to a level of ¥345.5 billion and after recording a revised surplus of ¥157.6 billion in the prior month.
The pair is expected to find support at 110.62, and a fall through could take it to the next support level of 110.25. The pair is expected to find its first resistance at 111.39, and a rise through could take it to the next resistance level of 111.79.
The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average
Trade Idea : USD/JPY – Buy at 110.35
USD/JPY - 111.08
Most recent candlesticks pattern : N/A
Trend : Near term up
Tenkan-Sen level : 110.96
Kijun-Sen level : 111.04
Ichimoku cloud top : 110.71
Ichimoku cloud bottom : 110.05
Original strategy :
Buy at 110.35, Target: 111.35, Stop: 110.00
Position : -
Target : -
Stop : -
New strategy :
Buy at 110.35, Target: 111.35, Stop: 110.00
Position : -
Target : -
Stop : -
Dollar’s retreat after meeting resistance at 111.42 has retained our view that consolidation below this level would be seen and pullback to 110.30-35 (50% Fibonacci retracement of 109.27-111.42) cannot be ruled out, however, renewed buying interest should emerge there and bring rebound later, above 111.25-30 would bring retest of 111.42 but break there is needed to confirm the rise from 108.82 low has resumed for retracement of recent decline from 114.37 to 111.60 (50% Fibonacci retracement of 114.37-108.82) and then test of previous resistance at 111.71 but price should falter well below another resistance at 112.13.
In view of this, we are looking to buy dollar on pullback but one should exit on next rise. Below 110.05-10 (61.8% Fibonacci retracement of 109.27-111.42) would abort and signal top has been formed, bring further fall to 109.85-90 and possibly towards 109.50 but support at 109.27 should remain intact.
Swiss Franc Reverses Its Gains In The Asian Session
For the 24 hours to 23:00 GMT, the USD declined 0.23% against the CHF and closed at 0.9728 on Friday.
In the Asian session, at GMT0300, the pair is trading at 0.9737, with the USD trading 0.09% higher against the CHF from Friday’s close.
The pair is expected to find support at 0.9724, and a fall through could take it to the next support level of 0.9710. The pair is expected to find its first resistance at 0.9754, and a rise through could take it to the next resistance level of 0.9770.
With no major economic releases in Switzerland today, investors will look forward to global events for further direction.
The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.
Loonie Trading A Tad Lower In The Morning Session
For the 24 hours to 23:00 GMT, the USD declined 0.3% against the CAD and closed at 1.3214 on Friday.
In the Asian session, at GMT0300, the pair is trading at 1.3215, with the USD trading marginally higher against the CAD from Friday’s close.
The pair is expected to find support at 1.3192, and a fall through could take it to the next support level of 1.3169. The pair is expected to find its first resistance at 1.3256, and a rise through could take it to the next resistance level of 1.3297.
The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.
EUR/AUD Daily Outlook
Daily Pivots: (S1) 1.4664; (P) 1.4730; (R1) 1.4771; More...
No change in EUR/AUD's outlook. We continue to expect strong support from 1.4669, near to 55 days EMA at 1.4689, to contain downside and bring rebound. Break of 1.4897 minor resistance will argue that pull back from 1.5226 has completed and turn bias back to the upside for retesting 1.5226 high first. However, sustained break of 1.4669 will argue that rise from 1.3642 is completed and bring deeper pull back to 1.4309 resistance turned support.
In the bigger picture, price actions from 1.6587 medium term top are viewed as a corrective pattern. Such correction should be completed at 1.3624 after defending 1.3671 key support. Rise from 1.3642 would extend to 61.8% retracement of 1.6587 to 1.3624 at 1.5455. Sustained break there will pave the way to retest 1.6587. However, sustained break of 1.4669 support will dampen this bullish view. We'll assess the outlook later after looking at the structure and depth of the pull back.
The PMI Releases In The Euro Area And The US
Market movers today
The data calendar is fairly thin this week, with the PMI releases in the euro area and the US as the most noteworthy global data releases. The main focus will instead be on political developments in the UK and France in the aftermath of the parliamentary elections in the two count ries on 8 June and yesterday, respectively.
Furthermore, in the UK, Brexit negot iations are bound to begin. We have writ ten intensively about the UK polit ical situat ion since the elect ion, for more see Research UK: May stats (for now) due to Brexit uncertainties, Research UK: Minority government is weak from the beginning and Research UK: Hung parliament adds government risk premium to GBP.
In the US, we will look out for any comments in speeches by FOMC members about what drove the decision on the June rate hike, which in our view was not justified by the data.
Selected market news
Global risk sent iment is solid this morning following a clear win for Emmanuel Macron and his party En Marche in the final round of the parliamentary elect ions in France yesterday. Asian equity markets are most ly up and the typically safe-haven Japanese yen is weaker against the EUR and USD. According to preliminary est imates, Macron’s part y La République en Marche and its cent rist ally Modem secured 355 of the 577 seats in the Nat ional Assembly. Hence, President Macron will enjoy a sizable majority in the French parliament , which will help him in push through an ambit ious reform agenda aimed at reinvigorat ing the French economy. Le Pen and her Party the Nat ional Front secured eight seats in parliament . However, it was also noteworthy that voter turnout was at an historical low at 44%, suggest ing widespread apathy with the current polit ical environment in France.
The Brexit negot iat ions are due to begin between the UK and EU representat ives at 11:00 today in Brussels. The launch of the negot iat ions comes at a time when Theresa May is struggling to hang on to her job. According to the UK newspaper The Times, the PM has 10 days to save her position, as she is facing the threat of rival leadership bids in the Conservat ive party. Some MPs are ready to demand a no-confidence vote, the paper said. Chancellor Philip Hammond told the BBC that Britain will leave the single market , but should aim for a gentle departure. In addition, there is still no power sharing deal with the DUP. Furthermore, the UK may have been hit by yet another terrorist at tack this morning, as a car drove into pedest rians outside a London Mosque, killing one person and injuring 10.