Sample Category Title

The dollar hovered near seven-month lows against the yen following Friday's disappointing US jobs report, while sterling weakened after the news of the attacks in London over the weekend. Gold hit its highest in over six week and oil was lifted due to tensions in the Middle East.

The greenback held onto losses made on Friday after the release of the non-farm payrolls report which showed fewer jobs were added to the US economy in May, while the previous two months' figures were revised lower. Despite the unemployment rate falling to a 16-year low of 4.3%, payrolls rose by only 138,000 jobs last month versus the 185,000 forecasted.

The dollar reacted negatively to the data and tumbled to a new seven-month low against the yen in Asian trading today. The pair fell to 110.30 yen before rebounding later in the session. The dollar index dropped to its lowest level since November after the report on Friday and remained below 97 points in Asia, as the softer jobs data diminished prospects of a total of three rate hikes this year by the Federal Reserve, as was originally expected by the markets.

Political uncertainty weighed on the pound after the attacks in London over the weekend that killed seven people resulted in the temporary suspension of campaigning, just days before the June 8 national elections. Sterling fell as much as 0.3% against the dollar in Asia from Friday's close, trading down to $1.2855. British Prime Minister Theresa May is expected to resume campaigning today. The vote is expected to be much tighter than previously predicted.

The Australian dollar rebounded after a stronger-than-expected Caixin Chinese services PMI provided a boost, as China is a major trading partner for Australia. The index rose to 52.8 in May compared to 51.5 in April. The aussie jumped to $0.7456 after the data from a low of $0.7421.

Gold prices benefitted from a broadly weaker dollar and hit its strongest since April 21 at $1,281.86 an ounce early in the session.

Oil prices rose on news out of the Gulf overnight. Four Arab countries cut diplomatic ties with Qatar, escalating a crisis that started over its relationship with Iran. WTI crude oil fell in early Monday trading to reach $47.64 a barrel before rising back to the $48 handle. Tensions in the Middle East trumped data out late on Friday that showed a rise in the latest US oil rig count.

Daily Pivots: (S1) 141.55; (P) 142.75; (R1) 143.49; More....

Intraday bias in GBP/JPY remains neutral for the moment. On the downside, break of 141.43 will extend the decline from 148.09. In such case, intraday bias is turned to the downside for 61.8% retracement of 135.58 to 148.09 at 140.35. At this point, we'd still expect rebound from 122.36 to resume later. Hence, we'd look for strong support below 140.35 to contain downside and bring rebound. On the upside, break of 143.93 will turn bias back to the upside for 148.09 resistance.

In the bigger picture, rise from 122.36 medium term bottom is still expected to extend to of 195.86 to 122.36 at 150.42. And decisive break there could pave the way to 61.8% retracement at 167.78. However, as the cross is starting to lose upside momentum, rejection below 150.42 and break of 135.58 support will indicate reversal and bring deeper fall back to retest 122.36 instead.

The USDJPY pair posted marginally lower low at 110.28 on Monday, cracking 200SMA support and maintaining pressure on other key supports at 110.23/15 (18 May spike low / daily cloud base).

Recovery attempts were capped at 110.73 in early Europe, with Friday’s long bearish daily candle weighing on near-term action.

Hesitation at 200SMA and ahead of other key supports may keep the pair in extended consolidation, with extended upticks expected to hold below 111.15 (Fibo 61.8% of Fri/Mon fall). Barrier is reinforced by 10/55SMA bear-cross and daily Tenkan-sen, which maintain bearish pressure.

Only sustained break above here would sideline near-term bears and re-focus key barriers at 110.70/80 (Friday’s upside rejection / daily cloud top).

Res: 110.73, 111.15, 111.37, 111.70
Sup: 110.28, 110.15, 109.58, 109.60

EUR/USD – 1.1268

EUR/USD:   Wave (c) of 2 ended at 1.3993 and wave 3 of III has commenced for weakness to 1.0411 (1.236 of wave 1), then 1.0000.

The single currency found renewed buying interest at 1.1109 last week and has risen again, adding credence to our view that recent erratic rise from 1.0340 low has resumed and bullishness remains for this move to extend further gain to previous resistance at 1.1300, however, only a daily close above there would retain bullishness and signal medium term downtrend has ended and headway to another previous resistance at 1.1366 would follow but near term overbought condition should prevent sharp move beyond 1.1430-35 and price should falter below 1.1500, bring retreat later. 

Our preferred count on the daily chart remains that a wave (II) from 1.2329 ended at 1.5145 with A-leg ended at 1.4720, followed by wave B at 1.2457, the wave C from there was also a 3 legged move and is labeled as (a): 1.3739, (b): 1.2885, the wave iii of the 5-waver (c) from 1.2885 has ended at 1.4339 and wave iv is a triangle ended at 1.3878 and wave v formed a top at 1.5145. The decline from there is a 5-waver (C) with minor wave (i) of I of (C) ended at 1.4218 with wave (ii) ended at 1.4580, wave (iii) ended at 1.3267 and wave (iv) ended at 1.3692 and wave (v) ended at 1.1876, this is also the low of wave I of (C) and wave II ended at 1.4940, hence wave III is now in progress with a diagonal wave 1 ended at 1.2042, the breach of previous support at 1.1876 (wave I trough) adds credence to our view that the wave 2 has ended at 1.3993, wave 3 has commenced for further weakness to 1.0411, then towards 1.0000.

On the downside, although initial pullback to 1.1205-10 cannot be ruled out, reckon 1.1160-65 would hold and bring another rise later. Below said support at 1.1109 would abort and suggest a temporary top is possibly formed, bring test of previous resistance at 1.1025 but a daily close below there is needed to provide confirmation, bring retracement of recent rise to 1.0975-80 but downside should be limited to 1.0900 and support at 1.0839 should remain intact, bring rebound later.

Recommendation: Buy at 1.1210 for 1.1410 with stop below 1.1110. 

Euro's long-term uptrend started from 0.8228 (26 Oct 2000) with an impulsive structure. The rise from 0.8228 to 0.9593 (5 Jan 2001) is labeled as wave I, the retreat to 0.8352 (6 Jul 2001) is wave II and the rally to 1.3670 (31 Dec 2004) is wave III. Wave IV from there ended at 1.1640 (15 Nov 2005), the subsequent upmove to 1.6040 (July 15, 2008) is treated as wave V, the major selloff from the record high of 1.6040 to 1.2329 (October 27, 2008) signals a reversal has taken place with (I) leg ended at 1.2329 and once (II) ended at 1.5145, wave (III) itself is an extended move with I: 1.1876 and complex wave II ended at 1.4902, wave III has commenced with wave 1 and 2 ended at 1.2042 and 1.3993 respectively, wave 3 of III is now unfolding for weakness towards parity.

Daily Pivots: (S1) 124.21; (P) 124.76; (R1) 125.10; More...

Intraday bias in EUR?JPY remains neutral for the moment as consolidation from 125.80 is still in progress. In case of another fall, downside should be contained by 38.2% retracement of 114.84 to 125.80 at 121.61 to bring rise resumption. We're staying mildly bullish in the cross. And, break of 126.09 key resistance will extend the whole rebound from 109.03 to 100% projection of 109.03 to 124.08 from 114.84 at 129.89. Nonetheless, firm break of 121.61 will dampen our bullish view and bring deeper fall to 61.8% retracement at 119.02.

In the bigger picture, focus is staying on 126.09 support turned resistance. Decisive break there will confirm completion of the down trend from 149.76. And in such case, rise from 109.20 is at the same degree and should target 141.04 resistance and above. Meanwhile, rejection from 126.09 and break of 114.84 will extend the fall from 149.76 through 109.20 low.

USD/JPY - 110.54

USD/JPY – Wave V of larger degree circle V has possibly ended at 75.31 and major correction has commenced and already met indicated target at 125.00.

The greenback recovered initially last week but renewed selling interest emerged at 111.71 on Friday and price has dropped again from there since, retaining our bearishness for the fall from 114.37 top to extend further weakness to 110.00, then towards previous support at 109.59, however, as broad outlook remains consolidative, reckon downside would be limited and bring recovery later. In the event dollar closes below 109.00 on a daily basis, this would provide confirmation that the rebound from 108.13 is over and bring retest of 108.13 eventually.

Our preferred count is that, triangle wave IV (with circle) ended at 101.45 and the circle wave V brought dollar down to the record low of 75.31 in 2011 and the subsequent rebound signal major correction has commenced with A leg ended at 84.19, followed by wave B at 77.14 and impulsive wave C is now unfolding (indicated upside target at 125.00 had been met) for gain towards 127.00 level. In the event dollar drops below support at 99.01, this would confirm medium term decline from 125.86 top (2015 high) has resumed for subsequent weakness to 98.00 and possibly 97.00.

Under this count, this wave C is unfolding as impulsive waves with (1) (2), 1 2 ended at 80.67, 79.07, 82.84 and 81.69 respectively, hence the extended wave 3 has ended at 103.74 and wave 4 correction of recent upmove should bring weakness to 92.57, then towards 90.88 but psychological support at 90.00 should limit downside and bring another rally later in wave 5, indicated target at 125.00 had been met and gain to 127.00 cannot be ruled out but reckon price would falter below 130.00.

On the upside, whilst initial recovery to 111.00-10 cannot be ruled out, reckon said resistance at 111.71 would limit upside and price should falter below said resistance at 112.13, bring another decline later. A daily close above 112.13 would prolong consolidation and bring another bounce to 112.70-80, however, previous support at 113.12 should limit upside and price should falter below 113.85, bring retreat later. Only break of 113.85 would suggest the retreat from 114.37 has ended and bring another rise to this level, a break of this resistance at 114.37 would extend the rise from 108.13 low to 114.60-65 (61.8% Fibonacci retracement of 118.66-108.13). Having said that, a daily close above there is needed to retain bullishness and suggest the entire fall from 118.66 has ended at 108.13, then further gain to 115.00 and later test of key resistance at 115.51 would follow.

Recommendation: Stand aside for this week.

On the monthly chart, we have changed our preferred count that an impulsive wave is unfolding with major wave III with circle ended at 79.75, then followed by wave IV with circle and is labeled as a triangle with A: 147.64 (11 August, 1998), B: 101.25, C: 135.20, D: 101.67 and E leg ended at 124.14 to end the wave IV with circle. Hence, wave V with circle commenced from there and hit a record low of 75.31, however, the subsequent strong rebound signals this circle wave V has possibly ended there, hence gain to (indicated upside target at 122.00 and 125.00 had been met), the retreat from 125.86 suggests wave A of major correction has ended there and wave B correction back to 99.00, then 95.00 would be seen, however, reckon downside would be limited to 90.00, bring another rebound in wave C next year.

The London terror attack happened on Saturday, June 3rd, which was the third terror attack in the UK this year following the Westminster terror attack in March and the Manchester terror attack in May. The timing of the London terror attack especially sensitive being just a few days prior to the general election.

The polls conducted by Survation, released on Jun 3rd, are indicating that the Conservative Party's lead has now narrowed to just 1%. The approval rating of the Tory and Labour Parties are 40% and 39% respectively. Despite the London terror attack and recent polls, the early European session on June 5th has GBP/USD still holding above the support line at 1.2850, trading around 1.2875. EUR/GBP hit a high of 0.8766. last seen on March 14th. Be aware that the election uncertainty will still likely pose downward pressure to GBP crosses before and after the election.

Saudi Arabia, Egypt, UAE and Bahrain today announced a break of diplomatic relations with Qatar due to terrorism and extremism. Saudi Arabia alleged that Qatar has funded some terrorism organisations, such as the Muslim Brotherhood and ISIS, attempting to cause regional chaos.

Those countries ordered Qatari diplomats to leave their countries within 48 hours. Saudi Arabia announced that the border with Qatar is to be closed and cut all land, air and sea contacts with Qatar, urging all “brotherly countries and companies to do the same”.

We can expect that the actions taken will cause a significant impact on the Qatar economy. Qatar is an OPEC member state and the diplomatic ties cut will likely pose uncertainty to the output cut agreement extension and oil prices. The diplomatic ties cut will likely affect oil supply which will result in higher oil prices. However, it will also likely undermine the execution of the output cut agreement, which will pose downward pressure to oil prices. The oil market prospect after the diplomatic ties cut is still vague.

On Monday June 5th, in early European session WTI spot and Brent crude spot saw a 1.4% and 1.48% rebound respectively. Spot gold rallied, being a safe haven in times of uncertainty, because of the London terror attack and the Qatar diplomatic issue, hitting a 6-week high of $1281.89.

EUR/JPY - 124.54

Recent wave: wave v of (C) ended at 94.12 and major correction in wave A has ended at 149.79

Trend: Near term up

Original strategy:

Buy at 124.20, Target: 126.20, Stop: 123.60

Position: -
Target: -
Stop: -

New strategy :

Buy at 123.75, Target: 125.75, Stop: 123.15

Position: -
Target:  -
Stop:-

As the single currency has retreated after rising to 125.31 on Friday, suggesting further consolidation within recent established range would be seen and pullback to 124.00 is likely, however, reckon downside would be limited to 123.65-70 and bring another rise later, above 125.31 would extend gain towards strong resistance at 125.82 but break there is needed to confirm recent upmove has resumed and extend headway to 126.20-30 and possibly 126.60-70 but reckon reckon 127.00-10 would hold from here.

In view of this, we are looking to buy euro on pullback as 123.65-70 should limit downside and bring another rise later. Below support at 123.16 would abort and shift risk back to downside for test of previous support at 122.56 which is likely to hold from here due to broad consolidative outlook.

Our latest preferred count is that wave (ii) is ABC-X-ABC which ended at 123.33 and wave (iii) is unfolding with wave iii ended at 100.77, followed by wave iv at 111.57 and wave v as well as the wave (iii) has ended at 97.04, followed by wave (iv) at 111.43 and wave (v) has ended at 94.12 which is also the end of the larger degree v, this also implied the major wave (C) has also ended there, hence major correction has commenced from there with (A) leg unfolding in its lower degree wave c which has possibly ended at 145.69. Under this count, A-B-C wave (B) has commenced with A leg ended at 136.23, wave B at 143.79 and wave C has possibly ended at 149.79.

Our larger degree count is that the decline from 139.26 is wave (C) and is sub-divided into a diagonal triangle i-ii-iii-iv-v with wave i - 105.44, wave ii- 123.33, wave iii - 97.03, wave iv - 111.43, followed by the final wave v as well as the end of wave (C) at 94.12, this also mark the bottom of larger degree wave B. Under this count, major rise in wave C has commenced as an impulsive wave with minor wave III ended at 145.69, wave V is still in progress for further gain to 150.00. Having said that, this so-called wave V could well be the first leg of larger degree 5-waver wave C and this wave C should bring at least a retest of wave A top at 169.97 (July 2008).

On the updated chart of USDCHF we can see that market recently made a three-wave recovery into wave 4 as part of a downtrend, that found resistance at the 0.9807 level. As we can see a new drop happened last week, which we labeled as final wave 5 of C). That said current drop can see limited downside around the Fibonacci ratio of 161.8 or 200% and later ideally make a new reversal higher in impulsive fashion.

AUD/USD – 0.7469

Recent wave: Wave 5 ended at 1.1081 and major correction has commenced for fall to 0.7000 and then towards 0.6500-10

Trend: Near term down

New strategy :

Buy at 0.7420, Target: 0.7570, Stop: 0.7360

Position: -
Target:  -
Stop:-

Although aussie fell to as low as 0.7372 late last week, decent demand emerged there and the pair has staged a strong rebound from there, suggesting the retreat from 0.7518 has possibly ended there, above 0.7475-80 would add credence to this view and extend gain to said resistance at 0.7518, break there would signal another leg of rise from 0.7329 low is underway and extend headway towards 0.7592 but resistance at 0.7611 should hold from here due to near term overbought condition.

In view of this, we are looking to buy aussie on dips as 0.7415-20 should limit downside and bring another rise. Below said support at 0.7372 would abort and revive our bearish view that the rebound from 0.7329 has ended at 0.7518 last month, bring further fall towards this level. Only a drop below there would confirm recent decline has resumed and extend weakness to 0.7295-00 (76.4% retracement of 0.7158-0.7750).

On the 4-hour chart, the move from 0.8066 is the wave 5 with i: 0.8860, ii: 0.8315, wave iii is an extended move ended at 1.0183, iv: 0.9706 and wave v has ended at 1.1081 (also the top of entire wave 5). The subsequent selloff is the major correction which is unfolding as ABC-X-ABC and 2nd A leg has ended at 0.8848, followed by a-b-c wave B which ended at 0.9758, hence, 2nd C wave is now in progress and indicated downside target at 0.7000 and 0.6950 had been met, so further fall to 0.6710-20 cannot be ruled out.