Sample Category Title

Daily Pivots: (S1) 1.2845; (P) 1.2890; (R1) 1.2917; More...

Intraday bias in USD/CAD stays neutral at this point. On the downside, below 1.2818 will extend the fall from 1.3077 to 55 day EMA (now at 1.2800). Sustained break there will target 1.2516 support next. On the upside, break of 1.3077 and sustained trading above 1.3022 fibonacci level will carry larger bullish implications, and bring up trend resumption.

In the bigger picture, focus stays on 38.2% retracement of 1.4667 (2020 high) to 1.2005 (2021 low) at 1.3022. Sustained break there should confirm that the down trend from 1.4667 has completed after defending 1.2061 long term cluster support. Further rise would then be seen towards 61.8% retracement at 1.3650. However, rejection by 1.3022 will maintain medium term bearishness.

Daily Pivots: (S1) 0.8567; (P) 0.8593; (R1) 0.8636; More...

Range trading continues in EUR/GBP and intraday bias remains neutral at this point. On the downside, break of 0.8484 support will suggest rejection by 0.8697 medium term fibonacci resistance. Outlook will be turned bearish for 0.8248 support next. On the upside, break of 0.8720 and sustained trading above 0.8697 medium term fibonacci level will carry larger bullish implication. Next target is 0.9003 fibonacci level.

In the bigger picture, rise from 0.8201 medium term bottom could could either be a correction to the down trend from 0.9499 (2020 high), or a medium term up trend itself. Sustained break of 38.2% retracement of 0.9499 to 0.8201 at 0.8697 will affirm the latter case, and pave the way to 61.8% retracement at 0.9003. However, rejection by 0.8697 will maintain medium term bearishness.

Daily Pivots: (S1) 1.5089; (P) 1.5159; (R1) 1.5253; More...

Despite dipping to 1.5059, EUR/AUD quickly rebounded and resumed larger rise from 1.4318. Intraday bias is back on the upside with focus on 1.5354 resistance. Sustained break there should indicate medium term bottoming at 1.4318. Stronger rally would be seen back to 100% projection of 1.4318 to 1.5277 from 1.4759 at 1.5718. On the downside, however, break of 1.5059 will revive medium term bearishness and turn bias back to the downside.

In the bigger picture, sustained break of 1.5354 support turned resistance will argue that a medium term bottom was formed at 1.4318 already. It would still be too early to call for long term trend reversal. But further rise would then be seen back towards 1.6434 resistance (2021 high). However, rejection by 1.5354 will retain bearishness for extending the down trend from 1.9799 (2020 high) through 1.4318 at a later stage.

Daily Pivots: (S1) 0.9965; (P) 0.9990; (R1) 1.0034; More....

Intraday bias in EUR/CHF is turned neutral first with 4 hour MACD crossed above signal line. Deeper decline is expected as long as 1.0155 resistance holds. Sustained trading below 0.9970 will resume larger down trend for 0.9650 long term projection level. On the upside, however, above 1.0155 resistance will delay the bearish case, and turn bias back to the upside for stronger rebound.

In the bigger picture, as long as 1.0505 support turned resistance (2020 low) holds, long term down trend from 1.2004 (2018 high) is expected to continue. Next target is 100% projection of 1.2004 to 1.0505 to 1.1149 at 0.9650. However, firm break of 1.0505 will suggest medium term bottoming, and bring stronger rebound towards 1.1149 structural resistance.

Daily Pivots: (S1) 164.81; (P) 165.32; (R1) 165.83; More...

GBP/JPY's fall from 167.84 resumed by breaking 164.45 minor support. Intraday bias is back on the downside for 159.97 support first. Firm break there will raise the chance of rejection by 167.93 long term fibonacci resistance. Deeper fall would be seen to 155.57 support for confirmation. On the upside, above 165.64 minor resistance will bring retest of 168.67 high instead.

In the bigger picture, up trend from 123.94 (2020 low) is still in progress. Sustained break of 61.8% retracement of 195.86 (2015 high) to 122.75 (2016 low) at 167.93 will be a long term bullish signal, and could pave the way back to 195.86 high. This will now remain the favored case as long as 155.57 support holds, even in case of deep pull back.

Daily Pivots: (S1) 142.13; (P) 142.99; (R1) 143.50; More....

Intraday bias in in EUR/JPY is back on the downside with break of 141.39 minor support. Deeper fall would be seen back to 137.83 support next. Sustained break there will raise the chance of rejection by 144.06 long term projection level and target 132.63 support. On the upside, above 142.42 minor resistance will bring retest of 144.26 high instead.

In the bigger picture, up trend from 114.42 (2020 low) is in progress. Such rise is seen as the third leg of the pattern from 109.30 (2016 low). Sustained trading above 100% projection of 114.42 to 134.11 from 124.37 at 144.06 will indicate upside acceleration and target 149.76 long term resistance (2014 high). In any case, outlook will now remain bullish as long as 132.63 support holds, in case of deep pull back.

Markets start the first day of the second half dumping risk assets, from stocks to oil to gold and copper. Safe haven flow into treasury has indeed started overnight, pushing US 10-year yield back below 3% handle. In the currency markets, Yen rides on the negative sentiment and rises broadly. Aussie leads other commodity currencies and Sterling lower. Dollar and Euro are relatively resilient, together with Swiss Franc.

Technically, AUD/JPY is now trying to extend the correction from 96.86 through 91.95 support. If that happens, AUD/JPY should be in correction to whole rise from 78.77, target 38.2% retracement of 78.77 to 96.86 at 89.94, and even further to 87.28 support. Such development could be accompanied by deeper declines in EUR/JPY through 137.83 support to 132.63, and in GBP/JPY through 159.97 support to 155.57.

In Asia, Nikkei dropped -1.73%. 10-year JGB yield dropped -0.0090 to 0.222. Hong Kong is on holiday. China Shanghai SSE dropped -0.35%. Singapore Strait Times is down -0.32%. Overnight, DOW dropped -0.82%. S&P 500 dropped -0.88%. NASDAQ dropped -1.33%. 10-year yield dropped -0.121 to 2.972, back below 3% handle.

Japan Tankan large manufacturing index dropped to 9 in Q2

Japan Tankan survey showed that large manufacturer sentiment dropped to lowest in more than a year. But note improvement was seen in the non-manufacturing sector. Also, the strong capital expenditure plan was a big surprise, showing that corporate spending was still robust despite increasing uncertainty.

Large manufacturing index dropped from 14 to 9 in Q2, below expectation of 13. That's the lowest level since Q1 2021. Large manufacturing outlook improved from 9 to 10, below expectation of 14.

Non-manufacturing index rose from 9 to 13, below expectation of 14. Non-manufacturing outlook rose from 7 to 13, below expectation of 17.

Capex plans for big firms seen rising 18.6% yoy in fiscal 2022, well above expectation of 8.9%.

Consumer inflation expectations rose from 1.8% to 2.4%. Three years ahead, consumer prices are expected to rise 2%, up from 1.6%.

Japan PMI manufacturing finalized at 52.7, optimism improved

Japan PMI Manufacturing was finalized at 52.7 in June, down from May's 53.3. S&P Global said output growth slowed amid near-stagnation in new orders. Prices charged for goods rose at sharpest pace on record. Business optimism improved to three-month high.

Usamah Bhatti, Economist at S&P Global Market Intelligence, said: "June PMI data pointed to a softer expansion of the Japanese manufacturing sector... Panel members often commented that rising price and supply pressures amid sustained disruption and delays had held back activity in the sector... That said, the degree of optimism regarding the 12-month outlook for output strengthened to a three-month high in June... This is broadly in line with the estimate for industrial production to grow just 2% in 2022 before an acceleration in 2023."

China Caixin PMI manufacturing rose to 51.7, restoration in the post-pandemic era

China Caixin PMI Manufacturing rose from 48.1 to 51.7 in June, above expectation of 50.2. Caixin said production increased at quickest rate for 19 months, as total new work and export sales returned to growth. Supplier performance stabilized.

Wang Zhe, Senior Economist at Caixin Insight Group said: "Restoration in the post-pandemic era remained the focus of the current economy, yet its base was far from strong. Deteriorating household income and expectations caused by a weak labor market dampened the demand recovery. Correspondingly, supportive policies should target employees, gig workers and low-income groups impacted by the outbreaks."

Australia AiG manufacturing rose to 54, exports jumped but domestic sales fell

Australia AiG Performance of Manufacturing rose 1.6 pts to 54.0 in June. Looking at some details, production rose 2.4 to 54.7. Employment rose 0.8 to 51.0. New orders rose 0.7 to 55.7. Exports jumped 10.1 to 53.0. Sales dropped -2.6 to 45.0. Input prices rose 2.1 to 89.3. Selling prices rose 2.1 to 67.8. Average wages dropped -5.5 to 69.3.

Innes Willox, Chief Executive of Ai Group said: "Although input price pressures continued to accumulate, Australia's manufacturing sector expanded again in June with solid increases in production and new orders and a slight lift in employment. While export sales were up, domestic sales fell reflecting the decline in consumer and business confidence in the face of concerns about inflation, interest rates and asset values. Selling prices were higher in June but by a smaller amount than input costs as less robust demand inhibited the ability of manufacturers to fully recover their higher costs in the market."

Looking ahead

Swiss PMI, Eurozone PMI manufacturing final and UK PMI manufacturing final will be released in European session. But focus will be on Eurozone CPI flash. Later in the day, US ISM manufacturing will take center stage.

EUR/JPY Daily Outlook

Daily Pivots: (S1) 142.13; (P) 142.99; (R1) 143.50; More....

Intraday bias in in EUR/JPY is back on the downside with break of 141.39 minor support. Deeper fall would be seen back to 137.83 support next. Sustained break there will raise the chance of rejection by 144.06 long term projection level and target 132.63 support. On the upside, above 142.42 minor resistance will bring retest of 144.26 high instead.

In the bigger picture, up trend from 114.42 (2020 low) is in progress. Such rise is seen as the third leg of the pattern from 109.30 (2016 low). Sustained trading above 100% projection of 114.42 to 134.11 from 124.37 at 144.06 will indicate upside acceleration and target 149.76 long term resistance (2014 high). In any case, outlook will now remain bullish as long as 132.63 support holds, in case of deep pull back.

Economic Indicators Update

China Caixin PMI Manufacturing rose from 48.1 to 51.7 in June, above expectation of 50.2. Caixin said production increased at quickest rate for 19 months, as total new work and export sales returned to growth. Supplier performance stabilized.

Wang Zhe, Senior Economist at Caixin Insight Group said: "Restoration in the post-pandemic era remained the focus of the current economy, yet its base was far from strong. Deteriorating household income and expectations caused by a weak labor market dampened the demand recovery. Correspondingly, supportive policies should target employees, gig workers and low-income groups impacted by the outbreaks."

Full release here.

Japan PMI Manufacturing was finalized at 52.7 in June, down from May's 53.3. S&P Global said output growth slowed amid near-stagnation in new orders. Prices charged for goods rose at sharpest pace on record. Business optimism improved to three-month high.

Usamah Bhatti, Economist at S&P Global Market Intelligence, said: "June PMI data pointed to a softer expansion of the Japanese manufacturing sector... Panel members often commented that rising price and supply pressures amid sustained disruption and delays had held back activity in the sector... That said, the degree of optimism regarding the 12-month outlook for output strengthened to a three-month high in June... This is broadly in line with the estimate for industrial production to grow just 2% in 2022 before an acceleration in 2023."

Full release here.

Japan Tankan survey showed that large manufacturer sentiment dropped to lowest in more than a year. But note improvement was seen in the non-manufacturing sector. Also, the strong capital expenditure plan was a big surprise, showing that corporate spending was still robust despite increasing uncertainty.

Large manufacturing index dropped from 14 to 9 in Q2, below expectation of 13. That's the lowest level since Q1 2021. Large manufacturing outlook improved from 9 to 10, below expectation of 14.

Non-manufacturing index rose from 9 to 13, below expectation of 14. Non-manufacturing outlook rose from 7 to 13, below expectation of 17.

Capex plans for big firms seen rising 18.6% yoy in fiscal 2022, well above expectation of 8.9%.

Consumer inflation expectations rose from 1.8% to 2.4%. Three years ahead, consumer prices are expected to rise 2%, up from 1.6%.