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Daily Pivots: (S1) 1.2559; (P) 1.2609; (R1) 1.2638; More...

Intraday bias in USD/CAD remains mildly on the downside as fall from 1.2947 is extending. Deeper decline could be seen to 1.2421 support. Firm break there will suggest rejection by 1.3022 fibonacci level. Rise from 1.2005 could have completed in this case and deeper fall would be seen to retest this low. On the other hand, break of 1.2711 minor resistance will revive near term bullishness, and turn bias back to the upside for retesting 1.2947 high instead.

In the bigger picture, fall from 1.4667 is seen as the third leg of the corrective pattern from 1.4689 (2016 high). It should have completed after hitting 1.2061 (2017 low) and 50% retracement of 0.9406 to 1.4689 at 1.2048. Sustained break of 38.2% retracement of 1.4667 to 1.2005 at 1.3022 will pave the way to 61.8% retracement at 1.3650 and above. Overall, medium term outlook remains neutral at worst with 1.2048/61 support zone intact.

Daily Pivots: (S1) 0.7216; (P) 0.7243; (R1) 0.7286; More...

AUD/USD is staying in range of 0.7105/7288 and intraday bias remains neutral at this point. In case of another fall, through 0.7105, we'd continue to look for strong support from 0.6991/7051 support zone to bring rebound. On the upside, firm break of 0.7288 support turned resistance will indicate short term bottoming, and turn bias back to the upside for 0.7425 resistance next.

In the bigger picture, rise from 0.5506 medium term bottom could have completed at 0.8006, after failing 0.8135 key resistance. Correction from there could target 0.6991 cluster support (38.2% retracement of 0.5506 to 0.8006 at 0.7051). We'd look for strong support from there to bring rebound. However, sustained break of this level would argue that the whole medium term trend has indeed reversed. Deeper decline would be seen to 61.8% retracement at 0.6461.

Dollar recovers mildly in Asian session today as selling lost some momentum. On the other hand commodity currencies are turning softer. Australian Dollar continues to be weighed down by surging coronavirus cases, as the State Premier also warned of "lots of pressures" on hospitals. But overall, traders are starting to turn cautious ahead of Jackson Hole Symposium and month end.

Technically, we'd reiterate that despite this week's pull back in Dollar, near term support levels were not broken yet. The levels include 1.1804 resistance in EUR/USD, 1.3785 minor resistance in GBP/USD, 0.7288 support turned resistance in AUD/USD, 0.9098 support in USD/CHF, 109.10 support in USD/JPY. USD/CAD looks more committed with the break of 4 hour 55 EMA, but it's still holding well above 1.2421 structural support. Near term outlook in Dollar is at least not bearish in general.

In Asia, at the time of writing, Nikkei is down -0.08%. Hong Kong HSI is down -0.36%. China Shanghai SSE is up 0.34%. Singapore Strait Times is up 0.06%. Japan 10-year JGB yield is flat at 0.020. Overnight, DOW rose 0.09%. S&P 500 rose 0.15%. NASDAQ rose 0.52%. 10-year yield rose 0.035 to 1.290.

BoJ Nakamura warned of delayed spending, Japan expands state of emergency

BoJ board member Toyoaki Nakamura warned in a speech today that the economy is still in a "severe state" and outlook was "highly uncertain" with risks skewed to the downside. He added, "the resurgence in infections may have somewhat delayed the timing for when pent-up demand materializes."

But he's hopeful that economic activity would strengthen strongly as pandemic impact subsides. Inflation is likely to gradually accelerate as the economy recovers. Also, he expects exports to increase steadily on robust global demand and recovery in capital expenditure.

Separately, Japan is set p expand a state of emergency to 8 more prefectures. That takes the total to 21 out of 47 total prefectures. Economy Minister Yasutoshi Nishimura emphasized, "the most important task is to beef up the medical system."

New Zealand goods exports rose 15% yoy in Jul, imports rose 35% yoy

New Zealand goods exports rose 15% yoy to NZD 5.8B in July. Goods imports rose sharply by 35% yoy to NZD 6.2B. Monthly trade balance was a deficit of NZD -402m, versus expectation of NZD 100m surplus.

Exports to all trading partners were up (China +25% yoy, Australia 22% yoy, EU + 7.4% yoy, Japan +26% yoy), except the US (down -2.9% yoy. Imports from all top trading partners were up (China +22% yoy, EU + 38% yoy, Australia + 12% yoy, US + 14% yoy, Japan +71% yoy).

From Australia, construction work done rose 0.8% in Q2, below expectation of 2.8%.

Looking ahead

Germany Ifo business climate is a major focus in European session. Swiss will release Credit Suisse economic expectations. Later in the day, US will release durable goods orders.

AUD/USD Daily Report

Daily Pivots: (S1) 0.7216; (P) 0.7243; (R1) 0.7286; More...

AUD/USD is staying in range of 0.7105/7288 and intraday bias remains neutral at this point. In case of another fall, through 0.7105, we'd continue to look for strong support from 0.6991/7051 support zone to bring rebound. On the upside, firm break of 0.7288 support turned resistance will indicate short term bottoming, and turn bias back to the upside for 0.7425 resistance next.

In the bigger picture, rise from 0.5506 medium term bottom could have completed at 0.8006, after failing 0.8135 key resistance. Correction from there could target 0.6991 cluster support (38.2% retracement of 0.5506 to 0.8006 at 0.7051). We'd look for strong support from there to bring rebound. However, sustained break of this level would argue that the whole medium term trend has indeed reversed. Deeper decline would be seen to 61.8% retracement at 0.6461.

Economic Indicators Update

Short-term Elliott wave view in S&P 500 (SPX) suggests cycle from July 20, 2021 low remains incomplete favoring more upside. Rally from there is unfolding as a 5 waves impulse Elliott Wave structure. Up from July 20 low, wave 1 ended at 4480.26 and wave 2 pullback ended at 4367.73. Internal subdivision of wave 2 unfolded as a zigzag structure. Down from wave 1, wave ((a)) ended at 4417.83, wave ((b)) ended at 4454.32, and wave ((c)) ended at 4367.73. Index has resumed higher and broken above wave 1, confirming wave 3 is in progress. Up from wave 2, wave ((i)) ended at 4418.61 and pullback in wave ((ii)) ended at 4382.99.

Expect wave ((iii)) to end soon, then the Index should pullback in wave ((iv)) before another leg higher to end wave ((v)) of 3. Then it should pullback again in wave 4 before 1 more push higher to end wave 5 and complete cycle from July 20 low. Near term, as far as pivot at 4368.26 low stays intact, expect dips to find support in 3, 7, or 11 swing for further upside. Potential target higher is 100% – 123.6% Fibonacci extension from July 20 low which comes at 4616 – 4675.

SPX 30 Minutes Elliott Wave Chart

New Zealand goods exports rose 15% yoy to NZD 5.8B in July. Goods imports rose sharply by 35% yoy to NZD 6.2B. Monthly trade balance was a deficit of NZD -402m, versus expectation of NZD 100m surplus.

Exports to all trading partners were up (China +25% yoy, Australia 22% yoy, EU + 7.4% yoy, Japan +26% yoy), except the US (down -2.9% yoy. Imports from all top trading partners were up (China +22% yoy, EU + 38% yoy, Australia + 12% yoy, US + 14% yoy, Japan +71% yoy).

Full release here.

BoJ board member Toyoaki Nakamura warned in a speech today that the economy is still in a "severe state" and outlook was "highly uncertain" with risks skewed to the downside. He added, "the resurgence in infections may have somewhat delayed the timing for when pent-up demand materializes."

But he's hopeful that economic activity would strengthen strongly as pandemic impact subsides. Inflation is likely to gradually accelerate as the economy recovers. Also, he expects exports to increase steadily on robust global demand and recovery in capital expenditure.

Separately, Japan is set p expand a state of emergency to 8 more prefectures. That takes the total to 21 out of 47 total prefectures. Economy Minister Yasutoshi Nishimura emphasized, "the most important task is to beef up the medical system."

In this technical blog, we will look at the past performance of 4 hour Elliott Wave Charts of EURNZD, which we presented to members at the elliottwave-forecast. In which, the pullback from 18 June 2021 high unfolded as a double three structure & showed a blue box area. A green right side tag suggested buying opportunity in the pair looking for the next leg higher or for a 3 wave bounce at least. We will explain the structure & forecast below:

EURNZD 4 Hour Elliott Wave Chart

Here’s 4hr Elliott wave chart of EURNZD from the 8/11/2021 update. In which, the pullback from 6/18/2021 high unfolded as Elliott wave double three structure where wave W ended at 1.6691 low. Wave X bounce ended at 1.7101 high and wave Y managed to reach the blue box area at 1.6657- 1.6553. From where buyers were expected to appear looking for more upside or for a 3 wave bounce at least.

EURNZD Latest 4 Hour Elliott Wave Chart

Key Highlights

• USD/CHF started a downside correction from the 0.9240 region.
• A connecting bearish trend line is forming with resistance near 0.9170 on the 4-hours chart.
• EUR/USD could gain pace if there is a close above the 1.1750 resistance zone.
• GBP/USD is still trading well below the 1.3800 resistance.

USD/CHF Technical Analysis

The US Dollar failed to clear the 0.9240-0.9250 resistance zone against the Swiss Franc. As a result, USD/CHF corrected lower below the 0.9200 support zone.

Looking at the 4-hours chart, the pair settled below the 0.9200 region, the 100 simple moving average (red, 4-hours) and the 200 simple moving average (green, 4-hours).

It even broke the 0.9150 support level and traded close to 0.9100. It is now consolidating losses above the 0.9100 zone. On the upside, the pair could face sellers near the 0.9150 level.

The next major resistance is near the 0.9170 zone. There is also a connecting bearish trend line forming with resistance near 0.9170 on the same chart. A close above 0.9170 could set the pace for a fresh increase towards the 0.9250 resistance.

On the downside, the 0.9100 region is an important breakdown support. A close below the 0.9100 level might open the doors for more losses. The next major support is near the 0.9075, below which USD/CHF could test 0.9020.

Looking at EUR/USD, the pair might gain pace if it settles above the 1.1750 resistance. Besides, GBP/USD could face hurdles near 1.3750 and 1.3800.

Economic Releases

• German IFO Business Climate Index for August 2021 – Forecast 100.4, versus 100.8 previous.
• US Durable Goods Orders for July 2021 – Forecast -0.3% versus +0.9% previous.
• US Durable Goods Orders ex Transportation for July 2021 – Forecast +0.5% versus +0.5% previous.

STOCKS

Equities continue to trade positive and remain bullish. The Dow can rise to 36000. DAX can test 16000-16200. Nikkei can gain momentum on a break above 28000 and rise to 29000. Shanghai looks mixed and has to break above 3560 to gain bullish momentum. Sensex and Nifty are bullish to test 57000 and 16700 respectively.

Dow (35366.26, +30.55, +0.09%) sustains well above 35250. This keeps our bullish view intact of testing 35500-35750 initially and 36000-36200 eventually in the coming weeks.

DAX (15905.85, +53.06, +0.33%) has been stuck in a range of 15600-16000 for more than two weeks. It is now heading towards the upper end of this range. While above 15600, the bias is bullish to see a break above 16000 and test 16200 on the upside.

Nikkei (27733.11, +1.01, +0.004%) remains higher and can test 28000. As mentioned yesterday, a strong break above 28000 will be needed to move up further towards 29000. Else it can come-off and remain in a narrow range of 27000-28000. Price action at 28000 will need a close watch.

Shanghai (3512.64, −1.83, -0.05%) hovers near the intermediate resistance level of 3520. A break above it can take it up to 3560. A sustained break above 3560 is necessarily needed to become bullish again. A pull-back from 3560 can drag it to 3400 again. Overall the picture is mixed.

Sensex (55958.98, +403.19, +0.73%) has tested 56000 as expected. The view remains bullish. The current upmove has room to test 57000 on the upside and then see a pull-back from there.

Nifty (16624.60, +128.15, +0.78%) has risen above 16500 yesterday as expected and can now test 16700. A break above 16700 will strengthen the bullish momentum and will take the index further up to 16800-16850.

COMMODITIES

Commodities have reversed a bit after trading higher for the last 2-sessions. Gold has come off below 1800, Silver is headed towards 23 while below 24, Copper might face resistance at 4.30 which needs to break in order to move towards 4.40/50; else a sharp decline from 4.30 is likely. Crude prices have dipped and could see some more of a fall in the very near term.

Brent (70.65) rose to test 71.20 on the upside before coming off from there as mentioned yesterday. While below 72.50, we can look for a di back towards 69-68 initially and then slowly towards 65 again. Watch price action near current levels.

WTI (67.19) also tested 67.66 before coming off from there. While below 67, a dip to 64 could be possible in the near term.

Gold (1796.20) has failed to rise above the 1800-1810 zone and has instead fallen back below 1800. Gold needs to bounce back immediately in order to move up else a fall back to 1780-1770/65 cannot be negated in the near term. While below 1810-1800, view ion Gold will be bearish.

Silver (23.72) has fallen from 23.89 and while the [rice holds below 24, there is scope for a test of 23 or even lower in the medium term. Watch price action near 23 now in the next few sessions.

Copper (4.2570) has risen above 4.20 but could face interim trend resistance at 4.30 which needs to break in order to move further up towards 4.40/50. Else a decline from 4.30 looks likely.

FOREX

Corrective declines seen in the currency markets as the FED prepares for its Jackson Hole meeting on Friday. Dollar Index trades near 93 and could test 93.30 on the upside. A broad range of 92.50-93.30/50 holds for now. Euro trades below 1.1750 and a fall to 1.17 cannot be ruled out. Aussie and Pound trades stable but may face some immediate declines before again bouncing back to higher levels. EURJPY and USDJPY is within 128-129.50 and 109-110.50 respectively. USDCNY can rise towards 6.49/50 while above 6.47. USDINR needs to break above 74.20 to head higher else could trade within 74.0-74.20.

Dollar Index (93.03) has bounced as expected and is headed towards 93.30 while above 93. Immediate view is bullish from here. Broad range of 92.50-93.30/50 may hold for now.

Euro (1.1735) trades below 1.1750-1.1780 region and while the dip continues, we may have to allow for a re-test of 1.17 before a bounce is seen. Immediate view is bearish while below 1.1765/75 which is an immediate resistance.

EURJPY (128.85) trades slightly higher today but has been oscillating in the 128.59-129.20 region for the last 1-2 sessions. A break on either side is needed for the cross to test either 128 or 130-130.50. Watch price action near current levels to see which way it chooses to move.

Dollar-Yen (109.79) dipped to 109.41 yesterday before bouncing back from there. The pair is highly fluctuating within 110.20-109.40. We continue to see a broad range of 109-110.50 to hold for now and unless a sustained break on either side is seen, there is lack of clarity on further direction from here.

Aussie (0.7242) has has dipped from 0.7271 and could extend to 0.72 on the downside before a bounce is seen again that may eventually extend to 0.73 in the medium term.

Pound (1.3716) has dipped slightly below 1.3750. We need to see if the dip sustains or the pound manages to bounce back to 1.38 and higher.

USDCNY (6.4774) tested 6.4664-6.4654 before bouncing back from there and could now be headed towards resistance near 6.49-6.50 soon. Immediate view is bullish while above 6.47. Any break below 6.47 if seen again would open possibilities of a fall to 6.45.

USDINR (74.1975) bounced back to 74.20 from 74.10. We need to see if the pair manages to break above 74.20 to move up towards 74.40/50 or continues to trade within the narrow 74-74.20 region for a few sessions.

INTEREST RATES

The US Treasury yields have risen. It will have to be seen if they can rise past their immediate resistance and see a corrective rally from here. Such a move will negate our view of seeing a dip that we have been mentioning for some time. Jerome Powell’s speech at the Jackson Hole meeting on Friday will be a crucial event to watch. The German yields are holding above their key supports and a strong bounce from here can trigger a corrective rally within their broader downtrend. The 5Yr GoI can oscillate in a broad range and can move up within this range in the near-term.

The US 2Yr (0.25%), 5Yr (0.79%), (1.29%) and the 30Yr (1.91%) Treasury yields have risen across tenors. 1.3% on the 10Yr is crucial and a sustained break above it will negate the chances of testing 1.18% on the downside that we have been mentioning over the last few days. In turn that will pave way for a fresh rise to 1.4%-1.45%. The 30Yr has to sustain above 1.9% to move up further towards 2%-2.1% and negate the fall to 1.8%. Overall it is a wait and watch situation.

The German 2Yr (-0.76%), 5Yr (-0.74%), 10Yr (-0.48%) and 30Yr (-0.03%) yields remain stable. We will have to wait and see if the yields get a strong bounce from here in order to see a corrective rally to -0.30%/-0.25% (10Yr) and 0.10% (30Yr). Thereafter the broader downtrend can resume. Inability to see a strong bounce from here will leave the yields in danger of falling to -0.6% (10Yr) and -0.2% (30Yr) from here itself.

The 5Yr GOI (5.699%) remains higher and stable. As mentioned yesterday, we can expect it to trade in a broad range of 5.63/62%-5.74/76%. Within this range, we see high chances of the yield moving up towards 5.74%-5.76% in the near-term.

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