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On Thursday, the British Pound fell by 103 pips or 0.68% against the Japanese Yen. The currency pair was pressured lower by the 50– and 200– hour SMA during Thursday's trading session.

By and large, the GBPJPY exchange rate could continue to edge lower in a descending channel pattern during the following trading session. The possible target for sellers will be near the 150.50 area.

However, a support line formed by the weekly S1 at 151.10 could provide support for the currency exchange during Friday's trading session.

Upside risks dominated the USD/CAD currency pair on Thursday. As a result, the US Dollar edged higher by 104 pips or 0.84% against the Canadian Dollar during yesterday's trading session.

Everything being equal, the exchange rate is likely to continue to edge higher in an ascending channel pattern during the following trading session. Buyers might target the 1.2640 level today.

However, the resistance level at 1.2612 could provide resistance for the currency exchange rate in the shorter term.

Daily Pivots: (S1) 151.38; (P) 152.10; (R1) 152.57; More...

Intraday bias in GBP/JPY remains neutral at this point. Correction from 156.05 could still extend lower. Break of 150.64 will target 149.03 cluster support level. On the upside, break of 153.46 will turn bias back to the upside for 155.13/156.05 resistance zone.

In the bigger picture, rise from 123.94 is seen as the third leg of the pattern from 122.75 (2016 low). Focus remains on 156.59 resistance (2018 high). Sustained break there should confirm long term bullish trend reversal. Next target is 61.8% retracement of 195.86 (2015 high) to 122.75 at 167.93. On the downside, break of 149.03 support is needed to be the first sign of completion of the rise from 123.94. Otherwise, outlook will remain bullish even in case of deep pull back.

Daily Pivots: (S1) 129.49; (P) 129.85; (R1) 130.08; More....

EUR/JPY is holding above 129.60 support and intraday bias remains neutral first. On the downside, break of 129.60 will resume the the correction from 134.11. But we'd expect strong support from 38.2% retracement of 121.63 to 134.11 at 129.34 to bring rebound. On the upside, break of 131.07 resistance should argue that the correction has completed. Intraday bias will be turned back to the upside for 132.68 resistance and above.

In the bigger picture, rise from 114.42 is seen as a medium term rising leg inside a long term sideway pattern. Next target is 137.49 (2018 high). Decisive break there will open up the possibility that it's indeed resuming the up trend from 94.11 (2012 low). For now, outlook will stay bullish as long as 127.07 resistance turned support holds, in case of pull back.

Daily Pivots: (S1) 0.8513; (P) 0.8541; (R1) 0.8570; More...

Intraday bias in EUR/GBP stays neutral at this point. On the downside, break of 0.8520 will extend the choppy fall from 0.8718 to retest 0.8470 low. On the upside, though, break of 0.8616 resistance will indicate completion of the correction from 0.8718, and turn bias back to the upside.

In the bigger picture, price actions from 0.9499 are still seen as developing into a corrective pattern. That is, up trend from 0.6935 (2015 low) would resume at a later stage. This will remain the favored case as long as 0.8276 support holds. However, firm break of 0.8276 support will suggest that rise from 0.6935 has completed and turn medium term outlook bearish.

Daily Pivots: (S1) 1.5841; (P) 1.5884; (R1) 1.5958; More...

Intraday bias in EUR/AUD remains neutral as consolidation continues. Another rise could be seen with 1.5614 support intact. On the upside, break of 1.5976 will resume the choppy rise from 1.5250 to 1.6033 key support turned resistance next. Sustained break there will argue that longer term trend has reversed, and target 1.6827 resistance for confirmation.

In the bigger picture, outlook stays bearish with 1.6033 support turned resistance intact for now. Fall from 1.9799, as a correction to to long term up trend from 1.1602 (2012 low) is still in favor to resume through 1.5250 later. However, However, firm break of 1.6033 will argue that such decline has completed. Stronger rebound would then be seen 38.2% retracement of 1.9799 to 1.5250 at 1.6988.

Daily Pivots: (S1) 1.0814; (P) 1.0832; (R1) 1.0858; More....

A temporary low is formed at 1.0802 and intraday bias in EUR/CHF is turned neutral first. Outlook will stay bearish as long as 1.0985 resistance holds. Break of 1.0802 will resume the decline from 1.1149, for 1.0737 cluster support next.

In the bigger picture, current development argues that rebound from 1.0505 (2020 low) might be completed with three waves up to 1.1149 already. Sustained trading below 55 week EMA (now at 1.0885) will affirm this bearish case. Further break of 1.0737 cluster support (61.8% retracement of 1.0505 to 1.1149 at 1.0751) will bring retest of 1.0505 low.

USDCAD has found strong resistance at the 200-day simple moving average (SMA) and is reversing slightly to the downside today. The RSI is confirming the recent negative move as it is pointing south in the positive territory; however, the MACD is stretching its bullish momentum above its trigger and zero lines.

In the case that the 200-day SMA acts as a significant turning point, it could send the price lower again towards the 1.2420 support, which coincides with the 20-day SMA. Even lower, the Ichimoku cloud and the 40-day SMA around 1.2275 could attract attention before slipping towards the 1.2200 psychological number. Underneath these obstacles, the six-year low of 1.2012 may pause the long-term bearish tendency.

In the positive window, the price may overcome the 200-day SMA and the 1.2645 resistance, hitting the 1.2750 barrier ahead of 1.2950, registered in December 2020. More increases could switch the broader bearish outlook to bullish, resting near 1.3175.

In conclusion, in the short-term, USDCAD has been in a bullish mode after the rebound off 1.2012 and any climbs above the key line of the 200-day SMA may open the way for more positive actions in the longer timeframe as well.

US dollar steady despite fall in yields

Despite another fall by US long-dated bond yields and a retreat by tech stocks, the US dollar continues to surprise and hold onto much of its recent gains of the past week. The dollar index rose 0.21% to 92.56 overnight, edging higher to 92.89 in Asia. The dollar index remains near to resistance at 92.85, and a weekly close above there this evening signals more gains to 93.50 next week. Support remains at 92.00.

The US dollar strength may not be a dollar story, although currency markets have for some time priced in a more cautionary tale regarding inflation than bond or equity markets. The greenback appears to be supported by the potential weakness elsewhere. Notably, a potentially dovish ECB next week setting up a possible monetary policy divergence in the quarters ahead. The potential headwinds of Covid-19 in Asia and further US restrictions on China are also playing into the US dollar’s hands, with ASEAN currencies still very much on the weak side.

EUR/USD faded overnight ahead of resistance at 1.1850, falling to 1.1800 as of this morning and a daily close under 1.1770 hints of a deeper retracement below 1.1700 next week. GBP/USD remains locked mid-range between 1.3800 and 1.3900, supported by the removal of pandemic restrictions and yet another Bank of England official making tightening noises overnight. A break of either level will signal its next directional move.

NZD/USD rose 0.50% t0 0.7020 today after blockbuster inflation data had the market scrambling to price in RBNZ rate hikes tout suite. Its rally has been tempered by the viral woes of its trans-Tasman neighbour Australia, but the kiwi should outperform against both the Australian and US dollars into next week.

China set a slightly weaker yuan fixing this morning at 6.4705 but left liquidity neutral at the repo. The spot market is slightly lower at 6.4670, but with the PBOC setting slightly weaker fixes this week, support at 6.4500 is unlikely to be tested. ASEAN currencies will remain under pressure into the end of the week and will underperform until the Covid-19 situation improves materially.

Asian markets follow Wall Street and edge lower

Asian markets after mostly lower today as US-Sino relations, mixed US data, and a rampaging delta-variant across the region all combine to weigh on sentiment into the weekend. Wall Street closed lower overnight, led by technology, as bullish momentum faded against a background of regulatory noise and Capitol Hill legislative confusion.

Notably, US long-dated yields continued to retreat on a firm transitory message from Mr Powell and Ms Yellen; Wall Street could not rally, despite a procession of decent earnings results. That suggests that markets will be vulnerable tonight to a weak US Retail Sales print as investors cast an eye to an increasingly cloudy third quarter.

The S&P 500 fell 0.33% while the Nasdaq lost 0.70%, with the Dow Jones recording a modest 0.15% gain on rotational flows out of tech. Futures on all three indexes are slightly negative in Asia. A GDP downgrade by the Bank of Japan, and Covid-19 cases sees the Nikkei’s late-week retreat continue, falling 0.80% today. The Kospi has fallen by 0.60%, with Taipei falling by 0.75%.

China’s new requirements on property developer debt disclosures, and more warnings from the US on doing business with China overnight, have sent markets lower. The Shanghai Composite has fallen by 0.10%, with the CSI 300 falling 0.50%. President Biden’s comments on Hong Kong’s judiciary independence see the Hang Seng lower by 0.30%.

The downgrade of regional growth prospects by Goldman Sachs is weighing on other markets as well. Singapore’s Non-Oil Export data has kept the STI slightly in the green, up 0.10%, but Kuala Lumpur and Bangkok are down 0.30%, Manila is down 0.80% after the delta variant was detected there today, while Jakarta has edged 0.20% higher. In Australia, spreading inter-state virus lockdowns is muting the sentiment from another impressive set of data releases this week. The All Ordinaries and ASX 200 being barely changed.

European stocks are likely to open modestly lower ahead of Eurozone inflation data, with Europe not showing much connection with Asian markets at the moment. Assuming no upward surprises from the Eurozone inflation, an oxymoron if ever there was one, equity markets on both sides of the Atlantic will remain focused on US Retail Sales this evening.