Sample Category Title

Daily Pivots: (S1) 0.9124; (P) 0.9161; (R1) 0.9181; More....

Intraday bias in USD/CHF remains neutral for the moment. Risk remains mildly on the downside with 0.9273 resistance intact. On the downside, sustained trading below 55 day EMA (now at 0.9126) will affirm the case that rebound from 0.8925 has completed at 0.9273. Deeper fall would then be seen back to retest 0.8925 low. On the upside though, break of 0.9273 and sustained trading above 61.8% retracement of 0.9471 to 0.8925 at 0.9262 will target 0.9471 resistance next.

In the bigger picture, medium term outlook is currently neutral with focus on 0.9471 resistance. Sustained break there will indicate completion of whole decline from 1.0342 (2016 high). Medium term outlook will be turned bullish for a test on 1.0342 high. But, rejection by 0.9471 again will revive bearishness for another fall through 0.8756 low.

Daily Pivots: (S1) 109.69; (P) 110.19; (R1) 110.45; More...

USD/JPY is still staying in range above 109.52 and intraday bias remains neutral first. Also, risk stays mildly on the downside with 111.65 resistance intact. On the downside, break of 109.52, and sustained trading below 55 day EMA (now at 109.85) will suggest that it's at least correcting the rise from 102.58. Deeper fall would be seen to 38.2% retracement of 102.58 to 111.65 at 108.18 next.

In the bigger picture, medium term outlook is staying neutral with 111.71 resistance intact. Though, as notable support was seen from 55 day EMA, rise from 102.58 is mildly in favor to extend higher. Decisive break of 111.71/112.22 resistance will suggest long term bullish reversal. Rise from 101.18 could then target 118.65 resistance (Dec 2016) and above. However, sustained break of 55 day EMA would revive some medium term bearishness, and open up deep fall back towards 102.58 support.

Daily Pivots: (S1) 0.7414; (P) 0.7459; (R1) 0.7490; More...

Intraday bias in AUD/USD remains neutral as range trading continues above 0.7408. We're continue to expect strong support from 100% projection of 0.8006 to 0.7530 from 0.7890 at 0.7414 to complete the correction from 0.8006. On the upside, break of of 0.7598 resistance will turn bias back to the upside for 0.7890 resistance first. However, sustained break of 0.7414 will argue it's at least in larger scale correction, and target 161.8% projection of 0.8006 to 0.7530 from 0.7890 at 0.7120 next.

In the bigger picture, rise from 0.5506 medium term bottom could either be the start of a long term up trend, or a corrective rise. Reactions to 0.8135 key resistance will reveal which case it is. Rejection by 0.8135 key resistance, followed by firm break of 0.7413 resistance turned support, will favor the latter case. Deeper decline would be seen to 38.2% retracement of 0.5506 to 0.8006 at 0.7051 first.

Daily Pivots: (S1) 1.2451; (P) 1.2488; (R1) 1.2550; More...

USD/CAD recovered after drawing support from 4 hour 55 EMA but stays below 1.2589 resistance. Intraday bias remains neutral first. As long as 1.2301 support holds, another rise is in favor. On the upside, break of 1.2589 will resume the rise from 1.2005 to 1.2653 structural resistance to confirm larger bullish reversal. However, on the downside, break of 1.2301 support will dampen the bullish case and turn bias back to the downside for 1.2005 low 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 might 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. Overall, medium term outlook remains neutral at worst with 1.2048/61 support zone intact.

BoE Governor Andrew Bailey admitted in an interview that yesterday's inflation numbers were "higher than we thought it would be". But the central bank won't be rushed in to raising interest rates.

"What we will have to do, again, is go through all the evidence and assess to what extent we think the sorts of things that underlie that are likely to be transitory," he added. "And to what extent is it going to cause second round effects - so it starts to get embedded in expectations and it gets into wage negotiations and it's difficult to get out (of an inflationary cycle)."

In reaction to people who said that BoE is being "casual" about the surge in inflation, he emphasized, "we're not at all actually." "The committee has been very clear - if we think the case is made, then of course, we will respond and use the policy tools. We must do that."

China GDP grew 1.3% qoq in Q2, matched expectations. Industrial production growth slowed to 8.3% yoy in June, but beat expectation of 7.9% yoy. Retail sales growth slowed to 12.1% yoy, above expectation of 11.0% yoy. Fixed asset investment growth slowed to 12.6% ytd yoy, above expectation of 12.5% yoy. While growth momentum appears to be slowing, recovery is still very strong.

Hong Kong HSI rises in response to the solid data from China, and it's trading up more than 1% at the time of writing. Notable support was seen from 26782.61 resistance turned support after last week's spike low. Focus is back on 55 day EMA (now at 28484.00). Sustained break there will argue that correction from 31183.35 has completed and would bring retest of this high.

Australia employment grew 29.1k in June, or 0.2% mom, above expectation of 20.3k. Full time jobs grew 51.6k while part-time jobs dropped -22.5k. Over the year, employment grew 777.9k, or 6.3% yoy. Unemployment rate dropped -0.2% to 4.9%, better than expectation of 5.0%. Participation rate was unchanged at 66.2%.

Bjorn Jarvis, head of labour statistics at the ABS, said June saw the eighth consecutive monthly fall in the unemployment rate. "The unemployment rate fell to 4.9 per cent in June. This was 0.4 percentage points below March 2020 (5.3 per cent) and the lowest it has been since December 2010. The declining unemployment rate continues to coincide with employers reporting high levels of job vacancies and difficulties in finding suitable people for them," Jarvis said.

Full release here.

STOCKS

Equities seem to need some fresh trigger to move up strongly from here. Dow seems to lack strong follow-through buying to rise past 35000 decisively. It has to sustain above 34500 to avoid a fresh fall. DAX has room to move up to 16000-16200 if it breaks above 15800 from here. Nikkei is coming down again and can trade in a broad range of 27200-29200. Shanghai retains its 3500-3625 range for now but needs to remain cautious to see if it will break the range on the downside as it seems to lack strength to move up within the range. Sensex and Nifty have come up to the upper end of their 52000-53000 and 15600-15900 range and need to see if they can break the range on the upside now or will continue to retain the range for some more time.

Dow (34933.23, +44.44, +0.13%) continues to hover around 35000 and seems to lack strong follow-through rise above 35000. As we have been mentioning for some time, a strong rise past 35100 is needed to become bullish for 36000. Key support is at 34500 which if broken can drag the Dow to 34000-33500 again. The price action in the coming days will need a close watch to see on which side of 34500-35100 does the Dow breaks.

DAX (15788.98, −0.66, -0.004%) remains higher and keeps alive the chances of breaking above 15800. Such a break can pave way for a further rise to 16000-16200. However, DAX has to rise past 16200 to become strongly bullish. Inability to breach 15800 from here can continue to keep the index in the range of 15300-15800 for some more time.

Nikkei (28348.14, −260.35, -0.91%) has come down below 28500. The rise to 29000-29500 that we were expecting seems not to be happening. While below 28500, Nikkei can fall to 28000 and 27500 again. Broadly, 27200-29200 is the range within which Nikkei can oscillate for some time.

Shanghai (3523.38, −5.13, -0.15%) is not gaining strength to move up within its 3500-3625 range. As mentioned yesterday, in case of a break below 3500, Shanhgai can fall to 3450-3400 and then see a fresh rise. While above 3400, the long-term outlook is bullish to see 3700-3800 on the upside in the coming months.

As expected, the Sensex (52904.05, +134.32, -0.25%) and Nifty (15853.95, +41.60, +0.26%) have risen and closed near the upper end of their 52000-53000 and 15600-15900 range respectively. It will have to be seen if they can break their range on the upside and move up to 54000 and 16000-16200 that we have been expecting for some time. Failure to break above 53000 (Sensex) and 15900 (Nifty) can continue to keep the indices in the range for some more time.

COMMODITIES

Commodities seem to have recovered the movements seen over the last few sessions. Brent and WTI test immediate trend support which if breaks could drag them lower towards 72/71 and 70/68 respectively. Gold and silver have risen and could be headed towards 1840/60 and 26.50/27 respectively. Copper may remain within 4.15-4.40 for some more sessions.

Brent ( 74.08) and Nymex WTI (72.46) have dipped as resistance near 77/78 seems to be holding well for now. On Brent, 73 is an immediate support which if breaks can make the price vulnerable to further fall towards 72/71 levels else a bounce back to 78/80 could be possible in the medium term. On the other hand, WTI has support at 72 which if breaks could take it down towards 70/68 eventually. Watch price action near current support levels on both.

Gold (1826.60) has risen well breaking above the first resistance level of 1820 and could now be headed towards 1840/60 on the upside in the near term. View is bullish while above 1820.

Silver (26.33) has also risen well and could be headed towards 26.50, a break above which can take the price higher towards 27inthe medium term.

Copper (4.2850) trades slightly higher within the 4.15-4.40 region. While 4.40 holds, it can produce a fall towards 4.15 on the downside soon. We need to see a break on either side of the range for further directional clarity.

FOREX

Currency pairs are mostly within a range and needs clear break on either side of the ranges to give clarity on further direction. Dollar Index is ranged within 92-93 while Aussie and Pound are ranged within 0.74-0.75 and 1.39-1.3735 respectively. EURJPY can fall to 129 before bouncing back from there while Dollar Yen can re-test 109.50. Euro needs to break above 1.1850 to move up further else a near term range of 1.18-1.1850 can hold for now. USDINR may trade within narrow range of 74.40-74.60 and broad range of 74.20-4.80 in the near term.

Dollar Index (92.474) has come down a bit but continues to trade within 92-93 without giving any clarity on further direction. While above 92, there is still scope of testing 93 on the upside.

Euro (1.1825) bounced back well from levels near 1.1770 seen yesterday but we have to see if Euro manages to sustain a rise past 1.1850 and move up rather than fall back towards 1.18 again in the near term. Immediate range of 1.18-1.1850 may hold for a few sessions before the Euro attempts to move higher eventually. View is bullish while above 1.1770/1.18.

EURJPY (129.91) continues to fall lower and could be soon headed towards 129. Thereafter a bounce to 130-130.50 could be possible.

Dollar-Yen (109.86) has fallen again after testing 110.70 on the upside, as expected. We may see a test of 109.50 in the near term, a break below which could pave way for a further fall towards 108.50-108.00 eventually. If 109.50 produces a bounce again we may have to allow for a rise back to 110.80-111 in the medium term.

Aussie (0.7453) seems to be trading in a stable range of 0.74-0.75 and needs to see a sustained break on either side to give clarity on further direction from here. A break below 0.74, if seen would set a long term bearish trend for Aussie.

Pound (1.3823) trades within 1.39-1.3735 region and may continue to hold within this range for some more time before a clear break on either side is seen.

USDCNY (6.4678) is stuck within 6.44-6.48 and needs a clear and sustained break on either side to indicate further direction from here.

USDINR (74.5875) is likely to trade within 74.40-74.60 region with possible extensions to 74.20 and 74.80 on either side.

INTEREST RATES

The US Treasury yields have declined sharply contrary to our expectation to move up further. The US Federal Reserve Chairman Jerome Powell stating that the central bank still has a long way to go to make changes in its monetary policy has dragged the yields lower. The crucial support levels on the yields can be revisited in the coming days. The German yields have moved down further and are keeping our bearish view intact. They have room to fall further from here. The 10Yr GoI remained stable yesterday and is likely to keep the chances alive of seeing a rise again while it remains above 6.18%.

The US 2Yr (0.23%), 5Yr (0.78%), 10Yr (1.33%) and 30Yr (1.96%) Treasury yields have come-off sharply contrary to our expectation to move up further. A fall below 1.3% on the 10Yr will reduce the chances of seeing 1.45%-1.5% on the upside immediately. In turn that will drag the 10Yr down to retest the 1.25%-1.2% support zone again. The 30Yr on the other hand looks likely to revisit its crucial 1.9% support level in the coming days instead of moving up to 2.1%-2.2%.

The German 2Yr (-0.69%), 5Yr (-0.62%), 10Yr (-0.32%), 30Yr (0.27%) have come down further in line with our expectation. The bearish view is intact. We expect the German yields to fall towards 0.10%-0.8% (30Yr) and -0.45% / -0.50% (10Yr) in the coming weeks.

The 10Yr GoI (6.2001%)remained stable around 6.20%. We retain our view of seeing a rise to 6.3%-6.32% while the yield remains above 6.18% before a fresh fall is seen. The 5Yr GoI (5.6922%) can trade in the range of 5.68%-5.77%.

Key Highlights

• EUR/JPY started a fresh decline below the 131.00 support zone.
• A major bearish trend line is forming with resistance near 131.15 on the 4-hours chart.
• EUR/USD is consolidating losses above the 1.1780 support.
• GBP/USD could attempt a decent increase above the 1.3900 resistance zone.

EUR/JPY Technical Analysis

The Euro started a steady decline from well above 132.00 against the Japanese Yen. EUR/JPY traded as low as 129.62 before it started an upside correction.

Looking at the 4-hours chart, the pair was able to correct above the 130.50 resistance level. It even recovered above the 23.6% Fib retracement level of the key decline from the 132.40 swing high to 129.62 low.

However, the pair failed to surpass the 131.00 resistance. It also remained well below the 100 simple moving average (red, 4-hours) and the 200 simple moving average (green, 4-hours).

The pair faced sellers near the 50% Fib retracement level of the key decline from the 132.40 swing high to 129.62 low. There is also a major bearish trend line forming with resistance near 131.15 on the same chart.

To move into a positive zone, the pair must surpass the 131.00 and 131.15 resistance levels. If not, there could be a fresh decline below 129.80. The first key support is near 129.65, below which the pair could decline towards 128.80.

Looking at EUR/USD, the pair is consolidating above 1.1780 and it must climb above 1.1850 to start a decent increase. Similarly, GBBP/USD must settle above 1.3900 to start a steady recovery.

Economic Releases

• UK Claimant Count Change for June 2021 – Forecast -30.0K, versus -92.6K previous.
• UK ILO Unemployment Rate for May 2021 (3M) – Forecast 4.7%, versus 4.7% previous.
• US Initial Jobless Claims - Forecast 360K, versus 373K previous.
• US Industrial Production for June 2021 (MoM) – Forecast 0.7%, versus 0.8% previous.

[php_everywhere instance="1"]