Soft EU manufacturing data offset underwhelming US housing data on Friday, meaning that the majors were mixed but without any real directional moves into the weekend. This did not apply to the commodity bloc, where the Aud in particular suffered badly, finishing at new 6 year lows – and looking as though there is plenty more of the same to come in the weeks ahead. Global equities took a hit, not helped by the global growth outlook and also appear to have further downside ahead. This weeks main event – probably providing the market direction into the weekend – will be the FOMC meeting (Wed), where although no change in policy is expected, markets will be closely watching the wording of the statement from Janet Yellen for any hint of when to expect the first Fed rate hike. Elsewhere, it will be busy throughout the week, beginning today with the release of the German IFO Business Climate/Expectations, US Durable Goods Orders.
CURRENCIES
EUR/USD: 1.0978
Res
1.1020
1.1050
1.1085
Sup
1.0965
1.0925
1.0900
USD/JPY: 123.75
Res
124.00
124.20
124.50
Sup
123.75
123.55
123.30
GBP/USD: 1.5509
Res
1.5540
1.5570
1.5600
Sup
1.5500
1.5470
1.5450
USD/CHF: 0.9619
Res
0.9645
0.9670
0.9690
Sup
0.9600
0.9575
0.9560
AUD/USD: 0.7278
Res
0.7300
0.7325
0.7340
Sup
0.7260
0.7235
0.7200
NZD/USD: 0.6566
Res
0.6600
0.6625
0.6650
Sup
0.6550
0.6525
0.6500
INDICES / COMMODITIES
S+P: 2079
Res
2085
2095
2105
Sup
2070
2060
2050
DJI: 17528
Res
17575
17625
17700
Sup
17475
17425
17355
ASX SPI: 5467
Res
5490
5510
5530
Sup
5450
5425
5390
GOLD: 1099
Res
1100
1105
1110
Sup
1090
1085
1075
SILVER: 14.66
Res
14.90
15.15
15.40
Sup
14.55
14.25
14.00
OIL(WTI): 48.03
Res
48.40
49.00
49.55
Sup
47.60
46.60
45.35
Indices/commodities
S&P Futures
2079
Global equity markets fell hard on Friday, under pressure from weak commodities and exacerbating concerns over the global economic growth outlook. Copper fell to a six-year low which came on top of weaker than expected data from China and the EU, and does not paint a healthy picture. The S+P headed almost perfectly to the Fibo support at 2068 (61.8% of 2034/2125), by reaching 2069, before a minor bounce to close the week at 2078. With the 4 hour and daily charts seemingly building further downside momentum, we could see a run towards the 200 DMA (2063) and beyond, towards 2055 (76.4%) and potentially towards the very strong support at 2030/35. The topside would seem limited now to the previous strong support – now resistance – at 2090, and selling near here, with a tight stop above 2100 would seem to be a plan. We have been here before though, and it could be that further choppy trade within the recent range is going to continue, at least ahead of the Fed, Wednesday. I think the downside looks more favoured over the next few sessions.
DJI
17528
Ditto S+P. Having fallen to reach the 17500 support (low 17472) and with both the 4 hour and daily charts pointing lower, further downside momentum looks likely, with support to be seen at 17400 and at the important 17353, 6 July low (38.2% of 15768/18330). A break of this would open the way towards 17280 and possibly to the major rising trend support at 17160. The topside will see sellers at 17620 and then at the 100 DMA at 17715. Any approach to this would seem to be a sell opportunity, with a SL placed, ideally above 17850 although probably lower for more conservative traders.
ASX SPI
5467
The SPI continued to the downside into the end of the week, not helped by the weak commodity complex, global manufacturing data or the direction of the other global equity markets. Friday’s action saw a move to 5452, meeting the Fibo support (61.8% of 5323/5668) and looking as though it may want to test 5430 (76.4%) and given the weak price action and outlook for commodities, this would seem to be the direction to concentrate on. The short term charts do show some mild bullish divergence though, and a bounce could take the SPI back to the 50% pivot of 5323/5668 at 5495, beyond which (unlikely today) would head towards 5525 and potentially back to the 200 HMA at 5570 and the 200 DMA at 5580. Right now, any move back to 5500 would seem to be a sell, although it could just be rather choppy ahead of Wednesday’s Fed meeting.
GOLD
1099
Gold managed a bit of a comeback on Friday and after falling to 1077 it bounced impressively, by $25oz, to 1101 before closing the week at 1099. This choppy action seems likely to continue in the near term, but further out things still do not look healthy, and further losses, (possibly not helped by a strengthening dollar/ hawkish Fed), would see Gold head back to Friday’s 1077 low and on to last Monday’s spike low at 1070, beyond which there is not too much to hold it up ahead of 1045 (Feb 2010 low), and 965 (Oct 2009 low), with an eventual target being at 888 (61.8% of 254/1921). Back above 1105/10, the topside will run into strong selling interest on the approach back towards 1130, with 1115/20 likely to be toppish on an intraday basis. Selling rallies at 1110/15 seems to be the plan with a tight SL placed above 1120.
SILVER
14.66
Silver had another choppy day on Friday, finishing unchanged at 14.63 but only after bouncing back from a low of 14.37, meaning that it met the initial target at the 1 Dec ’14 low at 14.41. The choppy, downside momentum seems set to continue, with the next support, below 14.35/40 to be seen at the 200 MMA (14.15), which should be very strong at the first attempt, and eventually to the major rising trend support, joining the 2003/2008 lows, at 13.00. The longer term target would seem to be somewhere around 8.40 (Oct 2008 low) albeit that this is a long way off at this stage. Back above 15.00, which looks doubtful, the topside will find sellers at 15.25, 15.40 and again at 15.75/85 ahead of 16.00. Selling into strength is again favoured, on the back of a view of a strengthening dollar, but with a tight SL placed above 16.00.
OIL(WTI)
48.03
WTI extend losses to new weekly lows of 47.70 on Friday after a rise in the number of operational U.S. oil rigs, which rose from 638 to 659. Further losses appear to lie ahead, with the next support to be seen at the Fibo level at 46.80 (76.4% of 42.02/62.55). A break of this leaves a bit of a black hole of support which potentially could see a steeper decline towards 44.90 and 44.60 (both minor) ahead of 43.56 (29 Jan low) and 42.02(18 march low). The topside will encounter offers at 48.50 (minor), 49.50 (100 HMA) and at 50.00. The short term descending trend resistance (from 24 June high: 61.54) is currently at 51.70 but falling rapidly, so do not discount a move back to meet this area. Selling rallies remains the theme, but note that the hourlies are showing some mild bullish divergence, so there is a good chance of seeing a run back towards 49/50, and even towards 51.00, before the bigger downtrend continues.
EUR/USD: 1.0978
The EurUsd finished the week with a rangebound session, trading within a 1.0995/25 range and with soft EU manufacturing data offsetting some lowers than anticipated housing numbers,, stymieing any directional move wither way.
It is going to be a busy week, beginning today with the German IFO Business Climate/Expectations and then later on, the US Durable Goods Orders although the main event will be on Wednesday’s FOMC Meeting. No change is expected at this month’s meeting but a hawkish outlook from Janet Yellen, backing up her recent comments, would underpin the dollar as the market smells an approaching rate hike, possibly as soon as September.
Note that, on Friday, the Fed “accidentally” published “confidential” staff documents on their website, projecting that there will be one rate hike before December. As there will be post-meeting press conferences only in September and December it probably makes a September hike the more likely scenario, although the dollar will need some affirmation from some solid data and also from the Fed regarding the chance of a September hike, in order to gather the momentum for another move higher. aside form today’s Durable Goods Orders, the US provisional GDP is due on Thursday.
Technically there is little new to suggest, although while the daily charts look mildly positive, the downside may be somewhat limited early in the week. A weak IFO/strong Durable Goods figure could change that theory very quickly as we head towards the Fed, Wednesday. It is worth noting that there are heavy 1.1000 option expiries into month end.
Back above 1.1000 (daily cloud base), the Euro would need to overcome 1.1011 (50% pivot of 1.1215/1.0807) and last week’s 1.1014 high in order to head towards the 15 July high (1.1035) and higher, to the 61.8% Fibo resistance at 1.1060. Beyond here might be doubtful today, but further rallies would then head on to 1.1118 (76.4%) and possibly back to the 10 July high at 1.1215.
The downside will see buyers at the minor double bottom at 1.0920/25 low, where the 200 HMA will provide additional assistance. A break of 1.0900 would re-open the way to 1.0869, the previous session low, and to 1.0850 (minor). Below here would return to the 1.0810/20 area, where solid support lies and will unlikely be broken today.
Further out, below 1.0800 would see an acceleration lower, towards the next major level, to be found some way off at the 76.4% retracement of the move up from 1.0520/1.1466 at 1.0742, and to be followed by the 100% Fibo extension of 1.1435/1.0915, from 1.12015, at 1.0695, which ties in perfectly with the 76.4% move of the larger Fibo rally off the low from 1.0461/1.1466. Further out, a larger decline would then open the way to the major lows at 1.0520 (13 April low) and 1.0461 (13 March low).
Economic data highlights will include:
M: German IFO Business Climate/Expectations, US Durable Goods Orders
T: German Consumer Confidence, Case Schiller House Price Index, Richmond Fed Mfg Index
W: German Provisional HICP, CPI (Jul), US Markit Services, Composite PMI, Pending Home Sales, FOMC Meeting/IR Decision/Statement
T: German Unemployment, EU Economic Bulletin, Economic Sentiment Indicator, Industrial Confidence, Services Sentiment, Business Climate, US Provisional GDP (Q2), Jobless Claims
F: EU Provisional CPI, Unemployment Chicago Purchasing Managers Activity, Rts/Michigan Consumer Sentiment Index.
Meta Trader – AxiTrader
EUR/USD: 4 Hour
…
USD/JPY: 123.75
US$Jpy has had another session of chopping around either side of 124.00 on Friday, making it up to 124.08 but unable to hold on to its highs after the soft US data, which caused a brief slide to 123.58, where the recent lows held and allowed a bounce back to 123.75 at the close of the week, currently sitting right on the daily Tenkan..
The outlook therefore again remains pretty much unchanged. As we said previously, while the dailies do still point higher, they appear to be running out of some upside momentum, so it maybe that the dollar continues to chop around current levels as we head towards the Fed decision on Wednesday.
Back above 124.00 would again find good offers in the 124.15/20 area, a break of which would allow progress to the equally tough 124.45 level. Beyond this, 124.55 (76.4% of 125.85/120.40) needs to be taken out in order increase the confidence for a move towards 125.00, a break of which would open the way towards the trend high at 125.85 (5 June). This currently looks as though it will take a while.
The downside will again find good bids at the last three session lows, within the 123.55/65 area, a break of which would then encounter further strong support at 123.50 (23.6% of 120.40/124.47/200 HMA). Below 123.50 would open the way to 123.00, a break of which will see bids at 122.90 (38.2% of 120.40/124.47), albeit probably not for a while.
Economic data highlights will include:
M:
T: Unemployment
W: Japan Retail Trade
T: Japan CPI, Industrial Production, Foreign Bond/Stocks Investment, Housing Starts, Construction Orders
F:.
Meta Trader – AxiTrader
USD/JPY: 4 Hour
…
GBP/USD: 1.5509
Cable had another tough session on Friday although it rebounded from its 1.5466 lows to finish the day unchanged at just above 1.5500.
Weak oil prices & inflation expectations weighed on the downside for Cable, which was also not helped by the soft German flash PMIs, although the underwhelming US housing data did allow a bit of a bounce towards the end of the session.
The coming week is a bit thin on the ground for Cable, with the main driver being the provisional UK GDP (Tue). Most of the focus will be on the outcome of the FOMC Meeting, while soundbites from BOE officials talking up/down the chance of a year end rate hike cannot be ruled out.
Currently sitting above 1.5500, the initial support will be seen at the rising trend support, currently at 1.5475, and at the Friday low at 1.5466. A break of this would head towards the 14 July low at 1.5451 and then to the 200 DMA at 1.5405 and maybe, eventually towards the 8 July low at 1.5329 and the 100 DMA at 1.5290.
The topside will find sellers at Friday’s 1.5525 high and again at 1.5560 (100 HMA), beyond which would head towards the 200 HMA at 1.5585 and which might prove a struggle to overcome today, should we get there. If wrong, then we are heading back to 1.5600 and above, eventually to Thursday’s session high at 1.5670, where there is now a triple top and would provide stern resistance.
Economic data highlights will include:
M:
T: UK Provisional GDP
W: UK Consumer Credit, Net Lending
T:
F:.
Meta Trader – AxiTrader
GBP/USD: 4 Hour
…
USD/CHF: 0.9619
US$Chf had another choppy session, mostly near 0.9600 but which also included a brief dip to 0.9573 following the US data before an equally quick return to higher ground, actually making a session high at 0.9635, before closing at 0.9620.
The Chf has taken on a very soft tone over the last few days, possibly feeling that the safe-haven demand following the Greek/EU agreement has diminished and seems to suggest the dollar is attempting to head to higher ground. EurChf headed higher for the 5th session in a row in trading up to 1.0580, briefly taking out the June high (1.0573), reaching its highest level since March 23. Although no particular reason lies behind the rally the fingers are pointing towards the SNB as well as the easing of tensions in Greece.
At this stage, the theory that the dollar is heading higher seems a little premature and further gains would once again run into sellers at the 0.9630/35 levels, a break of which would find further offers at last week’s top at 0.9648. Beyond here looks a bit unlikely today, but if wrong, we would then see a run towards 0.9675 (76.4% of 0.9862/0.9071) and then to 0.9718 (23 April high).
Back below 0.9600 (100 HMA), bids will once again arrive at the 0.0.9575 Friday low and also the 200 HMA. A break of this would head to 0.9660, with further buyers to be found at the 23 July low (0.9525) and then at the previous strong resistance offered by the 100/200 DMAs at around 0.9510/15.
For the coming session expect more of the same. Use 0.9580/0.9635 as a guide, but with a preference to buying dips for the medium term move north.
Economic data highlights will include:
M:
T:
W: UBS Consumption Indicator
T:
F:.
Meta Trader – AxiTrader
USD/CHF: 4 Hour
…
AUD/USD: 0.7278
The extremely soft Caixin China manufacturing PMI was the catalyst that broke the back of the Aud on Friday, causing it to head down to a low of 0.7260, before a mild bounce into the end of the US session, assisted by some soft US data which put the US$ under a little pressure of its own.
Commodities had another tough day, although Copper did manage to stall its recent losses (Brent crude -1.14%, WTI -0.8%, Aluminium +0.5%, Copper +0.1%, Gold +0.3%), but the outlook is not encouraging.
This week sees some secondary data, although much of the focus will be again be on commodity prices, which as I said, do not look at all healthy and in the medium term will continue to be a drag on the Aud. The main event risk will come from the FOMC Meeting (Wed) where a hawkish Fed would put a further bid tone under the US$, keeping the downside pressure on commodities and on the Aud as yield spreads continue to contract..
Technically, things do not look positive, and having finished the week below the 0.7285/90 support, the way looks open to much lower levels with the 4 hour charts suggesting little relief to the topside. There is very little support until we get to the monthly charts, where the next target will be at the very strong level at around 0.7200, where two important Fibo levels are lining up (0.7210: 61.8% of 0.4773/1.1082 and 0.7180:76.4% of 0.6006/1.1082) and which could appear on the horizon rather quickly. Taking some profit on short positions near here, looking to re-sell into any potential bounce seems to be a plan. If wrong, and the support does not hold, then the Aud is on its way to test the major rising trend support from Sept 2001 – joining the Sept 2009 low,- currently at 0.7130.
The topside looks capped at 0.7300, although maybe we should allow the possibility of a return to 0.7350. If the Fed turn out to be a little dovish on Wednesday then the US$ will come under pressure, giving the Aud a reprieve which could see a further squeeze towards at 0.7375 and possibly at 0.7400, above which will run towards Thursday’s high at 0.7416. I don’t think we are likely to get close to this, but if wrong, further gains would take the Aud towards 0.7430 (minor) and the weekly high of 0.7448.
Any significant rally appears to be a decent sell opportunity and as I have droned on about many times before I suspect that eventually 0.7000 will eventually appear on the horizon and, in the longer term, so will 0.6000 http://www.fxchartsdaily.com/audusd-aud-heading-0-6000-check-monthly-chart/. If correct, this is going to be some way off (2016/17?), so don’t get too excited yet as the carry will be expensive!
Economic data highlights will include:
M:
T: NAB Business Conditions/Confidence
W:
T: Building Permits, Import/Export Price Index
F: Private Sector Credit
S: China NBS Mfg, Non Mfg PMIs.
Meta Trader – AxiTrader
AUD/USD: 4 Hour
…
NZD/USD: 0.6566
The Kiwi has now given up all its post-rate-cut short squeeze gains to 0.6694, finishing the week at close to Friday’s lows at 0.6566 and looking as though it could remain under some pressure in the sessions ahead.
In economic terms, the coming week will be a bit thin for the Kiwi although traders will use the scheduled secondary data to decide on the likelihood of the possibility/timing of the next rate cut from the RBNZ. In the meantime it will be commodity prices and Fed watching that will take up much of the concentration of traders.
While the 4 hour charts point lower, the dailies are still recovering, after having become oversold, so I would not be getting overly bearish down here as we could yet see some interim bounces, particularly if we get a cautious Janet Yellen on Wednesday. In the meantime, if we do head lower there will be minor support at 0.6545 ahead of the strong 0.6500/05 level. A break of 0.6500 though would be ominous, with only minor support at 0.6420 ahead of the next, stronger level at the base of the channel, currently at 0.6380, beyond which there is little to be seen until well over the horizon, at 0.6194 (July 2009 low). Maybe not over the horizon for long!
The topside will find sellers at 0.6580 (minor) and then at 0.6600 (100/200 HMAs). Beyond here may be tricky today, but further gains would head to 0.6660 where the top of the channel now lies, and then to the short squeeze high at 0.6694, but which I don’t think we are going to see again for quite a while.
Selling rallies remains the general theme.
Economic data highlights will include:
M: ANZ Business Confidence
T: NZ Trade Balance
W: NZ Building Permits
T:
F:.
Meta Trader – AxiTrader
NZD/USD: 4 Hour
…
EURGBP: 0.7065
EURGBP: EurGbp traded nicely last week, in holding the base of the long term channel and bouncing well from the 0.6935 low to exactly reach our topside target of 0.7100, before closing the week at 0.7065. Daily momentum now points to the chance of further gains and a break of 0.7100 would open the way towards 0.7140 (38.2% of 0.7482/0.6934) and possibly towards the strong resistance at around 0.7200 (descending trend resistance/100 DMA/23.6% of 0.8038/0.6934), which if seen would appear to be a decent sell opportunity, with a SL placed above the early July, minor triple top at 0.7225.
The monthly charts do point lower though and, given the diverging central bank policies between the ECB/BOE, an eventual move towards long term Fibo support at 0.6650 (76.4% of 0.5680/0.9802) would seem to lie ahead. That is a long way off though and before then there will be plenty of support at 0.7000, 0.6985, 0.6960 (all minor) ahead of the current trend low at 0.6935 and the long term channel base, currently at around 0.6905.
In the short term, buying a dip towards 0.7000, with a SL placed sub 0.6985 may be a plan, looking for another squeeze to 0.7100/40 area.
Meta Trader – AxiTrader
CROSS: Daily
…
EURAUD: 1.5085
EURAUD: The cross appears to be breaking higher after having broken and closed the week above the long term descending trend resistance/ channel, which comes in at 1.5000. Further advances look likely, although resistance lies close by at 1.5120 (23 Dec ‘14 high), but above which could see a rapid move towards the 17 Dec 2014 high at 1.5330.
Support should now arrive at 1.5000, but below which would signal a false upside break and could take the cross quite sharply lower and back towards 1.4900 and even to the minor rising trend support at 1.4630. I don’t think we see it down here though and, while preferring to trade from the long side, a nimble stance is required as the dailies are giving the first hints of some minor bearish divergence.
Meta Trader – AxiTrader
CROSS: Daily
…
GBPAUD: 2.1300
GBPAUD: The cross continues to move to higher ground, last week reaching a peak of 2.1342, pretty much where it closed.
As we said last week, having now taken out the March 2009 high of 2.1002, the way looks open to much stronger gains, with the next realistic resistance being at 2.2213 (61.8% of 2.7055/1.4379). Before then the next target will be the 15 Mar 2009 high at 2.1496, but there is little above there to stop in heading on to 2.2000.
Support should arrive at 2.1000 but leave room for a deeper correction as well, which could take the cross back towards last week’s low, where rising trend support lies, at 20.888, and possibly to 2.0740 (23.6% of 1.8826/2.1342). Buying dips remains favoured..
Meta Trader – AxiTrader
CROSS: Daily
…
EURJPY: 135.65
EurJpy had a choppy week, finishing around 100 points higher after a range of 133.90/136.40, but as with last weeks outlook, it appears as though it is in the process of building a Head/Shoulder formation, with a neckline at 133.35 (also 100 DMA), a break of which would target 125.00, or thereabouts, so worth watching.
It is premature to sell it yet but a break of the neckline would see an acceleration lower towards 130.00 and lower. The 200 DMA is at 136.90, so SL should be placed above here, or ideally above the 100 WMA at 137.60.
Meta Trader – AxiTrader
CROSS: Daily
…
DXY: 97.19
The Dollar Index finished the week on a relatively weak note, towards the lower end of it 96.88/98.15 range and looks as though the choppy consolidation, possibly to slightly lower levels, may continue in the week to come, although direction will largely be dictated by the wording that Janet Yellen uses in the Press Conference/ Statement following the Fed Meeting on Wednesday.
If the DXY does head lower, then below last week’s 96.88 low, would find buyers at the rising trend support/100 DMA at 96.55, below which would suggest a return towards 96.00, where I think the index would most likely be a buy, with a SL placed under 95.45 (9 July low). If wrong on this, then the DXY could see a deeper decline towards 96.68 (29 June low).
Overall though, as with last week the DXY appears to be building a large bullish flag formation which could potentially see the dollar trade much higher. No point in getting too excited about that just yet, and in the meantime we still have to overcome 0.9800 and last week’s 98.15 high, above which further resistance lies at 98.42, which we have not seen since 23 April. Eventually, I think we are going to do so though, beyond which would head towards 98.70 (minor) after which there is not too much to hold it from heading on to the descending trend resistance at 99.10. A break of this could be significant, giving added credence to the bull flag theory, with further targets being 99.99 (13 Apr high) and 100.39 (13 March high.)
Looking further out, a break of 100.40 would then target 101.77 (61.8% of 121.02/70.69), a break of which would head towards the March 2003 high at 102.15. In the longer term the Jan 2003 high at 103.20 would come into view but it will take a while.
Given the look of the indicators I would expect the DXY to come under some mild selling pressure early in the week, possibly reversing later on, but dependent on the outcome of the FOMC.
www.tradingview.com
DXY: Daily
DXY: Weekly
…
The post 27 July: Currencies mixed, Commodities, Equities lower ahead of FOMC – Wednesday (early Thursday-Asia). appeared first on FX Charts Daily.