Market Commentary
US equity markets came back online with a bang, lifted by the prospect that the Fed might not hike in September after all. DJI, S&P 500 and NASDAQ were up more than 2%. Shanghai Composite was up 2.9%, underpinned by rumours of state buying. Overnight comments from Japan’s PM Abe regarding a cut in corporate taxes saw the Nikkei soar by 1000 points its biggest single session gain since 2008.
EUR firmed marginally amid broad USD weakness yesterday. Eurozone 2Q GDP was a touch better than expected and prior reading. The surge in equity Asian equity markets overnight saw some softness in the EUR last seen at 1.1180 levels as it continues to trade as a risk sentiment barometer.
GBP/USD sustained another day of short squeeze on talks of M&A flows. Japanese Insurer Sumitomo Mitsui (NYSE:SMFG) buying UK insurer Amlin (LONDON:AML) for 3.47bn. Today’s July industrial production, manufacturing production and trade data will be eyed for clues as to tomorrows BOE statement and the potential for an early 2015 UK rate lift off.
USD/JPY climbed back above the 120 handle on the sell-off in JPY vs. most of the majors and as the Nikkei roared higher this morning, helped by PM Abe’s plans to cut corporate tax rate by at least 3.3% next year. Also pressuring the pair higher is the M&A deal by Japanese insurer Sumitomo Mitsui Insurance. Seen hovering around 120.60 currently
Technical Commentary
EUR/USD
Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
- Pivotal 1.11 bids arrest the decline offers ahead of 1.1250 now define the current range, a close above 1.1250 will ease the immediate downside pressure, while a close below 1.11 would target 1.09 next.
- Daily Order Flow bearish, OBV sideways to down, Linear Regression and Psychology pierce midpoints from below.
- Monitoring intraday price and Order Flow indicators on a test of 1.1050 or 1.1250.
GBP/USD
Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
- Profit taking below 1.52 sees short squeeze persist, a close above 1.54 eases immediate downside pressure, while 1.5450 caps upside reaction expect drift back towards 1.52. A close above 1.54 targets pivotal 1.5550 again.
- Daily Order Flow bearish; OBV sideways, Linear Regression and Psychology bearish, but stalling.
- Monitoring intraday price action and Order Flow indicators on a test of 1.52 or 1.54.
USD/JPY
Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bullish
- As 121.50 caps upside bears now target a retest of last spike lows towards 116. Only a close back above 122.50 relieves immediate downside pressure, intraday support moves to 119.50 failure here opens retest of 118.50 bids.
- Daily Order Flow bearish; OBV sideways to up, Linear Regression and Psychology recapture midpoints from below.
- Monitoring intraday price action and Order Flow indicators on a test of 119 or 122.
EUR/JPY
Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
- Breach of pivotal 133 range support opens a retest of 2015 lows towards 127 only a close back above 1.35 would reduce immediate bearish pressure. Intraday look for 134.50 to cap upside reactions, while this area contains look for test of stops below 132 next.
- Daily Order Flow bearish; OBV sideways to up, Linear Regression and Psychology recapture midpoints from below.
- Monitoring intraday price action and Order Flow indicators at 134.50 or 132.
