Daily Market Outlook, July 6, 2021
Overnight Headlines
- Australia's RBA to taper bond buying, leaves OCR at record low 0.10%, still dovish • Sydney COVID lockdown call looms as new case numbers drop • NZ business outlook rebounds sharply, triggering rate hike speculation • NZ Q2 NZIER Confidence, 7% -13% prev; Capacity Utilization 94.9, prev 93.3% • BOJ cautiously upbeat on regional Japan as divergence widens • Japan's May household spending -2.1% n/n, +11.6% y/y, -3.7%, +10.9% eyed prev +0.1%, +13.0% • Japan's May real wages +2.0% y/y, largest monthly gain since June 2018, total cash earnings +1.9% • Japan's ruling party eyes cash payouts for low-income citizens – NHK • Japan to extend COVID restrictions for 30m people until after Olympics – Nikkei • Japan DepPM Aso – Peaceful solution desirable for any Taiwan contingency • Return to normal? UK PM Johnson outlines end to England's virus restrictions • Bank of Canada survey: Q2 business sentiment improves, economic recovery seen broadening • OPEC+ abandons oil policy meeting after Saudi-UAE clash • Asset owners managing $6 trln call for global carbon price
- Looking Ahead – Economic Data (GMT) • 09:00 DE Jul ZEW Economic Sentiment, 75.2 f’cast, 79.8 prev; Current Conditions, 5.0 f’cast, -9.1 prev • 09:00 EZ May Retail Sales MM, 4.4% f’cast, -3.1% prev; YY 8.2% f’cast, 23.9% prev
- Looking Ahead – Events, Auctions, Other Releases (GMT) • 08:10 ECB De Guindos speaks at University of Madrid event • 12:00 ECB Enria exchanges views with Italian Senate Finance Commission
G10 FX Options Expiries for 10AM New York Cut
(Hedging effect can often draw spot toward strikes pre expiry if nearby)
EUR/USD 1.1840 (494M), 1.1865-70 (1.1BLN), 1.1875-80 (945M), 1.1895-1.1905 (1.7BLN)
USD/JPY 109.60-70 (3.1BLN), 110.70-75 (605M), 111.00 (1.8BLN), 111.20 (715M), 111.50 (300M), 112.00 (573M)
GBP/USD 1.3900 (265M)
EUR/GBP 0.8475 (360M), 0.8600(250M), 0.8650 (426M)
USD/CHF 0.9240 (230M), 0.9290 (230M)
USD/CAD 1.2400 (416M), 1.2445 (230M)
AUD/USD 0.7500 (298M), 0.7620 (510M), 0.7640 (344M), 0.7650-70 (900M)
Technical & Trade Views
EURUSD Bias: Bearish below 1.20 Bullish above
Edges higher as risk currencies lead USD lower • EUR/USD opened little changed at 1.1866 and traded in a 1.1859/75 range • AUD and NZD surged higher in Asia and gave the USD a broadly offered tone • EUR/USD resistance is at 10-day MA at 1.1892 and break would ease pressure • EUR/USD still in downtrend with 5, 10 and 21-day MAs in bearish alignment • Buyers are tipped ahead of 1.1850 with support at Friday's 1.1807 low
GBPUSD Bias: Bearish below 1.4080 Bullish above.
Major resistance broken, but close is key • +0.25% at top of a 1.3849-1.3888 range after late morning flurry of interest • Respect financial watchdog independence, lawmakers tell Gov't • Charts; recent bounce leaves, falling 10 & 21 DMAs, 21 day Bolli contract • Strong bearish trending signals have dissipated, but remain net negative • 1.3863 10 DMA, that capped this fall broken – stops tripped, close above key • Strong close would end downside bias and suggest a period of consolidation • 1.3930-50 next resistance, 38.2% June/July fall and 21 DMA – break bullish • Cable clears key resistance as positives build – close key Key resistance caps sterling but positives build Sterling's downtrend has stalled with the U.S. dollar under pressure since Friday's robust U.S. payrolls data, and positive news from the UK now leaves GBP/USD poised below key resistance
USDJPY Bias: Bullish above 108 targeting 112
Soggy with US yields, some crosses fare better • USD/JPY 110.79-99 in Asia, heavy with US yields, Tsy 10s @1.445% • Volume low with flows few and far between ahead of US market re-open • Option expiries help contain action – 110.70-75 $609 mln, 111.00 $2.1 bln • Offers eyed 111.00+, bids from 110.70-75, towards 110.50 • Some JPY crosses fare better, AUD/JPY and GBP better bid, summer carries? • AUD/JPY 83.47 to 83.82, GBP/JPY 153.50 to 153.92, EUR/JPY heavy, 134.45-60 • Tokyo risk more on, Nikkei +0.3% @28,690, AXJ mixed
AUDUSD Bias: Bearish below .7790 bullish above
AUD/USD opened at 0.7525 and started tracking higher on back of NZD/USD • Strong NZ business confidence send NZD/USD soaring, as RBNZ expectations became more hawkish • The AUD/USD moved up despite AUD/NZD selling to slow the pace somewhat • The AUD/USD traded as high as 0.7571 before the RBA decision • Buying likely due to prospect of a hawkish surprise from the RBA • AUD/USD was around 0.7560/65 when the RBA announced its decision • As expected the RBA tweaked the bond buying program and didn't extend to the Nov 2024 maturity • RBA retained dovish bias by repeating rate hike "unlikely to 2024", but left out "at the earliest" • AUD/USD slipped below 0.7550 before steadying around 0.7550/55 • The market will now wait for RBA Governor Lowe press conference • AUD/USD resistance is at 200-day MA at 0.7573 • A break above 0.7575 targets 38.2 fibo at 0.7615 • AUD/USD support at 10-day MA at 0.7540 and break would ease upward pressure
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!