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[KeyToMarketsUK]

KTM FX Weekly: EURUSD 23.6% fib reaction is commanding the corrective rally

EURUSD has stabilized after Italy’s political risk premium narrowed. The major is subject to consolidate in a tight range this week after a decent rebound from last week’s low. The latest political developments in Italy and the month-end FX positioning are indicating the euro is offering limited upside risk in the tight range.

Yesterday’s economic data Sentix investor confidence revealed that the EZ is lingering with less optimism. “The new government in Italy is giving investors fears for the eurozone” reported by Sentix, the pioneer and leading provider of sentiment analyses (behavioural finance) in Europe. In the press release, the research institution also reported “The eyes are now once again on another Italian, Mario Draghi. How will the ECB respond to the new political situation?”.

Turning to Germany, the economy is also under pressure for the fifth time in a row, the overall index for Germany has fallen to its lowest level since July 2016. “The German economy, which seemed invulnerable at the beginning of the year, is now facing a relatively rough headwind. Expectations drop significantly to -13.8 points.” Said Sentix.

Whereas moving to inflation data for EZ, Spain, and Germany the readings are well anchored above market expectations. Based on the last week’s inflation readings we could confirm that Macro data is likely to cast this week’s technical trend as political risk is almost priced in the near-term euro’s action.

Data review:

Investor confidence for the Eurozone fell by more than 11 points to – 13.3. This is the lowest level since August 2012
Germany CPI are expected to increase by 0.5% on April
The annual inflation of the Spain CPI in May 2018 was 2.0%. It would imply an increase of nine tenth in the annual rate, since in April this change was 1.1%
Over one month, French CPI should increase a little stronger than in April +0.4% after 0.2%
EA annual inflation is expected to be 1.9% in May 2018, up from 1.2% in April 2018

Data preview:

The release of the services PMI for EZ being watched closely but not a game changer.

TECHNICAL OVERVIEW​

In May DKK, EUR and GBP were the weakest currencies in the G10 space.

We believe CAD, TRY and NZD could perform further in June against the EUR.

The growing number of resistances are indicating the price capped for Q2. Selling pressure remains very strong at the parallel resistance seems to be at 1.1750, May 24 high which coincides with the 20MA and the 23.6% fib reaction( 1.2555-1.1510 correction). Earlier May 14, the price was rejected at the same 23.6% (1.2555-1.1822 correction).

Whereas the price manages to close above the descending channel is still open the possibilities to breach the 20MA. A stiff footprint above the parallel resistance could open further to 1.1800/1.1820 and 1.1870 in the coming days. The daily studies RSI and the oscillator are remaining bullish.

Last week, we forecasted a cautious neutral view and later upgraded to cautiously bullish. Now we retain our cautiously bullish view with supports at 1.1590 and 1.1500.

Q2 range: 1.2000-1.1450

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[KeyToMarketsUK]

KTM Commodity: Copper breaking the symmetrical triangle

Copper has continued to rally with breaking the symmetrical triangle resistance trendline, and the psychologically crucial forthcoming resistance seems to be at 3.2980. Since the daily and weekly oscillator has picked up and another bullish break through Dec 2017 high could open fire to July 2014 high 3.2900 and 3.4200 levels in the medium term. The supports are at 3.1600, and 3.02 double bottom and additional support are at 2.9500 levels.

NOTE: Copper and AUDSUD are highly correlated. We expect AUDUSD will follow Copper’s way in the coming days. Today Aussie GDP is the key driver to the cross AUDSUD.

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​

 

[KeyToMarketsUK]

KTM FX: EURUSD more developed player

EURUSD briefly breached 23.6% fib reaction (1.2555-1.1510 correction) on Wednesday. Once again it will be quiet regarding Tier-1 data releases, and that will leave investors’ focus on next week’s Fed and ECB press conference.

Data review:

Spain and Italian Services sectors are continued to expand during May whereas France and Germany shifted down a gear during the same period. We could expect France and Germany growth could rebound in June.

According to Chris Williamson, Chief Business Economist at IHS Markit said “The pace of eurozone economic growth sank to a one-and-a-half year low in May, and has now slowed continually since January’s peak to suggest that the region is on course for its worst quarter since 2016.

Chris also said, “With the economic indicators turning down at the same time as political uncertainty has spiked higher, the eurozone’s outlook has darkened dramatically compared to the sunny forecast seen at the start of the year.”

• Spain Services PMI rose to a three-month high of 56.4 in May, from 55.6 in April
• Italian Services PMI posted 53.1 in May, up from 52.6 in April
• France Services PMI down to 54.3 in May, from 57.4 in April
• German Services PMI fall from 53.0 in April to 52.1, its lowest reading since September 2016
• At a 16-month low of 53.8, the final Eurozone PMI Services Business Activity Index was below April’s 54.7 and the earlier flash estimate of 53.9

Turning to central bank’s policy meeting, RBA remained on hold whereas RBI increased the interest by 0.25%. It is widely accepted the Federal Reserve will hikes interest rates again in June 12-13 meeting. As we pointed in our earlier article, we remain to our forecast, “expect four Fed hikes in 2018, but more confirmation will be available at the June meeting”.

Moving to ECB’s June 14 meeting, we could expect a hawkish twist and remained to our EURUSD bullish view. According to Peter Praet, Member of the Executive Board of the ECB said: “ Next week, the Governing Council will have to assess whether progress so far has been sufficient to warrant a gradual unwinding of our net purchases.”.
Regarding inflation Peter said “Signals showing the convergence of inflation towards our aim have been improving, and both the underlying strength in the euro area economy and the fact that such strength is increasingly affecting wage formation supports our confidence that inflation will reach a level of below, but close to, 2% over the medium term”.

Based on his speech at the Congress of Actuaries, Berlin we expect the probability of policy change is growing bigger either in next week’s meeting or in July.

Finally looking through the FX technical picture, the EURUSD surpass the 23.6% fib reaction and manage to close above 20MA for the first time since mid-April. Supports are at 1.1650 and 1.1590. The flip side, resistance seems to be at 1.1800/1.1835 and 1.1870 levels.

The Q2 range will remain between 1.1450-1.2000

Read: Retain our EURUSD cautiously bullish view
http://www.keytomarkets.com/blog/bl...-reaction-is-commanding-the-corrective-rally/

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[KeyToMarketsUK]

KTM FX: Friday morning FX comments. Chart of the day EURCAD

The Central Bank of Turkey raised the repo rate for one week to 17.75%, up from 16.5% previously, as a result, Turkish Lira strengthens 2.00% overnight. The dollar index (KTM:USDX) at 93.40, US 10Y at 2.93% remain below 3.0%.

Today once again it will be quiet regarding Tier-1 data releases, and that will leave investors’ focus on Canada’s jobs data.

FX:

AUDUSD: Failing at 100EA, consolidating between (0.7595-0.7675)

AUDNZD: Traced out a double top and rejected at 200MA

EURUSD: Manages to close above 20MA again

EURGBP: Rejected at 200MA

GBPUSD: Manages to close above 20MA again
USDJPY: Stiff resistance @200MA
USDCHF: Closed below 50MA. Scope to test the support zone 0.9770-0.9730

USDTRY: Hovering above the parallel support at 4.4470

USDZAR: Closed above 200MA finally whereas 13.20$ will be the lid

NZDUSD: Paused at 38.2% fib reaction (0.7395-0.6850)

Commodity corner:

Bitcoin: Unable to breach the early June high

Brent: Rebound 50.0% of the recent fall but a tad below 20MA at 77.50$

Copper: Fail to close above Dec 2017 high

Gold: Locked between 1308$-1289$

Silver: Rejected at 200MA. Bullish breakout looms >17.00$

Chart of the day: EURCAD

The cross was rejected at 1.5360 the parallel resistance above this, we see levels between the 1.5460-1.5510 as likely to meet resistance, and we target a move towards 1.5150 in the first instance. Noting that 50MA exists at 1.5380.

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[KeyToMarketsUK]

KTM FX Weekly: ECB vs FOMC preview

The brand new week wraps with the G3 central banks FOMC (Wed), ECB and BOJ (Thu) monetary policy meetings.

Central bank meetings: Ahead of the three central bank meetings USD, EUR and JPY crosses need more attention.

ECB vs FOMC

• Weak economic data vs Better data
• Hawkish hold vs Neutral hike
• Euro favors dip buying vs dollar’s limited upside risk

Hawkish hold:

Recent Italy turmoil and the saga of weak economic data would push the policy normalization till the end of 2018 at least. The ECB began to be shrinking the net asset purchase in Jan 2018 from 60Bn euro to 30Bn euro.

We are more focusing on the ECB’s macro projection in June 14 meeting. Recent Italy political turmoil would shift the ECB to wait and see approach for short time. The macroeconomic projections cover the outlook for the euro area, in particular with regard to GDP and inflation.

GDP rose by 0.4% in both the EA and the EU during the first quarter of 2018, compared with the previous quarter, according to an estimate published by Eurostat.

A recent set of inflation data revealed Euro area annual inflation is expected to be 1.2% in April 2018, down from 1.3% in March 2018, according to a flash estimate from Eurostat.

The ECB’s preferred inflation measure HICP is expected to be 1.9% in May, up from 1.2% in April 2018, according to a flash estimate from Eurostat, the statistical office of the European Union.

HICPs are used for the assessment of the inflation convergence criterion as required under Article 121 of the Treaty of Amsterdam and by the ECB for assessing price stability for monetary policy purposes. The ECB defines price stability on the basis of the annual rate of change of the euro area HICP. Source: eurostat

“We expect a moderate downward revision in the ECB growth projection (for 2018, not for 2019/2020) and upward revisions to the inflation forecast for 2018/2019, but not for 2020 (1.7%) “according to UBS.

Post last week’s Peter Praet remarkable speech, the hawkish odds have been elevating gradually but still on a cautious note. Based on his speech at the Congress of Actuaries, Berlin we expect the probability of policy change is growing bigger either in next week’s meeting or in July

According to Peter Praet, Member of the Executive Board of the ECB said: “ Next week, the Governing Council will have to assess whether progress so far has been sufficient to warrant a gradual unwinding of our net purchases.”.

Regarding inflation Peter said, “Signals showing the convergence of inflation towards our aim have been improving, and both the underlying strength in the euro area economy and the fact that such strength is increasingly affecting wage formation supports our confidence that inflation will reach a level of below, but close to, 2% over the medium term”.

The FOMC meeting outcome is widely expected to be hawkish in June 12-13 meeting. As we pointed in our earlier article, we remain to our forecast, “expect four Fed hikes in 2018, but more confirmation will be available at the June meeting”. The dollar bullishness cast on the clues regarding further tightening later this year.

FX : We forecast EURUSD (buying the dip), EURJPY (Neutral) and USDJPY (Neutral) in the Q2.

Especially in EUR crosses EURJPY (limited upside), EURGBP (remained in a tight range) and EURCHF (buying the dip at 1.13) favors the trend.

Chart of the day: EURUSD
Read: http://www.keytomarkets.com/blog/blog/ktm-fx-weekly-global-economic-calendar-june-11-15/

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[KeyToMarketsUK]

KTM Brent Weekly: Minor consolidation likely, but remains bearish

• Broken rising trendline
• Corrective ABC structure in progress
• 100MAs are in focus if 50MA off

With Brent oil holding the 50MA last week the price has shifted the action from bearish to a consolidation phase. Traders are focused on the upcoming OPEC meeting in Vienna on June 22. ” crude production in May slid for the fourth straight month to 31.90 million b/d, the lowest in over a year”, according to the latest S&P Global Platts survey of industry officials, analysts, and shipping data.

As shown on the below chart, the price has been trading in the falling channel with lower lows and lower highs pattern formation. Intraday trading resistance dropped to 77.40$ from 79.10$, flips side support has crawled to 74.80$ its 50MA from 74.50$.

A break below $ 75.00 could lead to further adjustments to $74.00 and $ 73.50 initially. The broken rising trendline indicating the Brent oil has additional downside risk. The corrective A-B-C structure on the H4 and Daily charts are pointing to 73.00$ and 71.40$ levels.

​

Ahead of the OPEC meeting, supply zone spread between 78.10$-79.10$ with solid support at 71.50-70.50$ its 100MA exists.

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[KeyToMarketsUK]

KTM FX Daily: FOMC preview and USDX technical overview

The FOMC meeting outcome is widely expected to hike by 25bps to 1.75%-2.00% in June 12-13 meeting. June Fed hike will leave RBNZ behind with 1.75%. Last month, the Bank held the OCR at 1.75 percent and retained the view that monetary policy would remain accommodative for a considerable period.

RBA at its meeting last week, leave the cash rate unchanged at 1.50 percent.

Will FOMC projections signal four hikes?

As we pointed in our earlier article, we remain to our forecast, “expect four Fed hikes in 2018, but more confirmation will be available at the June meeting”. The dollar bullishness cast on the clues regarding further tightening later this year. Market participants are mainly watching on the dot plots (projections) which are available in the Summary of Economic Projections (SEP). After the appointment of new Chair Powell, the market is anticipating a hawkish bias.

Since March the labor market has continued to strengthen and that economic activity has been rising at a moderate rate. Due to higher oil price prices, we expect the committee could upgrade the inflation forecast in the coming year.

May FOMC statement revealed, “Job gains have been strong, on average, in recent months, and the unemployment rate has stayed low.” Incase of lowering the unemployment rate, in the long run, could add fuel to the hawks.

We have two scenarios for FOMC: The Fed forward’s guidance language is the key

Hawkish: Upgrade economic, and inflation forecast are indicating more scope to rate hikes further. Currently, the street is expecting a hike in June and again in September. We believe December hike clue could be the trigger for the dollar bulls. A modest hawkish reaction could expect if four hikes projected in 2018. If dot plots are moved higher in 2019-2020, and the longer term could read as hawkish. Lack of an extra mile factor pressured the dollar bulls. We expect the Fed will erase the sentence “The stance of monetary policy remains accommodative.”

Neutral: If the dot-plot chart lacks an uptick in 2018 and no forward guidance means “slow and steady.” No macro outlook change could divide the Fed watchers (Dovish). Since March the policy bias remains unchanged. The “bitmap” median forecast shows that the Fed will raise interest rates three times in 2018.

The tradable dollar index (KTM: USDX) trading range likely to remain between 94.40-93.20 levels. Before retraced to 93.18 (June 07 low) the index traced out a double top at 95.00 between Nov 2017 and May 2018. The near-term trend remains in a tight range whereas a move above 95.00 needed to forecast 95.40 and 96.25 levels in the medium term. Flip side breaks below 93.00 could open further retracement to 92.40 levels.

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What is your Technical View?

Do you have a different idea? Please leave us a comment and get an answer from our professional analysts.​

 

[KeyToMarketsUK]

KTM FX Daily: EURUSD outlook

EURUSD popped from 1.1725 to 1.1790 after the Fed rate hike and extended the gains on Thursday’s early European session. Twice we tried to breach the mid-May high’s 1.1850 and failed, well above 1.1850 could open to 1.1900-1.1920 levels and on an extreme case, 1.1990 could even possible. Probably we are going to trade between 1.1790-1.1850 before ECB. The daily studies RSI and oscillator are remaining bullish.

Supports are at 1.1780 and 1.1725 levels. A break should expose to 1.1620-1.1590 levels. Our baseline assumption remains that Q2 trading range remains between 1.1450-1.2000 levels.

The further return of USD weakness, which should allow EUR to perform better continuation from the last week with resistance seems at 1.20 in the coming days.

Happy volatile day!

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[KeyToMarketsUK]

KTM commentary: FX, commodity and Crypto overview

EURUSD: We still believe the major likely to remain between 1.1450-1.2000in Q2. After a relentless euro selling, we downgrade the resistance from 1.2000 to 1.1850.

GBPUSD: Traced out a double top at 1.3475. Potential support finds between 1.3070-1.3000 levels. The 50.0% fib reaction (entire 2017 rally) finds at 1.1450, and the 61.8% finds at 1.1180 levels.

USDJPY: Tested and holding the support 110.00. Weekly resistance seems to be at 111.30 a close above this could open further rally to 112.90/113.20 levels.

USDCAD: Cruising above the 30-month descending trendline. The A-B-C structure is pointing to 1.3190 levels.

AUDUSD: Before retraced to one week low, the cross was rejected at 100EA last and this week traced out with a triple top at 0.7626 levels. A move below May low could open to May and June 2017 low’s 0.7330 and 0.7370 respectively. Resistance moved down from 0.7670 to 0.7630.

NZDUSD: Traced out a multi-top at 0.7060 and shifting focus to the support zone finds between 0.6880-0.6850 levels. Between 0.6860-0.6780 the cross has potential support to pause the downfall.

Brent: Remains in the falling channel. On the downside 75.00 is pivotal below this, 74.50 and 73.75 exists. Traders are focused on the upcoming OPEC meeting in Vienna on June 22. The broken rising trendline indicating the Brent oil has additional downside risk. The corrective A-B-C structure on the H4 and Daily charts are pointing to 73.00$ and 71.40$ levels.

Gold: Elevated the support from 1282.00$ to 1289.00$, but remains in the range between 1308.00$-1289.00$. Thrice we tried to breach the mid-May’s high 1308.00$ but failed, well above 1320.00 is an open target.

Bitcoin: The famous crypto currently fell as much as 6066$. It has a parallel support zone finds between 5630$ mid-Nov 2017 low and 5955$early Feb low.

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[KeyToMarketsUK]

KTM FX Weekly: Global economic calendar (June 11-15). Chart of the week- GBPCHF

• Bank of England policy is expected to hold the interest rates
• ECB Forum on Central Banking, Sintra, Portugal, 18-20 June
• Data wise NZ GDP and EZ PMIs are in focus
• OPEC meeting in Vienna on June 22

A dovish ECB send the euro and bund yields lower, flip side hawkish Fed failed to produce a bullish break to the tradable dollar index (KTM: USDX) and the US 10TY well anchored below 3.00%. On Friday NY trade commodities were banged as the volatility back to the diver seat. Trade concerns between US and China are back to the center stage again, and we expect it will remain the key driver over the coming weeks.

Overall, EURUSD lost 1.50% and the dollar index (USDX) rose 1.60% in the past week.

Economic events:

In this week, NZ GDP, EZ PMIs, and Canada inflation are the key risk economic events lined up accompanied by G10 central bank meetings, SNB Monetary Policy meeting and BOE Monetary policy summary. Addition to these, we have BOJ and RBA minutes scheduled (Wed).

In Europe, following last week’s ECB dovish meeting, traders remain focus to the ECB Forum on Central Banking, Sintra, Portugal, 18-20 June and EZ PMIs.

NZ Q1 GDP: We expect the near-term growth to remain quiet. Economic activity, as measured by gross domestic product (GDP) is expected to grow by 0.5% tad below Q4 2017 of 0.6% led by Service industries grow 1.0%.

The economy expanded 0.6 percent in the December 2017 quarter, the second quarter in a row it rose 0.6 percent, according to Stats NZ. The better than expected economy health reading could boost the kiwi dollar above 0.7000.

OPEC meeting: Brent oil continued to retrace last week lost 4.50%. We expect Russia and Saudi Arabia will be titled of production increases. The price reached its A-B-C corrective pattern target whereas we still believe further retracement to 71.70$ and 70.70$ levels.

Monetary Policy outcomes:

Thu, Bank of England (GBP): The BOE is expected to hold the interest rates unchanged. We are more focusing on the August meeting.

Thu, SNB Monetary Policy Assessment (CHF): The SNB is likely to hold the interest rates. Following ECB’s dovish meeting we expect the SNB will deliver neutral to dovish communication.

Chart of the week: GBPCHF

Since early June the cross has been locked between 1.3270 and 1.3120. The daily studies RSI and oscillator are remaining bullish helped the cross to settle above 20MA for the first time since April. A bullish break above the range could open to 1.3330 initially above this, 1.3450 and 1.3490 are the open targets with supports at 1.3120 and 1.3050. The flip side, any break below 1.3050 could open towards 1.3000, 1.2920 and 1.2850 levels.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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[KeyToMarketsUK]

KTM FX Dialy: Will the GBPUSD hold the fib reactions?

In the European session, focus today will be on the BOE policy meeting. Following clear hawkish Fed and a dovish ECB the pound traders are sitting sidelines ahead of Thursday BOE policy meeting. The BOE is expected to hold the interest rate unchanged will vote by a majority of 7-2 to maintain Bank Rate at 0.5%. We are more focusing on the August meeting.

The economic data since May has been mixed and hasn’t given a clear picture to the MPC to hike rates. Recent Office of the National Statistic (ONS) report suggests the fall in wage growth eases the August rate hike conviction rate. Moreover, average weekly pay including bonuses dipped by 0.1% to 2.5% while earnings excluded bonuses dipped by 0.1% to 2.8%, for the period, February to April 2018.

Dropping factory: The cable has witnessed another round of selling at 23.6% fib.

Before retracing to a five-month low, the price traced out a medium-term price top near 1.4345-1.4375 between Jan-Apr 2018 via the formation of a double top pattern. The recent shift in the sentiment rallied to 1.3470 its 23.6% fib reaction but attracted selling interest with supports at 1.3140 its 50.0% fib reaction of the Oct 2016-Apr 2018 rally. Below here, the focus will move down to 1.3060 its 100MA (Weekly), and the psychological support exists at 1.3000.
The recent short-term rallies (1.3200-1.3470 rally) should be considered counter-trend with a lower highs format. The near-term resistance moved down from 1.3710 to 1.3470 levels with stable support spread between 1.3060-1.3000 levels. The daily study, RSI has been making higher low though the price is drifting like a dead weight in the sky.
Probably we are going to trade between 1.3220-1.3130 before BOE. The daily studies on our favorite intraday charts (H1 and H4)are oversold. Supports are at 1.3130-1.3100 below this 1.3060, and 1.3000 exists. Resistance seems to be at 1.3230, well settles above Wednesday high could open to 1.3275 and 1.3300.

Forecast: Based on the given technical parameters we believe the cable offers limited downside risk. The risk-reward favors buying at 1.3100 with sl below 1.3000 targets 1.3220 and 1.3300 at the end of the day.

What if BOE follows ECB language?

Eventually, we are going to test the 61.8% fib reaction finds at 1.2800 and the four-year descending trendline finds at 1.2770.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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[KeyToMarketsUK]

KTM FX daily: Data review. Focus on EURUSD range

The dollar index performance is mixed against the major traded currencies. As a result, the crosses AUDUSD and NZDUSD tested and held the parallel support zone, turning to majors EURUSD, and GBPUSD did the same.

AUDUSD support zone: 0.7370-0.7330
NZDUSD support zone: 0.6820-0.6770
EURUSD support zone: 1.1500-1.1450
GBPUSD support zone: 1.3100-1.3050

RBA June meeting minutes revealed, “The Board judged that holding the stance of monetary policy unchanged would be consistent with sustainable growth in the economy and achieving the inflation target over time.”

ECB President Draghi said, “we will remain patient in determining the timing of the first-rate rise and will take a gradual approach to adjusting policy thereafter”

The U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly announced that May housing starts rose by 5.0% to an annual rate of 1.30M

New Zealand March 2018 GDP rose 0.5% lower than the May RBNZ MPS forecast.

The BOE keeps the interest rates unchanged. GBPSUD rose more than 100 pips post the policy announcement.

As we note in our earlier article, AUDUSD, EURUSD, GBPUSD, and NZDUSD are well manages to hold the support zone. For trading majors EURUSD and GBPSUD favor upside risk and the NZDUSD well bid above 0.6900.

Read: GBPUSD trade
[Link removed]

EURUSD: Since Tuesday the major EURUSD has been consolidating in a tight range of 150 pips, between 1.1650-1.1500. A well settles above 1.1650 could open to 1.1690-1.1710. On top of it, a daily close above 1.1710 could boost further to 1.1850 last week’s high. Flipside supports are at 1.1590, 1.1530 and 1.1500. Q2 range remains between 1.1450-1.1850 with an additional support at 1.1390.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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[KeyToMarketsUK]

KTM FX Weekly: Global economic calendar (June 25-29). Chart of the week :GBPUSD

• RBNZ is expected to hold the OCR
• Data wise 1Q GDP for US and UK are in focus
• CPI data for EZ and Canada


Out of the blue BOE ‘s hawkish message raises the August rate hike expectations from 50% to 65%. The dollar index performance was mixed against the major traded currencies. As a result, the crosses AUDUSD and NZDUSD tested and held the parallel support zone and turning to majors EURUSD, and GBPUSD did the same.

ECONOMIC EVENTS:
In this week, 1Q GDP for US and UK, and inflation data for EZ and Canada are the key risk events economic events lined up accompanied by RBNZ policy meeting. Additional to these, we have German Ifo business climate, ANZ Business Confidence and US Core durable goods are scheduled.

Succinct preview:
Central Bank: We expect the RBNZ will keep the OCR on hold at 1.75%. We believe the interest rates divergence between US and NZ will rise further in the 2H 2018.

US and UK 1Q GDP:
We expect the third release of US 1Q GDP will revise higher from 2.2% to 2.4% and the final release of the 1Q UK GDP also expected to revise higher to 2.3%. A higher revision of UK GDP could boost the August rate hike odds.

CPI data for EZ:
Eurozone annual inflation is expected to rise from 1.9% in May to 2.0% in June and core inflation to fall a tick from 1.1% to 1.0%. After dovish ECB meeting, ECB watchers are closely watching the June CPI data.

Chart of the week: GBP

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[KeyToMarketsUK]

KTM FX Weekly: Euro is the main legatee of the dollar weakness

• Traced out a double bottom
• Dollar weakness remains
• Data wise 1Q US GDP and EZ CPI

Lack of follow up euro selling post ECB meeting makes a certain degree of comfort to the traders. On the dollar front, Trade Tensions between US and China are back to the center stage again, and we expect it will remain the key driver over the coming weeks. On Monday session, euro was the main legatee of the dollar weakness, rose by 0.50% and settles above 20MA.


Data review:

ECB President Draghi said, “we will remain patient in determining the timing of the first-rate rise and will take a gradual approach to adjusting policy thereafter”

French manufacturing sector lost momentum further in June to a 16-month low, PMI down to 53.1 in June from May 54.4

The French services economy drove an acceleration in private sector output growth in June. Services Activity index improves to 56.4 in June from 54.3 in May 2-month high

Germany Manufacturing PMI slipped to an 18-month low of 55.9 in June from 56.9 in May

EZ manufacturing PMI declined to an 18-month low of 55.0 from 55.5 in May whereas services PMI rebound to 55.0 from 53.8 in May

The Ifo Business Climate index fell to 101.8 points in June from 102.3

Data preview:

CPI data for EZ:

Eurozone annual inflation is expected to rise from 1.9% in May to 2.0% in June and core inflation to fall a tick from 1.1% to 1.0%. After dovish ECB meeting, ECB watchers are closely watching the June CPI data.

US 1Q GDP:

We expect the third release of US 1Q GDP will revise higher from 2.2% to 2.4%

TECHNICAL OVERVIEW​

EURUSD traded out a short-term price bottom near 1.1500 in May and mid-June via the formation of a double bottom pattern. The ongoing corrective phase has paused and resumes the short rally. From last week’s low the price rebound nearly 1.90% and settles above 20MA.

The daily studies RSI has been propelling up, and the Oscillator is remaining bullish. Under these circumstances, a recovery above 1.1730 further offers further headroom in the near-term. Noting that the weekly oscillator has shifted to a bullish crossover for the first time after the price crested in Jan 2018.

Supports are at 1.1640, 1.1540 and 1.1500.

The new profiles are consistent with a short-term rally in EURUSD to 1.1720 it’s 61.8% fib reaction (June 16 high-June 21 low) and even 1.1850 its 50MA.

Set of resistance zones: 1.1720-1.1750 above these 1.1825-1.1850.

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[KeyToMarketsUK]

KTM Copper daily: 2.9530-2.9410 is the major support – break would trigger downgrade

• The tradable dollar index (KTM: USDX) higher after three days straight fall and the US 10TY remained stable at 2.88, well anchored below 3.00
  
• Brent oil on a better footing post-OPEC’s meeting settled above the descending wedge
  
• The precious metal Gold edged down below the support level 1260.00$, focus shifts to 1244.00$-1233.00$ support zone
  
• Copper price traced out a medium-term top between 3.3190-3.3300 in Dec 2017 and June 2018 via the formation of a double top pattern

Across the board, some of the FX pairs and commodities retraced nearly 50.0%. Among, copper price appears a new bee to the party.
AUDUSD, EURUSD, GBPUSD, and NZDUSD have traced out a medium-term top via the formation of a double top pattern. The industrial commodity Copper price has been evolving in the same way but still above the support trendline.

The price has retraced nearly 10.0% from June high’s sitting above the support zone spread between 2.9530-2.9410. The daily studies RSI is indicating 35.00 nearly oversold level and the oscillator is remaining bearish. At higher time frame the price it settles below 50MA(weekly) for the first time since Oct 2016.

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[KeyToMarketsUK]

KTM FX Daily: USDCZK may be running into an area of resistance

Two days view:

The cross again fails to breach the March high on Wednesday’s session after Czech National Bank increases the interest rates.

At its meeting on Wednesday, “the CNB Bank Board increased the two-week repo rate (2W repo rate) by 25 basis points to 1%. At the same time, it increased the Lombard rate by 50 basis points to 2% and kept the discount rate unchanged at 0.05%.” Source: CNB

USDCZK may be running into an area of resistance defined the following:

1. Facing resistance at 18-month descending trendline
2. Stiff resistance at 200EA (weekly) seems to be at 22.60 above this 23.00 exists August 2015 low
3. The August 2015 low coincides with the 100MA (weekly) and with the 50.00% fib reaction (Jan 2017 high-Jan 2018 low)
4. The daily study RSI is indicating a lower high, if propels above 22.55 could paint a negative divergence
5. Set of resistances seems between 23.00-23.25 above this 23.50 exists
6. Overall 200MAs (weekly) spread between 23.00 and 23.50

A recovery back between 23.00-23.50 seems hard in the near-term. In this case, this would point a new downward wave towards 21.95 and 21.60 possible.

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[KeyToMarketsUK]

KTM FX Daily: Dollar dominion over the G10 FX

• Broad-based dollar strength (KTM: USDX) across the G10 FX
• GDP increased at an annual rate of 2.0 percent in the first quarter of 2018
• US dollar likely to dominion over AUD and NZD

The dollar index (KTM: USDX) fail to settle above last week’s high, may be forming a double top pattern. We believe month-end position adjustment mostly leads recent (past four days) dollar upside move. On top of this, we are becoming increasingly concerned about the last three-day dollar (KTM:USDX) price action which has been driven by negative RSI negative divergence (below chart).

Year to date the dollar index rose by nearly 3.80%, from mid-Feb low an 8.0% huge move is reported.

Master of destruction: A strong dollar moves usually crush the commodities.

Whereas looking through policy divergence the US dollar likely to dominion over AUD and NZD. We still believe BOC will deliver a rate hike in July meeting and BOE in August. The common currency EUR has been driven down by micro and macro factors.

Yesterday’s US economic data is not encouraging bulls to settle above the critical resistance technical level.

The third estimate of 1Q GDP revised down to 2.0% from 2.2%, whereas the market had expected 2.2%.

Real GDP was revised down 0.2% from the second estimate, reflecting downward revisions to private inventory investment, PCE, and exports that were partly offset by an upward revision to non-residential fixed investment. Imports were revised up, according to the “third” estimate released by the Bureau of Economic Analysis.

The week ahead:

In the week ahead (Jul1-7) we have ISM Manufacturing PMI, ADP non-farm employment data, ISM non-manufacturing PMI, FOMC meeting minutes and the most volatile event June NFP.
The survey employment gauge is historically consistent with non-farm payrolls rising by 190k at the end of the second quarter, reported by IHS market.

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[KeyToMarketsUK]

KTM FX Weekly: Global economic calendar (July02-06). Chart of the week: USDJPY

• The end of 2Q PMI for EU, UK, US, and China
• Employment data for US and Canada
• June FOMC meeting minutes and the RBA policy meeting

With the start of the 2H2018, we have multiple high data risk events lined up this week. We expect the RBA interest rate decision is a no surprise to leave the cash rate unchanged at 1.5 percent.

In the EA, German politics may grab the attention more rather likely than the EA PMI surveys. In the 1H 2018 the major EURSUD down by -3.00%, especially in Q2 an -5.5% colossal slide was reported. Whereas on a monthly (June)basis, the euro cross EURTRY rose by more than 8.00% and the EURNZD rose by 3.30%. Against the haven currencies JPY and CHF, the euro rose by 2.00% and 0.60% respectively.

In the UK, PMI readings likely to have an impact on the GBP. We still believe, looking over the coming weeks, the official data prints will pave the way to the Q3 rate hike.

In the US, June FOMC meeting minutes, June non-farm payroll data and the PMI surveys are the essential risk events are in focus. In the 1H 2018 the dollar index settled with 2.50% gains, and from the mid- Fed low an 7.00% colossal move was reported. In the G10 FX pack, the Swedish Krona lost more than 9.00% followed by the commodity currencies AUD, NZD, and CAD by 5.50%, 4.60%, and 4.30% respectively. A strong dollar moves usually crush the commodities; as a result, precious metals and industrial metals brutally beaten down. The black gold, Brent oil settled at multi-year highs.

“FOMC minutes will likely show officials are upbeat (and rightly so), but this narrative has been well priced into the USD already and it’s unlikely to be a catalyst for renewed USD strength,” ANZ’s currency team said, reported by Businessinsider.

In Asia, China PMI survey and RBA monetary policy meeting are the key events will grab the attention. The Aussie traders are closely watching on the comments on the housing lending restrictions. The cross AUDUSD down over 5.00% in the 1H 2018.
“Any dovish signal will see markets shift the pricing of the RBA tightening cycle into 2020, further weakening the AUD,” ANZ’s currency strategists said.

June jobs report (Fri): We expect June nonfarm payrolls rose around 190k, the unemployment rate will remain at an 18- year low 3.8%.

The survey employment gauge is historically consistent with non-farm payrolls rising by 190k at the end of the second quarter, reported by IHS market.

We estimate wages rose 0.2% m/m in June, which leaves the annual growth rate unchanged at 2.7% y/y. Moreover, we estimate nonfarm payrolls rose around 190,000 and that the unemployment rate remains unchanged at 3.8%, reported by Danske Bank.

Weekly FX range:

• EURUSD: 1.1500-1.1755, triple bottom and spotted with a descending triangle
• GBPUSD: 1.3000-1.3385, driving by positive divergence and having a limited downside risk approach
• NZDUSD: 0.6660-0.6920, not out of the wound and trading at the cycle low
• AUDUSD: 0.7270-0.7500, focus on copper price
• USDJPY: 109.00-113.25, traced out a symmetrical triangle bullish break. Interestingly the oscillator has been shaping to an inverse H&S pattern. While holding 109.00 level we could expect a bullish print at 113.00.

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[KeyToMarketsUK]

KTM FX Weekly: EURGBP may be running into an area of resistance zone

In the UK, PMI readings likely to have an impact on the GBP. We still believe, looking over the coming weeks, the official data prints will pave the way to the Q3 rate hike. Data wise UK Manufacturing sector remains subdued at the end of the second quarter, but Output growth slows from May’s five-month high. Flipside, Eurozone manufacturing reported its weakest expansion for one-and-a-half years in June.

Data review:

• UK Manufacturing PMI broadly unchanged at 54.4 in June. Output growth moderated, to mostly offset a mild acceleration in new order growth and improved job creation. The average reading over quarter two as a whole (54.2) is the weakest outcome since the final quarter of 2016, as reported by HIS Markit.
• UK GDP increased by 0.2% between Quarter 4 (Oct to Dec) 2017 and Quarter 1 (Jan to Mar) 2018, revised upwards by 0.1 percentage points from the second estimate of GDP
• The UK’s current account deficit was £17.7 billion (3.4% of gross domestic product (GDP)) in Quarter 1 (Jan to Mar) 2018, a narrowing of £1.8 billion from a revised deficit of £19.5 billion (3.8% of GDP) in Quarter 4 (Oct to Dec) 2017, reported by ONS

Data preview:
Looking at another set of PMI surveys (Construction and Service sectors) a rebound in data could strengthen the Q3 BoE rate hike. The BoE seems data dependent and We still believe, looking over the coming weeks, the official data prints will pave the way to the Q3 rate hike.

TECHNICAL VIEW​

We still believe the final move to 0.8920 could be even possible before pulling back to 0.8830/0.8800 in the near term. Weekly pivotal finds between 0.8830-0.8800 below this, possible supports are at 0.8760 and 0.8715. As we pointed in our last week’s note, the fact is weekly resistance seems between 0.8900/0.8920 and 0.8970. While remains below the weekly supply zone, we foresee a downside risk to 0.8800 and 0.8760.
Flipside side, well settle above 0.8970 could rally further to 0.9050/0.9070.

Nothing that, the 50.0% of the fib reaction (0.9599-0.8300 correction) seems to be at 0.8950 and the descending trendline coincides at 0.8920. Overall, between 0.8920-0.8950 we could expect stiff resistance.

View: Focus on the given area of resistance zone to sell

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[KeyToMarketsUK]

KTM FX Daily: AUDUSD and GBPAUD upside risk forecast

The greenback broadly fell against most of the traded currencies on Tuesday session after the PBOC intervention. Given the trade relation to China the commodity currencies AUD and NZD rebound nearly 0.90% and 0.60% each. The beaten-down commodities resume short-term rally; Gold closed by a percent gain, and the critical beneficiary was Platinum rebound more than 3.0%.

News:
People’s Bank of China Governor Yi Gang said China will “keep the yuan exchange rate basically stable at reasonable and balanced level,” reported by Bloomberg.

“Recently the foreign exchange market has shown some volatility and we’re paying close attention to that,” Yi said in a statement responding to a request by the China Securities Journal posted on the central bank’s website. The fluctuation is “mainly due to factors such as a stronger dollar and external uncertainties, and there’s been some pro-cyclical behavior,” he said, reported by Business world.

Data review:

1. RBA leave the cash rate unchanged at 1.50%, as expected. The interest rate has been stable for 21 consecutive policy meetings.
2. UK Construction output growth reaches seven-month high in June. June PMI is reading up from 52.5 in May to 53.1.
3. In May 2018, compared with April 2018, industrial producer prices rose by 0.8% in the EA and by 1.0% in the EU, according to estimates from Eurostat.

What’s on today?

In the Asian session, we see Australia’s May Retail sales data and the Trade balance accompanied by the Caixin Services PMI are the key drivers to the Aussie dollar. Moving to Europe, we see Services PMI surveys for EA and UK. US markets closed in observance of Independence Day.

FX overview​

AUDUSD: The cross is trading at 0.7385 in an early Asia bid. Asian session resistance seems to be at 0.7400 above this 0.7440 exists. Since the daily studies RSI and the oscillator have picked up, further rally is anticipated well above 0.7400 towards 0.7440. Supports are at 0.7340 and 0.7300.

USDJPY: Strong selling pressure remains very strong between 111.00-111.40, a symmetrical triangle formation is still evident in the daily chart. The oscillator has been shaping to an inverse H&S pattern. While holding 109.00 level, we could expect a bullish print at 113.00, if well above 111.40.

EURUSD: Since the daily studies RSI and the oscillator have picked up we had have anticipated rallied towards 1.1710 and 1.1800. The price is likely to remain in the tight range between 1.1500-1.1780 ahead of the June NFP data. Intraday resistance seems to be at 1.1700-1.1720 above these 1.1780 exists with supports at 1.1590 and 1.1530.

GBPAUD: The cross has been consolidating between 1.8000-1.7730. We could expect a major move if settles above 1.8000 for 1.8080, 1.8260 and 1.8300 in the coming days.

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