Mr. British pound came under pressure yesterday, as month end re-balancing and corporate trade flows versus the Mr. Euro and Ms. USA pushed the currency to multi-week lows. The move lower has created opportunities to ‘buy the dip’, which it seems Asian speculators have done overnight, as they brought it back off its lows and above key support/resistance levels. The move could have been seen as a delayed reaction after Mark Carney’s dovish comments on interest rates and the pace of expansion in the economy went relatively unnoticed.
In Europe, Francois Holland has used D-Day commemorations next week to extend an olive branch to Vladmir Putin. The two will dine together in Paris next week as they remember the role both countries played in the Second World War. The meeting will be the first that Mr Putin has had with a Western leader since he annexed Crimea and both sides have confirmed that they will be covering some tricky subjects in their conversations, so we’ll be interested to see what Mr Hollande’s diplomatic hat looks like.
The French President was dealt a post election kick yesterday as it was reported that French unemployment continues to break records, rising yet again in May. The move higher was very small, but it was certainly in the wrong direction.
Another concern for European leaders is the falling bond prices that they’re seeing ahead of Mario Draghi’s likely market moves next week. Bond prices are falling to record lows across the Eurozone, as investors bet on a rate cut from the ECB – suspicions that were further affirmed yesterday when German unemployment data also came out weaker than expected – the move lower means that servicing debt is incredibly cheap for governments now, which could lead them into a false sense of security and the tables could easily turn if a rate cut doesn’t have the intended economic effects.
Investors are also pushing up US bond trading volumes as many are clambering to the relative stability of US treasury debt and the consistent yields it delivers over even a German government bond, for the time being.
Bonds are looking good, but housing seems to be a problem for the US economy. Janet Yellen has conceded that her input in solving a declining housing market could be limited as concerns grow that a fall back in mortgage applications, and therefore a stagnating housing market, could take significant chunks out of the 2014 GDP numbers.
In Asia, China has voiced concerns over initial conversations between the US and South Korea about the installation of a missile defense system near the North/South border. The plans “will not help maintain stability and strategic balance in this region” according to the Chinese foreign ministry. Meanwhile tensions are continuing to rise in the South China Sea, particularly between China and Vietnam. President Obama picked up on this in his speech at Westpoint yesterday, saying “regional aggression that goes unchecked, whether it’s southern Ukraine or the South China Sea or anywhere else in the world, will ultimately impact our allies and could draw in our military”. Slightly contradictory, Mr Obama also said in his speech that the US military cannot be the primary component of their leadership and that “just because we have the best hammer does not mean that every problem is a nail”. a summary of the President’s speech can be found here.
Today is a European public holiday, but many exchanges remain open. Data is mostly US focused, with GDP, jobless claims and energy inventories to look at.
Intraday Forex Technical Levels
EUR/USD Intraday: rebound.
Invest Diva likes: Long positions above 1.3585 with targets @ 1.364 & 1.367 in extension.
If pair goes nuts: Below 1.3585 look for further downside with 1.3555 & 1.353 as targets.
What’s up on the dance floor: The pair is rebounding and is breaking above its resistance.
Supports and resistances:
1.369
1.367
1.364
1.3614 Last
1.3585
1.3555
1.353
GBP/USD Intraday: under pressure.
Invest Diva likes: Short positions below 1.6755 with targets @ 1.669 & 1.666 in extension.
If pair goes nuts: Above 1.6755 look for further upside with 1.678 & 1.682 as targets.
What’s up on the dance floor: The pair stands below its resistance and remains under pressure.
Supports and resistances:
1.682
1.678
1.6755
1.6714 Last
1.669
1.666
1.6625
USD/JPY Intraday: under pressure.
Invest Diva likes: Short positions below 101.9 with targets @ 101.45 & 101.2 in extension.
If pair goes nuts: Above 101.9 look for further upside with 102.15 & 102.35 as targets.
What’s up on the dance floor: The pair has broken below its support and remains under pressure.
Supports and resistances:
102.35
102.15
101.9
101.575 Last
101.45
101.2
101.05
USD/CHF Intraday: under pressure.
Invest Diva likes: Short positions below 0.899 with targets @ 0.895 & 0.8935 in extension.
If pair goes nuts: Above 0.899 look for further upside with 0.901 & 0.903 as targets.
What’s up on the dance floor: The pair is breaking below its support.
Supports and resistances:
0.903
0.901
0.899
0.8969 Last
0.895
0.8935
0.892
NZD/USD Intraday: key resistance at 0.8525.
Invest Diva likes: Short positions below 0.8525 with targets @ 0.8465 & 0.843 in extension.
If pair goes nuts: Above 0.8525 look for further upside with 0.857 & 0.8595 as targets.
What’s up on the dance floor: As long as the resistance at 0.8525 is not surpassed, the risk of the break below 0.8465 remains high.
Supports and resistances:
0.8595
0.857
0.8525
0.8496 Last
0.8465
0.843
0.84
AUD/USD Intraday: the upside prevails.
Invest Diva likes: Long positions above 0.9265 with targets @ 0.9315 & 0.934 in extension.
If pair goes nuts: Below 0.9265 look for further downside with 0.924 & 0.9205 as targets.
What’s up on the dance floor: The pair stands above its new support and remains on the upside.
Supports and resistances:
0.937
0.934
0.9315
0.9294 Last
0.9265
0.924
0.9205
USD/CAD Intraday: bullish bias above 1.083.
Invest Diva likes: Long positions above 1.083 with targets @ 1.089 & 1.091 in extension.
If pair goes nuts: Below 1.083 look for further downside with 1.081 & 1.078 as targets.
What’s up on the dance floor: Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
Supports and resistances:
1.094
1.091
1.089
1.0859 Last
1.083
1.081
1.078
Precious Metals
Gold:
Intraday US Index Levels
S&P500
Long positions above 1894 with targets @ 1915 & 1923 in extension.
Alternative scenario: Below 1894 look for further downside with 1883 & 1874 as targets.
Dow Jones
Long positions above 16560 with targets @ 16695 & 16780 in extension.
Alternative scenario: Below 16560 look for further downside with 16465 & 16390 as targets.
Nasdaq 100
Long positions above 3687 with targets @ 3734 & 3745 in extension.
Alternative scenario: Below 3687 look for further downside with 3660 & 3624 as targets.
Russell 2000
Long positions above 1126 with targets @ 1145 & 1155 in extension.
Alternative scenario: Below 1126 look for further downside with 1116 & 1106 as targets.
