EURNZD – Topped?

EURNZD – Topped?

Chart Of The Day

The EURNZD appears to have made swing high at the 1.6050 level and is now starting to slide towards the 1.5800 level. After a massive rally that saw the euro outperform the comm dollars, the euro now appears to be in profit taking mode.

The surest sign that buying may have reached its limit is the fact that euro failed to rally off positive news from PMI and IFO data today. Meanwhile, the kiwi has been well bid for several days and managed to take out and hold the key .7000 figure in today’s trade.

FX traders will get a look at New Zealand trade balance at the start of Asian session trade today and if the numbers beat the forecast the pair could quickly tumble towards the 1.5900 mark.

USDCAD – More Downside to Come?

USDCAD – More Downside to Come?

Chart Of The Day

Amidst all the tumult in the dollar, the loonie has been a relative bastion of calm for the past few days moving only 50 pips either way. However, the deeper trend in the pair continues to be down as it keeps testing the key 1.3600 support.

With oil remaining anchored near the $49/bbl the loonie is well supported for now and tomorrow’s Canadian Retail Sales and CPI data could give it another boost if the numbers beat expectations. Both inflation and Retail Sales are expected to rebound from depressed levels a month ago which could push the loonie through the 1.3600 towards a test of 1.3550 support.

GBPUSD – Topped?

GBPUSD – Topped?

Chart Of The Day

While euro was making multi-month highs cable was floundering all day long despite hotter than forecast inflation data. But as we explained earlier in the day, investors feared that higher inflation rates will continue to weigh on the consumer. The Bank of England has categorically ruled out any rate hikes in the foreseeable future, so any spikes in inflation are now viewed as negative for the currency especially if UK Retail Sales continue to disappoint.

Cable has now stalled in front of the key 1.3000 figure and if it continues to drift lower giving up the 1.2800 handle it will likely have put in a near-term top as investor enthusiasm for the pair continues to wane. Tomorrow the pair may get some reprieve if UK labor data proves positive, but much will depend on the wage component of the report. Even of labor demand is robust, but wages lag the real wages numbers will actually turn more negative because of rising inflation and the market could send cable through the key 1.2800 support, confirming a near term top.

USDJPY – 114.00 Too Much?

USDJPY – 114.00 Too Much?

Chart Of The Day

We saw an interesting reaction from USDJPY today. After much hotter than expected PPI data the currency pair actually sold off hitting a low of 113.45 before finding a bottom. When a currency pair sells off on strong positive news it’s usually a sign that the rally is tired.

After a relentless move higher that took it up more than 800 points in three weeks USDJPY may be finding some resistance at the 114.00 level as bulls run up against multi-month highs that could contain the move for a while.

Tomorrow the market will get a look at the key US Retail Sales number which is expected to rebound to 0.6% from -0.2% the month prior. US will also release the CPI figures which could confirm the inflationary pressures of today’s PPI report. If those two data points fail to push the pair higher then USDJPY may be in for a more serious corrective move towards the 112.00 figure. If the data provides a downside miss, it could show the market just how much support there is around the 113.00 level as shorts will no doubt try to press the pair lower.

NZDJPY – On the way to 80.00?

NZDJPY – On the way to 80.00?

Chart Of The Day

USDJPY has been on a tear rising more than 600 points off the lows set just two weeks ago. The pair is driven higher by market’s unshaken belief that the Fed will hike rates in June and will continue to tighten policy for the rest of the year giving the dollar a key advantage in interest rate differentials.

Meanwhile, the kiwi looks to have found a solid bottom near the 6800 figure as it formed a double bottom support on the daily charts. The New Zealand economy has outperformed expectations over the past several months -- so much so -- that the RBNZ which meets tomorrow will have a hard time maintaining its dovish slant.

If the central bank decides that policy should shift to neutral and suggests that no further rate cuts are in the offing, the kiwi could see a strong rally towards the .7000 mark. That, in turn, should help lift NZDJPY towards key resistance at the 80.00 figure.

EURUSD – 1.1000 and French Election in View

EURUSD – 1.1000 and French Election in View

Chart Of The Day

The EURUSD powered its way to fresh multi-month highs breaking above the 1.0950 level and rising all the way to 1.0985. The pair is within the striking distance of the key 1.1000 figure that it hasn’t seen since last year and could break it in Asia session trade.

Over the next 72 hours, however, the pair faces two very important event risks. Tomorrow’s NFPs and Sunday night’s French election results. Both could prove beneficial to the pair and seal its rise above the 1.1000 level. If the NFPs prove soft, especially on the wage front, the nearly universal assumption that the Fed will hike rates will come under doubt and yield differentials between Treasuries and Bunds could compress sending euro higher.

Then on Sunday, a solid Macron win would ensure the status of EU and will create another wave of relief buying in the pair. There is a risk that much of the good news has been priced in, and the EURUSD could see a sell the news dynamic later on the week, but for now all roads lead to the 1.1000 figure as sentiment looks solidly euro bullish.

EURJPY – No More Mo?

EURJPY – No More Mo?

Chart Of The Day

EURJPY is now fully 600 points off the lows set in pre- French election as all of the investor jitteriness has clearly been wrung out of the pair. It’s difficult to see how much more upside there is in the move given the fact that the market has already priced in a Macron victory. EURJPY may also be trading on positive sentiment vis a vis US policy as traders await tax reform legislation from Congress, but any action on that front will take months to achieve.

In the meantime, tomorrow’s US ADP data and ISM Non-Manufacturing reports could put a serious dent in the rally if they disappoint to the downside. So far FX markets have been ignoring weak US data, but if the labor numbers prove soft the prospect of a June rate hike will fade and so with it the relentless rally in yen pairs.

EURJPY has a massive triple top at the 123.00-124.00 corridor and would need a fresh burst of momentum to clear such stiff resistance. A correction could take it to 120.00 and still preserve the nascent uptrend

USDCAD – Can Range Highs Hold?

USDCAD – Can Range Highs Hold?

Chart Of The Day

It’s been a rollercoaster ride for loonie this week as Trump Administration put the Northern neighbor trough the wringer, first slapping tariffs on soft lumber, then threatening to pull out of NAFTA. Adding insult to injury has been the lackluster performance of oil as crude slipped below the $50/bbl level.

Tomorrow’s Canadian GDP report may be another hit to the pair if it misses rather modest expectations of 0.1% growth versus 0.6% the month prior. With Canadian real estate market in a massive bubble and the country’s banking sector in a credit crunch due to deteriorating loan quality, the loonie may be in for more pain.

Given the Trump Administration’s penchant for protectionism, it is not at all certain if further flare-ups will be in store and loonie remains vulnerable for the time being. USD/CAD has breached the top of its range and unless the pair comes back below the 1.3400 mark the near term trend suggests that the pair could push towards 1.4000 over the near term horizon.

EURCAD – Runaway to 1.5000?

EURCAD – Runaway to 1.5000?

Chart Of The Day

The gap open in the euro that blasted the pair through the 1.0900 level continues to exert its force higher even into what is likely to be a generally dovish ECB meeting this Thursday. In te meantime, the loonie has been hammered by the double whammy of weaker oil prices and a new set of tariffs against Canadian lumber just issued by the Trump administration.

Fears of a trade war with US biggest trading partner have some traders concerned that USDCAD could push towards the key 1.4000 level as capital flees from the Great White North. Even without any additional tension, the slow drift lower in oil could hurt the loonie for the foreseeable future.

All of which is creating a very powerful rally in EURCAD that could see the cross hit the key 1.5000 mark within the next few days. A runaway gap is a rare technical formation but when it occurs it can lead to powerful rallies that could last for days. EURCAD continues to exhibit all signs of such a setup.

USDCAD – Top  of the Range?

USDCAD – Top of the Range?

Chart Of The Day

The collapse in oil prices yesterday pushed USDCAD to the top of its recent range at 1.3500. With crude still stuck at the $50/bbl and further weakness likely the loonie could push through the key 1.3500 resistance level as traders begin to worry about the impact of lower oil prices on the Canadian economy. But push higher may not have much traction especially if oil finds support at the $45/bbl level.

The Canadian economy is no longer so dependent on resource prices and has shown remarkable resilience in the wake of lower oil prices. Tomorrow the market will get a look at Canadian CPI data and if inflation numbers come in hotter than the 0.4% projected rate, USD/CAD 1.3500 could prove to be the cap to this rally as the pair turns back off the highs of the range towards support at 1.3200

GBPUSD – 1.3000 in View?

GBPUSD – 1.3000 in View?

Chart Of The Day

The pound took out not one, not two but three big figures today in the wake of a surprise announcement that Theresa May will call a snap election on June 8th. The news was met with resounding approval from the currency market as traders appreciated the shrewdness of the move which could consolidate Ms. May’s power and allow her unbridled power to negotiate the terms of Brexit.

The move by cable wiped out many long-standing shorts and is likely to extend further challenging the key 1.3000 level over the near term horizon. For now, the pair sees support at 1.2600 and resistance at the 1.3000 level with a decidedly upward bias.

AUDJPY- Bouncing off 82.00?

AUDJPY- Bouncing off 82.00?

Chart Of The Day

The Australian Employment report last night was a game changer. The final print of 60.9K jobs was a whopping three times the market estimate. Better yet full-time employment exploded at 74K rate indicating that the Australian labor markets remain robust. The news clearly puts the RBA into a neutral state and perhaps even leaves the door open to a tightening bias if labor demand continues at this pace.

Meanwhile, the dollar took a beating on comments from President Trump, who stated his preference for a lower dollar and lower rates. But the move was emotionally driven and USDJPY is now so deeply oversold that it is due for a bounce. All of which provide a good foundation for a rally in AUDJPY as the pair finds strong support at the 82.00 level and could see a rebound towards 84.00 over the next few days.