IronFX - Market Analysis - page 52

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IronFX Daily Commentary | 19/06/15

Language English

•Emergency EU summit called after no deal at Eurogroup Eurozone leaders will hold an emergency summit on Monday to try to seal a deal on the Greek crisis. Following the failure of Eurogroup to bridge the gap between Greece and its creditors, the talks will now move to the highest political level where the Greek PM has perceived that he has the strongest influence there. Without a deal, Greece is likely to default as it has a crucial payment due to the IMF end of June, when the four months extension of the rescue program expires as well. Against this background, the ECB will hold an unscheduled call to discuss ELA available to Greek banks as savers speed up withdrawals. With just a day after the Bank raised the ELA level by EUR 1.1bn on Wednesday, Athens may need to introduce capital controls as the banks may not have enough liquidity to open on Monday. The heightened uncertainty of an impending default, is likely be EUR-negative, while DAX and Eurostoxx 50 are likely to come under selling pressure.

•BoJ remains on hold, as expected The Bank of Japan ended its two-day policy meeting with no change in policy, as expected. However, the Bank maintained its upbeat assessment of the economy and seemed convinced that growth will strengthen enough to push inflation towards the 2% target. BoJ officials also took steps to improve transparency by releasing more information about their decisions. They plan to increase the number of economic outlook reports to four from two currently, and will also release a summary of opinions from policy meetings about a week after each meeting. The number of annual policy meetings will be reduced to 8 from 14 currently, starting from next year. These steps will bring its practices more in line with other major central banks. Despite the optimistic assessment, I believe that the bank needs to do more to reach their 2% inflation target. Nevertheless, I would expect them to wait at least until July before taking any more action, when the results of this year’s wage negotiation should be known and the MPC members will update their forecasts again. October, when the next official outlook report comes out, is the most likely month for them to change their program.

•Today’s highlights:Today, we have a relatively light calendar day with no major indicators to be released from Europe or the US. During the European day, the only noteworthy indicator we get is the Eurozone’s current account for April.

•From Canada, we get the CPI for May. Expectations are for the headline CPI to remain unchanged in pace, while the core rate is forecast to decelerate somewhat. The market is likely to focus more on the core rate, which could weaken CAD a bit. Retail sales for April are also coming out.

•As for the speakers, San Francisco Fed President John Williams, Cleveland Fed President Loretta Mester and Norges Bank Governor Oeystein Olsen speak.

Currency Titles:

EUR/USD fails to reach 1.1465

EUR/GBP looks ready to fall below 0.7145

USD/JPY hits 122.55 and rebounds

Gold surges and hits resistance around 1205

WTI rebounds from 59.80

Currencies Image Url:

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Currencies Text:

• EUR/USDcontinued higher on Thursday, but failed to reach our resistance hurdle of 1.1465 (R1). It hit resistance below it and then retreated somewhat. Taking a look at our short-term oscillators, I believe that the pullback may continue for a while. The RSI hit resistance near its 70 line and pulled back, while the MACD, already positive, shows signs of topping. A clear move below 1.1350 (S1) is likely to confirm the case and perhaps challenge the 1.1300 (S2) barrier as a support this time. However, the short-term picture remains somewhat positive in my view, and therefore I would expect the pullback to remain limited. If the bulls manage to take control at around 1.1300 (S2), I would expect them to make another attempt for the 1.1465 (R1) area. As for the broader trend, I believe that a move above the psychological zone of 1.1500 (R2) is the move that could carry larger bullish implications.

• Support: 1.1350 (S1), 1.1300 (S2), 1.1200 (S3)

• Resistance: 1.1465 (R1), 1.1500 (R2), 1.1650 (R3)

•EUR/GBPhit resistance at the 0.7200 (R1) barrier, then slid, and during the early European morning Friday appears ready to challenge again the support line of 0.7145 (S1). On the 12th of the month, the pair fell below the support (turned into resistance) barrier of 0.7265 (R2) and completed a double top formation on the 4-hour chart. Since then, the price structure has been lower peaks and lower troughs and therefore I believe that the short-term picture remains negative. I believe that a dip below 0.7145 (S1) is likely to target our next support at 0.7115 (S2). On the daily chart, the pair has been trading in a non-trending mode since mid-March. Therefore, although we may see some further declines in the short run, I would consider the overall outlook to be neutral.

• Support: 0.7145 (S1), 0.7115 (S2), 0.7060 (S3)

• Resistance: 0.7200 (R1) 0.7265 (R2), 0.7315 (R3)

• USD/JPYfell below the support (now turned into resistance) barrier of 123.10 (R1), hit our next hurdle at 122.55 (S1), and then rebounded to test the 123.10 (R1) as a resistance this time. As long as the rate is trading below the uptrend line taken from back the 14th of May, I would consider the short-term picture to be negative. However, given that there is positive divergence between our short-term oscillators and the price action, I would expect the forthcoming wave to be positive. A decisive move above 123.10 (R1) will confirm that and perhaps challenge our next resistance at 123.80 (R2). In the bigger picture, the break above the 122.00 (S2) zone on the 26th of May triggered the continuation of the long-term upside path. I would treat any further near-term declines as a corrective phase of the larger uptrend.

• Support: 122.55 (S1), 122.00 (S2), 121.45 (S3)

• Resistance: 123.10 (R1), 123.80 (R2), 124.50 (R3)

• Gold continued its rally on Thursday and managed to trade above 1200 for a while. The advance was halted by the 1205 (R1) zone, which stands fractionally close to the 61.8% retracement level of the 18th of May – 5th of June decline. Subsequently the metal retreated somewhat. Although the short-term bias remains positive, shifting my attention to our momentum studies, I see signs that further pullback could be on the cards. The RSI has topped and exited its overbought territory, while the MACD, although above both its zero and signal lines, shows signs of topping. I believe that a move below 1196 (S1) is likely to signal further retreat and perhaps challenge the 1190 (S2) zone.

• Support: 1196 (S1), 1190 (S2), 1183 (S3)

• Resistance: 1205 (R1), 1215 (R2), 1220 (R3)

• WTIrebounded from the 59.80 (S2) level, and during the European morning Friday is trading in a consolidative manner slightly above the support hurdle of 60.30 (S1). Therefore, I would consider the intraday bias to remain neutral. Our technical studies support the trendless short-term picture as well. The RSI lies near its 50 line and points sideways, while the MACD, although positive, points east as well. As for the broader trend, the break above 55.00 on the 14th of April signalled the completion of a double bottom formation, something that could carry larger bullish implications in the not-too-distant future. However, WTI has been trading in a sideways mode since the 6th of May, and this is supported by our daily oscillators as well. Both the 14-day RSI and the daily MACD lie near their equilibrium lines and point sideways.

• Support: 60.30 (S1), 59.80 (S2), 59.40 (S3)

• Resistance: 60.85 (R1) 61.35 (R2), 61.75 (R3)

Benchmark Currency Rates:

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IronFX Daily Commentary | 22/06/15

Language English

•Greece is the word • Greece is the word All eyes will be on Greece today as the deadline for reaching an agreement approaches. Greek PM Tsipras will meet with the leaders of the three international creditors (the EU, the ECB and the IMF) today ahead of a summit meeting of EU leaders. He reportedly presented new proposals over the weekend, although the details were not available and the FT reported that no formal written proposal had arrived. The Greek newspaper Kathimerini said that at the EU summit, Tsipras will be presented with two options: either accept the reforms proposed by the creditors, potentially with some Greek amendments, or prepare for a default. If Tsipras is willing to compromise, the creditors would probably extend Greece’s bailout program and perhaps make a commitment to discuss debt relief. The paper said that “sources indicate that Tsipras could be ready to accept a compromise, with amended proposals on value-added tax and even possible pension reforms in exchange for a firm commitment from creditors on debt relief and a growth-boosting package.”

• If they don’t reach agreement today, then discussions may be suspended until Thursday, when there will be a regularly scheduled EU summit. But some participants reportedly believe that today is the “end of the road” and that if no agreement is reached, the EU will be prepared to “let them go,” according to the FT.

•Meanwhile, the head of the Bank of Greece warned that Tuesday would be a “difficult day” and that “decisions will have to be taken” if the two sides don’t reach agreement on Monday. Some EUR 4.2bn was reportedly withdrawn from the banks last week, and there were said to be orders for another EUR 1bn to be withdrawn today. If withdrawals continue at that pace, a bank holiday and/or capital controls would soon be necessary unless the ECB greatly increases its Emergency Liquidity Assistance (ELA) to the county. The ECB raised the ELA on Friday, but reportedly not by as much as the Greek central bank asked for. The ECB board is expected to discuss the liquidity of the Greek banking sector in a special meeting at 0830 GMT today. I expect them to remain supportive so long as there is a chance of a settlement. But if there is no compromise today, then the ECB could institute what has been called the “Cyprus solution”: threatening to stop supporting the banks unless the government agrees to the lenders’ conditions. That was basically what forced a settlement on Cyprus, and it could have the same effect on Greece – or it could cause the dreaded “Grexit.”

• If they do reach agreement today, I would expect Tsipras to put it to a referendum in order to get popular backing for an agreement that his party would probably object to. It’s hard to see how the politics would be carried out in time to meet the end-month deadline, but I expect that the creditors would bend the rules as necessary to give Tsipras every chance to get an agreement through.

• Looking at the market’s response to the problems in Greece, it’s clear thatinvestors think either that A) a solution will be reached, or B) a Greek default will not have much of an impact on other borrowers or on the private sector. I agree that a solution seems the most likely outcome, given that the failure to agree would be much more expensive for both sides, plus polls show the Greek public wants an agreement. The difficulty lies in getting any agreement through the Greek parliament. That could require a change in the ruling coalition.

As for default, most of the Greek debt is now held by governments or agencies, not by banks or investors, so there is not much reason for a Lehman Bros.-like collapse. Portuguese business confidence, for example, is almost back to pre-2008 levels, while Portuguese bond spreads over Bunds actually tightened last week. The only visible sign of distress in European financial markets has been in the equity markets’ implied volatility, where the VDAX (the German equivalent of the VIX index) is now substantially higher than the VIX. But even that is partly due to the strength of the euro, which is putting downward pressure on German stocks.

• Personally, I’m not so sure.I think a default with Greece remaining in the Eurozone would be likely to engender contagion at least to the other peripheral countries, while a default and exit from the Eurozone (which I think is much less likely) could be catastrophic for the currency union and the currency.

• Today’s indicators As for the indicators, we have a relatively light agenda. We have no major indicators to be released during the European session.

• In the US, existing home sales for May are forecast to have increased a bit. The housing starts and building permits released last week were consistent with an improving housing market. If the existing home sales are in line with a strong housing sector, this may be USD-supportive.

• As for the speakers, ECB Executive Board member Benoit Coeure speaks.

• As for the rest of the week, Tuesday is PMI day. China’s preliminary HSBC manufacturing PMI for June is expected to increase a bit but to remain below 50, the threshold dividing expansion from contraction. From Europe, we get the preliminary manufacturing and service-sector PMI data for June from several European countries and the Eurozone as a whole. The expectations are for the manufacturing PMIs to decrease a bit, while service-sector PMIs are forecast to decline or remain unchanged.

• The US preliminary Markit manufacturing PMI for June is also coming out, along with durable goods orders and new home sales, both for May.

• On Wednesday, the main indicator will be the German Ifo survey for June. The weak ZEW indices last Tuesday increase the likelihood of soft Ifo indices as well. This could add to evidence that Eurozone’s growth engine is losing steam.

• In the US, the 3rd estimate of Q1 GDP is expected to show that the US economy contracted less compared to the 2nd estimate. The 3rd estimate of the core personal consumption index, the Fed’s favorite inflation measure, is also coming out. An improvement in the GDP figure could strengthen USD.

•On Thursday, US personal income and personal spending for May are both forecast to accelerate. This could prove USD-supportive. The yoy rate of the PCE deflator and core PCE are also coming out.

• On Friday, we have the usual end-of-month data dump from Japan. The focus will be on the National CPI rate for May and the Tokyo CPI rate for June. The national CPI rate for May is expected to slow to 0.4% yoy from 0.6% yoy. That could raise expectations of further BoJ easing, although as we have mentioned several times, this isn’t likely to come for several months at the earliest. At the same time, we get Japan’s jobless rate and job-offers-to-applicants’ ratio, also for May.

Currency Titles:

EUR/USD gaps up after Greece’s last-minute proposals

GBP/USD stops slightly below 1.5950

EUR/JPY rebounds from near 139.00

Gold hits again resistance near 1205 and pulls back

DAX shoots up after finding support at around 10800

Currencies Image Url:

http://shared.ironfx.com/Morning_Pictures_2015/June2015/June22/EURUSD_22June2015.PNG

http://shared.ironfx.com/Morning_Pictures_2015/June2015/June22/GBPUSD_22June2015.PNG

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http://shared.ironfx.com/Morning_Pictures_2015/June2015/June22/DAX_22June2015.PNG

Currencies Text:

• EUR/USD traded higher on Friday after hitting support at 1.1300 (S1). On Monday, the pair gapped higher as Greece tried to avoid defaulting with last-minute proposals aimed at appeasing its lenders. I would now expect the bulls to target the 1.1450 (R1) area. A break above that resistance is likely to target the psychological figure of 1.1500 (R2). Our oscillators detect positive momentum and support the case for further advances. The RSI rebounded from its 50 line and edged higher, while the MACD, already positive, looks ready to turn up and to cross above its signal line. As for the broader trend, I believe that a move above the psychological zone of 1.1500 (R2) is the move that could carry larger bullish implications.

• Support: 1.1300 (S1), 1.1200 (S2), 1.1200 (S3)

• Resistance: 1.1450 (R1), 1.1500 (R2), 1.1650 (R3)

• GBP/USD moved in a quiet mode on Friday after it hit resistance slightly below the 1.5950 (R1) resistance zone marked by the high of the 11th of November. The short-term picture remains positive in my view and therefore I would expect the pair to continue trading higher and perhaps challenge the psychological area of 1.6000 (R2). However, taking a look at our short-term oscillators, I would be careful of a possible pullback before buyers seize control again. Switching to the daily chart, I see that after rebounding from the 50% retracement level of the 14th of April - 15th of May up leg, GBP/USD moved back above the 80-day exponential moving average. In my view, the move above 1.5800 on the 17th of June confirmed that the overall picture has turned positive as well.

• Support: 1.5800 (S1), 1.5700 (S2), 1.5600 (S3)

• Resistance: 1.5950 (R1), 1.6000 (R2), 1.6175 (R3)

• EUR/JPY gapped higher on Monday as well, after it hit support near 139.00 (S1) on Friday. If the rebound continues, I would expect the bulls to aim for another test at the 141.00 (R1) zone. Further upside is also supported by our momentum studies. The RSI moved back above its 50 line, while the MACD, already positive, shows signs that it could move above its signal line in the near future. However, although we may see the continuation of the rebound, the rate is still trading in a sideways channel between the support of 138.00 (S2) and the resistance of 141.00 (R1). Therefore, I would see a neutral short-term picture. On the daily chart, the break above 131.40 on the 29th of April signaled a possible trend reversal in my view. As a result, I would consider the medium-term trend of EUR/JPY to be positive. Nevertheless, a daily close above 141.00 (R1) is needed to confirm a forthcoming higher high on the daily chart and signal trend continuation.

• Support: 138.00 (S1), 137.00 (S2), 135.15 (S3)/p>

• Resistance: 139.60 (R1), 141.00 (R2), 141.70 (R3)

• Gold traded lower after finding resistance once again near the 1205 (R1), which stands fractionally close to the 61.8% retracement level of the 18th of May – 5th of June decline. Currently the metal is headed towards the support line of 1196 (S1), where a clear break is likely to extend the retreat towards the next support zone at 1190 (S2). Although the short-term picture looks somewhat positive, a further tumble is favored by our momentum studies as well. The RSI exited its overbought zone and now points down, while the MACD has topped and could fall below its signal line soon.

• Support: 1196 (S1), 1190 (S2), 1183 (S3)

• Resistance: 1205 (R1), 1215 (R2), 1220 (R3)

• DAX futures surged after hitting support at the 10,800 (S3) line. This was the 3rd time sellers failed to close the day below the 10,870 (S2) area, which happens to be the 38.2% retracement level of the 16th of October – 10th of April advance. Now the index is headed towards the resistance line of 11,350 (R1), where an upside break is likely to challenge the next obstacle of 11,450 (R2), determined by the high of the 11th of June. Our short-term oscillators reveal upside speed and amplify the case that DAX could trade higher in the near future. The RSI emerged above its 50 line, while the MACD crossed above its trigger and is now headed towards its zero line. In the bigger picture, although the index is trading within a downside channel and below the uptrend line taken from the low of the 16th of October, I would switch my view to neutral. Only a clear close below the 10,800 (S3) zone could make me confident on the medium-term downside path.

• Support: 11070 (S1), 10870 (S2), 10800 (S3)

• Resistance: 11350 (R1) 11450 (R2), 11600 (R3)

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IronFX Daily Commentary | 23/06/15

Language English

•Dr. Johnson was rightDr. Samuel Johnson, he of the 18th century English dictionary, once said, “when a man knows he is to be hanged in a fortnight, it concentrates his mind wonderfully.” Apparently that worked with Greece too. With only days before his country would have to default and perhaps leave the Eurozone, Greek PM Tsipras presented a new set of proposals to the creditors that went a long way towards meeting their demands. In particular, the new proposals meet much of the requirements with regards to the government’s primary surplus targets and pension reform.

•Greece is not out of the woods yet, however. First off, the proposals do not meet all of the requirements, for example for spending cuts and tax increases (sales taxes appear to be one of the major points of disagreement remaining). IMF chief Lagarde said the proposal “still lacks specificity” and that an “enormous” amount of work still lies ahead. Moreover, Tsipras is still insisting that creditors must reduce Greece’s debt burden, but Germany and some other countries are still reluctant to do so, although both German Chancellor Merkel and French President Hollande both agree that the issue has to be dealt with eventually – probably after this agreement is signed. Finally, the Greek parliament will have to pass any agreement before it can even be submitted to the German Bundestag for its approval, but some members of Tsipras’ ruling SYRIZA coalition remain opposed to making the necessary concessions. In other words, the negotiators now have the basis for further work, rather than the finished deal.

•European leaders gave Tsipras 48 hours to come up with something that they could sign off on at the EU leaders’ summit scheduled for Thursday. That then becomes the deadline. So staff level discussions will continue, followed by approval from the Eurogroup of finance ministers Thursday and then the EU leaders at their summit, assuming everything goes OK. The assumption is that the EU leaders would start discussion on longer-term debt relief after the measures were agreed on. Both the Greek and German parliaments have to pass the proposals and the money has to be released in time for Greece to repay the IMF next Tuesday. This will be quite tight, as the Bundestag begins its summer holiday on Monday. I’m not sure whether they can meet on the weekend.

•EUR assets rally on the news, but EUR itself weakens The Euroxstoxx 50 index rose 4.1% yesterday, with Greek stocks up 9%. Meanwhile, spreads over Germany of 10-year Italian bonds, which the market is using as a proxy for illiquid Greek bonds, narrowed by around 26 bps to 127 bps. This shows that the market is assuming a successful conclusion to the talks. So why is EUR/USD about 1% lower this morning than it was 24 hours ago? There are two possible explanations: 1) the euro is trading as a funding currency, not an asset, and 2) investors are hedging the currency risk on their euro-denominated investments. The first would indicate that in a risk-on situation, investors would be borrowing euros and using them to invest in other assets, while the second would suggest that as investors pile into European stocks and bonds, they simultaneously sell forward their euro exposure to hedge their position. By this understanding, we can see that the successful resolution to the Greek issue does not guarantee a stronger euro, while the failure of the talks and a Greek crisis almost assuredly would mean a weaker euro.

•In any case, the euro’s performance yesterday was consistent with the overall performance of the dollar, which gained as US existing home sales rose to the highest level since 2007 (if we exclude a period when they were boosted temporarily by a special tax credit). Both Fed funds rate expectations and US bond yields moved higher, with UST 10-year yields up a significant 11 bps on the day, in contrast to the decline in peripheral European yields. Given the dollar’s recent good performance and the large cutback in short currency/long USD positions shown in Friday’s Commitment of Traders report, further gains seem possible as the momentum continues. Today’s data is likely to boost the dollar further, in my view (see below).

•Today is PMI dayTuesday is a PMI day. During the Asian day, China’s preliminary HSBC manufacturing PMI rose to 49.6 from 49.2 last month. While this beat the market’s estimate of 49.4, it was still below the crucial 50 line that divides expansion from contraction. The improvement shows the economy stabilizing at best. Nonetheless, Chinese stocks continued to fall as margin calls continue to hit investors. AUD and NZD both weakened more than CAD, the other commodity currency.

• During the European day, we get the preliminary manufacturing and service-sector PMI data for June from several European countries and the Eurozone as a whole. The expectations are for the manufacturing PMIs to remain unchanged or increase a bit, while service-sector PMIs are likely to decline somewhat. Even though the main theme this week is Greece, a strong positive surprise from the PMIs would be needed for the EUR to strengthen somewhat.

•We have a busy day in the US with data that is forecast to be largely USD-positive. The Markit PMI is expected to show manufacturing expanding at an accelerating pace, which should be USD-positive. The headline figure for durable goods orders for May is expected to fall at a faster pace than in April, but durable goods orders excluding transportation equipment are estimated to have risen, a turnaround from the previous month. The focus is usually on the core figure where a positive surprise could suggest the possible start of a turnaround in business investment that would be bullish for the dollar. New home sales for May and FHFA housing price index for April are also due out. The forecast of an increase in new home sales could add to the recent strong housing data and strengthen USD. Richmond Fed manufacturing activity index for June is also coming out.

•As for the speakers, Norges Bank Governor Oeystein Olsen and Fed Governor Jerome Powell speak.

Currency Titles:

EUR/USD falls below 1.1300

GBP/USD is testing again the black uptrend line as a support

USD/JPY just below 123.80

DAX finds resistance near 11500

WTI in a sideways path

Currencies Image Url:

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http://shared.ironfx.com/Morning_Pictures_2015/June2015/June23/GBPUSD.PNG

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http://shared.ironfx.com/Morning_Pictures_2015/June2015/June23/WTI.PNG

Currencies Text:

• EUR/USD fell during early European morning Tuesday, breaking below our support-turned-into-resistance line of 1.1300 (R1). If the bears prove strong enough and keep the rate below that area, we could see further declines perhaps towards the 1.1200 (S1) support zone. A break below that level is likely to target our next support of 1.1145 (S2). Our short-term momentum studies support this notion. The RSI fell below the 50 line and points down, while the MACD, failed to break above its trigger line, turned down and dip into its negative territory.

• As for the broader trend, I would like to remain neutral and wait for a break below the 1.1080 (S3) area to carry larger bearish implications.

• Support: 1.1200 (S1), 1.1145 (S2), 1.1080 (S3)

Resistance: 1.1300 (R1), 1.1400 (R2),1.1450 (R3)

•GBP/USD declined on Monday after finding resistance near 1.5950 (R1). During the early European Tuesday, the pair continue trading lower, testing again the black uptrend line as a support. A break below that uptrend line and subsequently the 1.5740 (S1) support zone, could trigger further declines perhaps towards our next support of 1.5675 (S2). Our short-term oscillators support further declines. The RSI fell below 50 and is pointing down, while the MACD, already below its trigger line fell below zero. However, switching to the daily chart, I see that after rebounding from the 50% retracement level of the 14th of April - 15th of May up leg, GBP/USD moved back above the 80-day exponential moving average. In my view, the move above 1.5800 on the 17th of June confirmed that the overall picture has turned positive.

• Support: 1.5740 (S1), 1.5675 (S2), 1.5620 (S3)

• Resistance: 1.5815 (R1) 1.5950 (R2), 1.6000 (R3)

• USD/JPY surged during the Asian session Tuesday but the move was halted a touch below our resistance line of 123.80 (R1). A break of that line could target initially the black uptrend line to test it as a resistance this time, and if the bulls prove strong enough the rate could move higher towards 124.50 (R2). The move higher confirmed the positive divergence between our short-term oscillators and the price action. Therefore, we could see further advances in the not-too-distant future. The RSI break above the 50 line and moves towards the 70 area, while the MACD, lies above its zero and trigger lines. These momentum signs support further advances. In the bigger picture, the break above the 122.00 (S3) zone on the 26th of May triggered the continuation of the long-term upside path. I would treat any further near-term declines as a corrective phase of the larger uptrend.

• Support: 123.10 (S1), 122.50 (S2), 122.00 (S3)

• Resistance: 123.80 (R1), 124.50 (R2), 125.00 (R3)

• DAX futures surged on Monday but found resistance close to the crossroad of the 11500 (R1) hurdle and the upper boundary of the downslope channel. A break of that area is needed to support further advances. Our short-term oscillators reveal upside speed and amplify the case that DAX could trade higher in the near future. The RSI found support at its 50 line and moved higher, while the MACD stands above its trigger and zero line. In the bigger picture, although the index is trading within a downside channel and below the uptrend line taken from the low of the 16th of October, I would switch my view to neutral and wait for a break above the 11500 (R1) to trust further advances.

• Support: 11350 (S1), 11210 (S2), 11070 (S3)

• Resistance: 11500 (R1) 11600 (R2), 11720 (R3)

• WTI trades in a consolidative manner between the 60.55 (R1) resistance line and the 59.60 (S1) support area. A break in either direction is needed to determine the near-term bias. Therefore, I would consider the intraday bias to remain neutral. Our technical studies support the trendless short-term picture as well. The RSI lies near its 50 line and points sideways, while the MACD, although positive, points east as well. As for the broader trend, the break above 55.00 on the 14th of April signalled the completion of a double bottom formation, something that could carry larger bullish implications in the not-too-distant future. However, WTI has been trading in a sideways mode since the 6th of May, and this is supported by our daily oscillators as well. Both the 14-day RSI and the daily MACD lie near their equilibrium lines and point sideways.

• Support: 59.60 (S1), 59.20 (S2), 58.60 (S3)

• Resistance: 60.55 (R1), 61.00 (R2), 61.40 (R3)

Benchmark Currency Rates:

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Market Summary Url:

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[IronFx]

IronFX Daily Commentary | 24/06/15

Language English

•With Greece on its way to being solved, monetary policy dominates markets As the market discounted the successful resolution of the long-running Greek drama, attention reverted to monetary policy divergence and the likelihood of Fed tightening. As a result, the dollar continued to gain against most currencies. The commodity currencies were the only exception as oil prices surged.

•Fed funds rate expectations continued to move higher – up 2.5 bps from Aug. 2016 out – and bond yields also rose as US new home sales exceeded expectations to hit a new high for this economic cycle. The May durable goods report was mixed, with the headline number falling more than expected on a large drop in the volatile civilian aircraft orders series, but the key core gauge of equipment demand -- nondefense capital goods excluding aircraft orders – extending a modest recovery. The news outweighed a somewhat disappointing Markit manufacturing PMI for the US.

•One reason for the dollar’s general strength was that Fed Governor Jerome Powell said he sees a 50-50 chance that the US economy will improve enough for him to support a rate hike in September and a second one in December, bringing to five the number of Fed officials who see two rate hikes this year. That’s one less than half of the 12 voting members of the FOMC. These people are comfortable raising rates even though they see growth this year at only around 2%, which indicates that they have adjusted their outlook to take into account a substantial decline in trend growth and they still want to lift rates from zero nonetheless. The fact that so many members of the FOMC hold such views means that on a risk-adjusted basis, the Fed funds futures for December at 0.32% -- discounting only a small chance of a second rate hike -- is perhaps too low.

•Tsipras caught between a rock and a hard place Optimism about a solution to the long-running Greek drama is running high as both sides show new determination to reach an agreement. Greek stocks were up 6.1% yesterday, with the banks rising 10.4%. Nonetheless, there are still a lot of hurdles to overcome as Greek PM Tsipras is caught between a rock and a hard place: Officials think his proposals do not go far enough, while members of his own party think they go too far.

•According to the Greek newspaper Kathimerini, EU officials say that Greece’s proposals violate many of the creditors’ “red lines” on value-added tax rates and pensions. Creditors think the Greek proposal is too heavy on revenue-raising measures, which could push the country back deeper into recession, rather than spending cuts, which tend to be more supportive of growth. The IMF In particular has been saying that Greece needs to cut spending, not raise taxes, yet EUR 7.3bn out of the EUR 7.9bn of measures that Greece proposed are increases in taxes and social security contributions. Such a “solution” would be unsustainable if it were actually implemented, but given the country’s dismal record in tax collection, it in fact has only a small chance of being successfully implemented. Thus there is the chance that when Tsipras meets today with ECB President Draghi, EC President Juncker and IMF Managing Director Lagarde, it’s possible that Lagarde may tell him that the proposals are unacceptable and must be revised.

•At the same time, some members of Tsipras’ SYRIZA coalition also object to the new measures as being too harsh and say that they will vote against them. The government’s narrow majority means that if only 10 SYRIZA deputies vote against the package or even abstain, the government would need the help of opposition parties to pass the measures. That would hurt its credibility and throw the government’s future into question. To make matters worse, there is talk that Finance Minister Varoufakis may leave the government. Meanwhile, thousands of pensioners Tuesday evening demonstrated in the streets of Athens against the cuts.

•Assuming though that Greece works out some compromise with the EU and Greek lawmakers do approve the measures over the weekend, Germany’s Bundestag could vote on it on June 29th or June 30th. That probably wouldn’t be soon enough for Greece to receive the last disbursement of funds in time to make the payment due to the IMF on June 30th, but the ECB would probably allow the Greek central bank to raise the money in time through T-bills. If however something goes wrong, then the country will miss the June 30th payment to the IMF and that’s that. While the assumption of a successful resolution to the Greek drama has turned out to be negative for the euro, failure would probably be much, much more negative.

•Oil rises after API stats apparently show large drawdown in inventories Oil prices rose sharply after the American Petroleum Institute (API) weekly statistics apparently showed an 3.2mn barrel decline in inventories in the week ended June 19th, far exceeding expectations of a 2mn barrel decline. Expectations of rising demand are replacing fears of a Greek collapse, boosting oil prices. The result was a rise in the commodity currencies – AUD, NZD, CAD and RUB – although NOK did not participate in the rally, probably because of the divergence in monetary policy there. Note though that Iran yesterday raised new objections to some of the conditions for lifting sanctions, calling into question whether the country will be able to start exporting more oil. The collapse of the Iranian talks would probably boost oil prices significantly.

•Today’s highlights: In the European evening, the Eurozone finance ministers will hold an emergency meeting in an a bid to reach a final bailout deal for Greece ahead of an EU leaders’ summit the following day.

•As for indicators, we get the German Ifo survey for June. The weak ZEW indices last Tuesday increase the likelihood of soft Ifo indices as well. Even though Tuesday’s PMIs showed that business conditions had improved in June, another weak Ifo reading could add to evidence that Eurozone’s growth engine is losing steam. The final GDP figure for Q1 for France is also coming out. The final data is expected to confirm the preliminary growth figure, thus the market reaction could be limited.

•In the US, the 3rd estimate of Q1 GDP is expected to show that the US economy contracted less compared to the 2nd estimate. Even though this is the final estimate and not that big market mover, it could prove USD-positive as it will show a stronger Q1 compared to what was initially estimated (-0.2% qoq SAAR vs -0.7% qoq SAAR). Along with expectations of a rebound in Q2, this will keep the September rate hike scenario alive. We believe that if the economic outlook continues to improve in the next months and the momentum picks up, the first rate hike could occur in September and the USD could regain its strength. The 3rd estimate of the core personal consumption index, the Fed’s favorite inflation measure, is also coming out.

•As for the speakers, ECB Vice President Vitor Constancio speaks.

Currency Titles:

EUR/USD falls below 1.1200

GBP/USD founds support just above 1.5700

USD/JPY test 123.80 as a support this time

DAX above the psychological level of 11500

WTI surged above 60

Currencies Image Url:

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http://shared.ironfx.com/Morning_Pictures_2015/June2015/June24/DAX%20futures.PNG

http://shared.ironfx.com/Morning_Pictures_2015/June2015/June24/WTI.PNG

Currencies Text:

• EUR/USD fell sharply on Tuesday, breaking below the round number of 1.1200. The decline was halted near our 1.1145 (S1) support zone. Since the rate remains trapped in a range between the 1.1300 (R2) resistance line and the 1.1145 (S1) support, I view the price as moving within a sideways path. A break in either direction is likely to determine the forthcoming short-term bias. Given the inability of the bears to push the rate below that key support, I would expect the pair to bounce up a bit, at least for a test of 1.1230 (R1). This notion is supported by our momentum indicators. The RSI found support at its 30 line and rebounded somewhat, while the MACD, although still below zero, has bottomed and points up. A break of that hurdle could see scope for further advances towards the 1.1300 (R2) resistance line. In the bigger picture, I would like to remain neutral and wait for a break below the 1.1080 (S3) area to carry larger bearish implications or a move above the psychological zone of 1.1500 (R2) for further bullish extensions.

• Support: 1.1145 (S1), 1.1080 (S2), 1.1000 (S3)

• Resistance: 1.1230 (R1) 1.1300 (R2), 1.1400 (R3)

• GBP/USD broke below the black uptrend line on Tuesday and declined to find some buy orders around 1.5700. I would expect the decline to continue at least towards our 1.5675 (S1) support zone. A break below that line could trigger further declines, perhaps towards our next support of 1.5620 (S2). Looking at our momentum indicators, however, further declines may not be immediate. The RSI found support slightly above 30 and points up, while the MACD, has bottomed and seems willing to cross its trigger line. Therefore, we could see a minor bounce before the next leg lower. On the daily chart, I see that after rebounding from the 50% retracement level of the 14th of April - 15th of May up leg, GBP/USD moved back above the 80-day exponential moving average. In my view, the move above 1.5800 on the 17th of June confirmed that the overall picture has turned positive.

• Support: 1.5675 (S1), 1.5620 (S2), 1.5545 (S3)

• Resistance: 1.5815 (R1) 1.5950 (R2), 1.6000 (R3)

• USD/JPY moved higher on Tuesday, breaking above the resistance-turned-into-support line of 123.80 (S1). The advance was halted however at the black uptrend line and the pair declined a bit to test the 123.80 (S1) zone. If the bulls manage to take the price above that trend line, I would expect them to challenge our 124.50 (R1) resistance level. Given our momentum indicators however, we will have to wait and see whether the bulls are strong enough to start a new attempt to take the price higher. The RSI lies just below its 70 line and is pointing sideways, while the MACD stands above its zero and trigger lines and is also pointing sideways. This amplifies the case to see a break above the uptrend line and further advances. On the daily chart, the break above the 122.00 zone on the 26th of May triggered the continuation of the long-term upside path.

• Support: 123.10 (S1), 122.50 (S2), 122.00 (S3)

• Resistance: 123.80 (R1), 124.50 (R2), 125.00 (R3)

• DAX futures gapped up on Tuesday, breaking above the psychological figure of 11500 and the upper boundary of the downslope channel. The advance was halted at the 11640 (R1) resistance line. A break above that level is needed for the index to see scope for further bullish extensions. Even though our short-term oscillators reveal upside speed and amplify the case that DAX could trade higher in the near future, a minor correction towards the 11490 (S1) zone cannot be ruled out. In the bigger picture, I would need a decisive break above 11640 (R1), to switch the medium-term bias to the upside again.

• Support: 11350 (S1), 11210 (S2), 11070 (S3)

• Resistance: 11500 (R1) 11600 (R2), 11720 (R3)

• WTI surged on Tuesday breaking two resistance lines in a row. The move was halted at our 61.40 (R1) resistance line and today, during the early European morning Wednesday, WTI is testing the 61.00 (S1) level as a support this time. A break below that level could push the rate even lower, perhaps towards our next support of 60.55 (S2). Our technical studies support the decline. The RSI found resistance at its 70 line and is pointing down, while the MACD has topped, crossed below its trigger line and moves towards zero. As for the broader trend, the break above 55.00 on the 14th of April signalled the completion of a double bottom formation, something that could carry larger bullish implications in the not-too-distant future. However, WTI has been trading in a sideways mode since the 6th of May, with both momentum indicators near their equilibrium lines pointing sideways.

• Support: 61.00 (S1), 60.55 (S2), 59.60 (S3)

• Resistance: 61.40 (R1), 61.80 (R2), 62.35 (R3)

Benchmark Currency Rates:

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Market Summary Url:

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[IronFx]

IronFX Daily Commentary | 25/06/15

Language English

• Greek talks stumble I mentioned yesterday that Greece’s creditors didn’t like the country’s proposals, which emphasized tax increases that could further dampen growth and largely ignored spending cuts and structural reforms that would boost the country’s potential. In fact the creditors rejected the proposals and made counterproposals that Greek PM Tsipras rejected (available at http://online.wsj.com/public/resources/documents/062415Greek.pdf ) These are the “prior actions” that the government must implement and the calendar for implementation. They show that the pension system remains a major sticking point.

• To give you a feel for how far apart the two sides still are at this late date, Market News International quoted an unnamed Greek government official as describing the creditors’ proposals as “barbaric” and “Armageddon,” while a German government spokesman called them “exceptionally generous.” Given that many of the members of the ruling SYRIZA coalition thought that the original Greek proposals were too harsh, it’s hard to see how Greek PM Tsipras can come up with new proposals that the creditors will approve of and still manage to get them through the country’s parliament in time for next Tuesday’s deadline.

• The technical teams reconvened this morning at 0600 CET, while Tsipras and his counterparts from the three creditor institutions – the ECB, the IMF and the European Commission – will meet again at 0900 CET. It’s hard to imagine though what they can come up with that will win the approval of the Greek parliament. If the two sides cannot agree on measures and pass them through the Greek parliament by Sunday night, the country might have to impose capital controls and the Greek banks might not be able to open as usual on Monday morning. That could prove to be a traumatic event for the FX markets. On the other hand, if the Greek government can agree in time, then the Eurogroup might be able to wire them the profits from the Securities Market Program (SMP) directly, which would allow them to make the payment to the IMF on Tuesday. (The ECB bought Greek government bonds as part of the SMP, which was active from 2010 to 2012. It has said it would give Greece the profits from those trades if an agreement is reached.)

• EUR slightly higher nonetheless Has this proven to be a catastrophe for the euro? Not at all. In fact, the euro was 0.3% stronger vs USD this morning than it was 24 hours ago, while the Deutsche Bank EUR TWI was up 0.37% this morning compared with its Tuesday close. The range in EUR/USD was 0.74% yesterday, well below this year’s average of 1.23% (although this is the European trading day, which ended before the talks officially blew up). It looks to me like market participants are simply getting bored by the whole Greek issue and are thinking about other things, such as their plans for this summer. The main impact was on the stock markets, not the FX market. FX is being more influenced by monetary policy and USD was mixed as Fed funds rate expectations slipped somewhat and UST yields declined. That may be the channel through which Greece is affecting the FX market: increased Greek tensions reduce the likelihood of Fed tightening and thereby paradoxically weaken the dollar, not the euro.

• Nonetheless, I still believe that the failure of the talks would be negative for the euro. Investors are starting to worry about the possible contagion effects, notably on Portugal. After falling to record lows in recent months, Portugal’s borrowing costs last week hit their highest point this year as the Greek tensions increased. During the previous Greek crisis in 2012, Portuguese 10-year bond yields soared to 18%, forcing the-then government to seek a rescue from the EU and the IMF. UBS has forecast that Portugal’s borrowing costs could double if Greece leaves the euro. Even before that, if Greece imposes capital controls, depositors in Portugal could worry that they may be next and start to move money abroad. That could impose serious strains on the European monetary system, weakening the euro.

Today’s highlights: During the European day, EU leaders begin their two-day summit. Greece is likely to dominate the discussion, however, the fast-approaching UK referendum on EU membership will also be among the key points of the summit. This will be the first time that the UK PM will officially present his demands as part of plans to renegotiate UK’s membership with the EU. He will seek to get support from the EU leaders for reforms meaningful enough to persuade the British people to vote to remain in the EU. Anything that could undermine the UK’s membership in the bloc could have negative impact on GBP.

• As for indicators, only data of secondary importance are coming out: Germany’s GfK consumer confidence for July and Sweden’s PPI for April. Neither is a major market mover.

• In the US, we get personal income and personal spending for May. Both are forecast to accelerate but the market will most likely focus on personal spending, which is forecast to rise sharply after a flat reading in April. A big pickup in spending will support a rebound in growth in Q2 and add to the likelihood of a rate hike in September. The yoy rate of the PCE deflator and core PCE for May are also coming out. The PCE deflator is expected to accelerate, while the core PCE is forecast to remain unchanged in pace from April. The former could add to dollar’s strength. The preliminary Markit service-sector PMI for June and initial jobless claims are also due out.

• As for the speakers, Swiss National Bank President Thomas Jordan and Fed Governor Jerome Powell speak. Powell spoke Tuesday on monetary policy while Thursday he speaks on payment systems, so his comments are not likely to add much to our understanding of Fed thinking..

Currency Titles:

EUR/USD trades somewhat higher

GBP/USD finds support at 1.5675

EUR/JPY finds resistance near 139.10

DAX hits resistance at 11645 and tumbles

Gold rebounds from 1170

Currencies Image Url:

http://shared.ironfx.com/Morning_Pictures_2015/June2015/June25/EURUSD_25June2015.PNG

http://shared.ironfx.com/Morning_Pictures_2015/June2015/June25/GBPUSD_25June2015.PNG

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http://shared.ironfx.com/Morning_Pictures_2015/June2015/June25/DAX_25June2015.PNG

http://shared.ironfx.com/Morning_Pictures_2015/June2015/June25/XAUUSD_25June2015.PNG

Currencies Text:

•EUR/USDtraded somewhat higher on Wednesday, after it hit support around 1.1145 (S1) on Tuesday. Today, during the European morning, the rate is headed towards the resistance hurdle of 1.1240 (R1), where an upside break could extend the rebound towards the 1.1300 (R2) area. Our momentum studies corroborate the view that the rebound is likely to continue. The RSI rebounded from its 30 line and is now headed towards its 50 barrier, while the MACD has bottomed and could move above its trigger line soon. However, although we may experience further advances for a while, the rate is trading below the short-term uptrend line taken from the low of the 27th of May, and the possibility for a lower high below that line still exists. Therefore, I would consider the short-term bias to have turned somewhat negative and I would treat the recovery from near 1.1145 (S1) as a corrective move for now. In the bigger picture, I would maintain my neutral stance. I believe that a move above the psychological zone of 1.1500 is the move that could carry larger bullish implications, while a break below 1.0800 is needed to confirm a forthcoming lower low on the daily chart and perhaps turn the overall bias back to the downside.

• Support: 1.1145 (S1), 1.1075 (S2), 1.1000 (S3)

• Resistance: 1.1240 (R1), 1.1300 (R2), 1.1400 (R3)

• GBP/USD slid on Wednesday, but the decline was halted at around 1.5675 (S1). Bearing in mind that Cable is trading below the prior short-term uptrend line, I would consider the near-term outlook as staying negative. A move below 1.5675 (S1) is likely to initially target the next support obstacle at 1.5620 (S2). Our short-term oscillators detect negative momentum and support the case for further declines. The RSI hit resistance fractionally above its 50 line and moved lower, while the MACD lies below both its signal and zero lines, pointing down. Switching to the daily chart, I see that after rebounding from the 50% retracement level of the 14th of April - 15th of May up leg, GBP/USD moved back above the 80-day exponential moving average. In my view, the break above 1.5800 on the 17th of June confirmed that the overall picture has turned positive. As a result, I would consider any further short-term declines as a corrective move, at least for now.

• Support: 1.5675 (S1), 1.5620 (S2), 1.5540 (S3)

• Resistance: 1.5800 (R1), 1.5910 (R2), 1.6000 (R3)

• EUR/JPYtraded lower after it hit resistance at around 139.10 (R1). The rate is now approaching the uptrend line taken from the low of the 14th of April. In my view, a break below the support zone of 138.00 (S1) is needed to confirm a forthcoming lower low on the 4-hour chart and perhaps turn the near-term picture to the downside. Such a break is likely to open the way for our next support of 137.00 (S2). Taking a look at our momentum studies, I see that the RSI turned down after finding resistance slightly below 50, while the MACD stands below both its zero and signal lines. On the daily chart, the break above 131.40 on the 29th of April signaled a possible trend reversal in my view. As a result, I would consider the medium-term trend of EUR/JPY to be positive and any near-term declines as just a corrective phase of that uptrend.

• Support: 138.00 (S1), 137.00 (S2), 136.10 (S3)

• Resistance: 139.10 (R1), 141.00 (R2), 141.70 (R3)

• DAXfutures traded lower on Wednesday after finding resistance at 11645 (R1), slightly above the upper bound of the downside channel that had been containing the price action since the last days of March. Having that in mind, and that the index is still trading below the longer-term uptrend line taken from back at the low of the 16th of October, I would expect the forthcoming wave to be negative. This is also supported by our short-term oscillators. The RSI tumbled after it hit resistance at its 70 line, while the MACD has topped and could fall below its signal line soon. If the bears manage to drive the battle below the 11365 (S1) support line, I would expect them to initially target the 11250 (S2) area. Another break through that support could have larger bearish implications and perhaps target the 11000 (S3) zone. In the bigger picture, although the index remains below the uptrend line taken from the low of the 16th of October and is now trading back within the downside channel, I would hold my flat stance. Only a clear close below the 10800 zone could make me confident on the medium-term downside path.

• Support: 11365 (S1), 11250 (S2), 11000 (S3)

• Resistance: 11645 (R1) 11800 (R2), 11930 (R3)

• Goldedged higher after it hit support at 1170 (S1). As long as the metal is trading below the short-term uptrend line drawn from the low of the 5th of June, I would consider the short-term picture to be somewhat negative. However, I see signs that the current upside corrective move may continue a bit more. The RSI has turned up after finding support marginally above its 30 line, while the MACD has bottomed and could move above its trigger line any time soon. A clear move above 1180 (R1) would confirm further upside correction and perhaps open the way for the next resistance at 1188 (R2). As for the bigger picture, the overall outlook remains somewhat negative. However, I would prefer to see a decisive close below the previous low at 1162 (S2), before I get more confident on the downside.

• Support: 1170 (S1), 1162 (S2), 1153 (S3)

• Resistance: 1180 (R1), 1188 (R2), 1195 (R3)

Benchmark Currency Rates:

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Market Summary Url:

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[IronFx]

IronFX Daily Commentary | 26/06/15

Language English

•Greek talks break up with no resolution, to continue tomorrow…or did I use that headline yesterday? It seems I could use the same comment every day but just change the date. Greek crisis, talks, collapse, reconvene – just put those words in a different order every day.

• Talks broke up yesterday without a decision and Eurozone finance ministers will reconvene Saturday for what’s being billed as “crucial” and “decisive” talks. German Chancellor Merkel said European leaders agreed that “everything must be done to find a solution on Saturday.” In practice, what that means is that the Greek side will have to move closer to what the creditors are demanding. It all then comes down to Greek politics. So no change, just the finish line is 24 hours closer. Tune in again on Sunday night!

• If they can’t reach an agreement, then the country probably won’t be able to pay the €1.5bn it owes to the IMF on Tuesday. The good news is that failure to pay the IMF technically is not defined as a “default.” The real, final, last, no-kidding-around deadline therefore isn’t actually Tuesday. That honor probably belongs to the 20 July €3.5bn payment due to the ECB. If Greece misses that payment, then the ECB would have a hard time continuing with the illusion that the banking system is solvent and would probably have to turn off the Emergency Liquidity Assistance (ELA) that is keeping the Greek banking system afloat = game over. Before that, on July 14th, the country has a ¥20bn samurai bond coming due. That’s much smaller, though.

• Greek crisis could affect CHF The resolution – or not – of the Greek crisis is likely to have big implications for the Swiss Franc, because of its characteristics as a “safe haven” currency. Swiss National Bank President Thomas Jordon Thursday made a speech to the Swiss watch industry in which he pointed out that the CHF is “significantly overvalued” and said that the country’s monetary policy was geared to dealing with this situation. Then he added, “However, in the current climate there is, regrettably, no easy solution that would absorb all external disruptions. We must accept these challenging economic conditions for the time being.” What kind of “external disruptions” is he talking about? Probably Greece. In other words, he’s warning that EUR/CHF could move down again if Greece defaults.

• People who are interested in playing the Eurozone crisis might want to look at that pair. EUR/CHF tracks the spread between Italian and German bonds fairly well, demonstrating that EUR/CHF does respond pretty closely to concerns about what’s happening with Greece.

• US indicators continue to improve Away from Greece, yesterday’s US economic indicators continued to improve and Fed funds rate expectations moved higher again as a result, supporting USD against most currencies. US consumer spending rose the most in nearly six years on demand for autos and other big-ticket items. Personal income also rose and previous months were revised up, which caused many forecasters to raise their estimate of Q2 GDP. The Atlanta Fed raised its forecast by 0.1 ppt to 2.1%, and it’s at the bottom end of forecasts. The core personal consumption expenditure deflator, the Fed’s favorite inflation measure, continued to rise at 1.2% yoy in May, but the 3 month annualized pace of change has now risen to 1.6% from 0.6% in February – this will reassure the Fed that its 2% inflation target is indeed within reach. Stronger growth, an improving labor market and stable or rising inflation should pave the way for a first hike in the Fed funds rate in September, expectations of which should support the dollar.

• Japan inflation slows further As the impact of the April 2014 hike in the consumption tax continues to drop out of the year-on-year calculation, Japanese inflation slowed further, although not as much as expected. The national CPI decelerated to +0.5% yoy in May from +0.6%, while the core-of-core inflation (excluding food and energy) was unchanged at +0.4% yoy. Tokyo headline for June decelerated even more (+0.3% yoy from +0.5%) but core was up a touch (but still near deflation at +0.2% yoy from +0.1%). The fact that core inflation is running below headline inflation shows that it isn’t just the impact of cheaper oil that’s pushing down prices. Moreover, inflation continues to decelerate even though the unemployment rate remains exceptionally low (3.3%) and the job-offers-to-applicants ratio is rising (1.19 from 1.17), suggesting that the labor market remains under upward pressure. While no one expects the Bank of Japan to increase its stimulus right away, I do think that they’ll have to do more later on this year if things continue the way they’re going. That should weaken the yen.

• Today’s highlights: During the European day, EU leaders will conclude their two-day summit. The draft communique said that EU leaders will review the state of negotiations with Britain on its EU membership in December, according to Reuters. A regular EU summit is scheduled for Dec. 17-18.

• As for the indicators, Eurozone’s M3 money supply is forecast to have risen 5.4% yoy in May, a slight acceleration from 5.3% yoy previously. The 3-month moving average is expected to accelerate if the forecast is met. French consumer confidence for June is also to be released.

• From Sweden, retail sales for May are forecast to rise, a turnaround from the previous month. This could add to the recent strong data and strengthen SEK somewhat.

• In the US, the final University of Michigan consumer sentiment for June is coming out along with the surveys of 1-year and 5-to-10 year inflation expectations.

• of As for the speakers, Bank of England Governor Mark Carney speaks.

Currency Titles:

EUR/USD trades in a consolidative manner

EUR/GBP tumbles after finding resistance 0.7145

USD/JPY hits support at 123.20

WTI in a sideways range

Gold trades somewhat lower

Currencies Image Url:

http://shared.ironfx.com/Morning_Pictures_2015/June2015/June26/EURUSD_26June2015.PNG

http://shared.ironfx.com/Morning_Pictures_2015/June2015/June26/EURGBP_26June2015.PNG

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http://shared.ironfx.com/Morning_Pictures_2015/June2015/June26/XAUUSD_26June2015.PNG

Currencies Text:

• EUR/USD traded in a sideways mode on Thursday, staying between the support line of 1.1145 (S1) and the resistance of 1.1240 (R1). As long as the rate is trading below the short-term uptrend line taken from the low of the 27th of May, and since the possibility for a lower high below that line still exists, I would consider the short-term outlook to be negative. A dip below 1.1145 (S1) is likely to signal further declines and perhaps challenge our next support at 1.1075 (S2). However, taking a look at our oscillators, there is still the likelihood for an upside corrective bounce. The RSI, although below 50, looks ready to turn up again, while the MACD still stands below its trigger line and points somewhat north. In the bigger picture, I would maintain my neutral stance. I believe that a move above the psychological zone of 1.1500 is the move that could carry larger bullish implications, while a break below 1.0800 is needed to confirm a forthcoming lower low on the daily chart and perhaps turn the overall bias back to the downside.

• Support: 1.1145 (S1), 1.1075 (S2), 1.1000 (S3)

• Resistance: 1.1240 (R1), 1.1300 (R2), 1.1400 (R3)

• EUR/GBP slid on Thursday after hitting resistance near 0.7145 (R1). Following the completion of a double top formation on the 12th of June, the price structure has been lower peaks and lower troughs. Thus, I believe that the short-term path of the pair remains to the downside. I would expect the rate to continue to trade lower and perhaps challenge again the support line of 0.7080 (S1). A break below that hurdle is likely to pave the way for the next support at 0.7055 (S2), marked by the low of the 27th of May. Our momentum studies reveal negative momentum and corroborate my view that the pair is likely to trade lower, at least in the near term. The RSI hit resistance at its 50 line and raced lower, while the MACD, although negative, has topped and could fall below its trigger line soon. On the daily chart the pair has been trading in a non-trending mode since mid-March. Therefore, I would consider the overall outlook to be neutral.

• Support: 0.7080 (S1), 0.7055 (S2), 0.7000 (S3)

• Resistance: 0.7145 (R1) 0.7200 (R2), 0.7250 (R3)

• USD/JPY traded lower after it hit the prior uptrend line. During the early European morning, the rate is testing the support barrier of 123.20 (S1), where a decisive dip is likely to target once again the well-tested support zone of 122.55 (S2). Our short-term oscillators somewhat support the case. The RSI fell below its 50 line and is pointing south, while the MACD, although positive, has topped and fallen below its signal line. However there is still positive divergence between both the oscillators and the price action, indicating decelerating downside momentum. As a result, I would expect any further downside extensions to remain short-lived. In the bigger picture, the break above the 122.00 (S3) zone on the 26th of May triggered the continuation of the long-term upside path. I would treat any further near-term declines as a corrective phase of the larger uptrend.

• Support: 123.20 (S1), 122.55 (S2), 122.00 (S3)

• Resistance: 124.35 (R1), 125.00 (R2), 125.80 (R3)

• WTI tumbled yesterday, falling back below the round figure of 60.00 (R1). WTI has been oscillating between the support of 59.25 (S1) and the resistance of 61.50 (R1) since the 11th of June. As a result, I would see a neutral short-term picture. I would expect another test at the lower bound of the sideways range, where there is a high possibility for a rebound. As for the broader trend, the break above 55.00 on the 14th of April signalled the completion of a double bottom formation, which could carry larger bullish implications in the not-too-distant future. However, WTI has been trendless since the beginning of May and this is supported by our daily oscillators as well. Both the 14-day RSI and the daily MACD lie near their equilibrium lines and point sideways.

• Support: 59.25 (S1), 58.70 (S2), 58.30 (S3)

• Resistance: 60.00 (R1) 60.40 (R2), 60.80 (R3)

• Gold traded somewhat lower on Thursday, but the decline stayed limited above the support barrier of 1170 (S1). As long as the metal is trading below the short-term uptrend line drawn from the low of the 5th of June, I would consider the short-term picture to be somewhat negative. A move below 1170 (S1) is likely to set the stage for larger bearish extensions and perhaps target the support of 1162 (S2), defined by the low of the 5th of June. However, I still see signs that an upside corrective move could be on the cards before the bears pull the trigger again. The RSI has turned up again after finding support above its 30 line, while the MACD has bottomed and poked its nose above its trigger line. A clear move above 1180 (R1) would confirm the corrective move and perhaps open the way for the next resistance at 1188 (R2). As for the bigger picture, the overall outlook remains somewhat negative. However, I prefer to see a decisive close below the previous low at 1162 (S2), before I get more confident on the downside.

• Support: 1170 (S1), 1162 (S2), 1153 (S3)

• Resistance: 1180 (R1), 1188 (R2), 1195 (R3)

Benchmark Currency Rates:

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Market Summary Url:

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IronFX Daily Commentary | 29/06/15

Language English

• Greek drama takes a sudden turn for the worse Don’t underestimate the role of pride in international relations. Sometimes people and indeed entire countries make decisions that are not in what appear to be their best interest simply because of pride. That seems to be what has happened in Greece. PM Tsipras called the last creditors’ offer “humiliating” and refused to sign. Instead, on Friday evening he called a referendum for 5 July to let the people vote on it, while urging that the country reject it. “The dignity of the Greek people in the face of blackmail and injustice will send a message of hope and pride to all of Europe,” he said in a statement that focused more on emotions than on economics.

• Some people argue though that the reason he called a referendum had more to do with domestic politics. That is, he may have realized his coalition wouldn’t pass the agreement so he needs the backing of the voters to force it through parliament.

• In any event, the EU and the IMF have lost patience with Greece. They refused Tsipras’ request to extend the nation’s bailout program, which ends Tuesday, to at least until the ballot.

• Caught between the politicians and the risk of a financial crisis, the ECB tried to steer a neutral course and will keep the level of Emergency Liquidity Assistance (ELA) funds to the Greek banks unchanged. That is, they are not going to pull the plug, but neither are they going to ease the pressure by increasing the ELA to compensate for further cash withdrawals by the Greek people. “The bank deposits of the Greek people are fully secure,” Tsipras said in a televised statement. “The same applies to the payment of wages and pensions – they are also guaranteed.” Nonetheless, the country closed its banks and will not reopen them until July 7th at the earliest and imposed capital controls while limiting daily cash withdrawals to EUR 60.

• My view: “yes” vote is likely, but you never know Personally, I always thought a referendum was the likely conclusion, but I assumed that they would hold it before the deadline. By waiting until now, the Greek government has crossed several red lines: they will exit from the bailout program without another program set up and they probably will not be able to make their payment to the IMF Tuesday. Neither is good. If the country rejects the offer in the referendum, then probably they will have to leave the euro, which I think would be a disaster for the currency (see below). My view though is a week of having the banks closed will give them a taste of what life would be like outside the Eurozone. As a result, I expect them to vote “yes” and accede to the creditors’ demands, which will probably mean a change of government.

• Nonetheless, you never know. First off we don’t know how the referendum will worded. Lots of research has shown that the answer you get depends to a large extent on the question you ask. If they only ask whether you agree with the creditors’ proposal, as seems likely, many people may vote “no” without realizing that a “no” vote implies exiting the euro. Secondly, as we saw with PM Tsipras, pride is a strong motivating factor. Look at Russia – how popular PM Putin is despite the difficulty caused by the sanctions, because he has made the world take Russia seriously again! The idea that it’s better to die on your feet than to live on your knees has a lot of resonance. I expect that Greek voters will feel that they are Europeans and that they need to do whatever is necessary to remain in Europe, hence vote yes; but it’s entirely possible that they will feel they have nothing left to lose and vote “no” to regain their pride regardless of the consequences.

• Why Greece leaving the euro would be a disaster Greece is just a small part of the Eurozone. Furthermore, it’s a troubled part. Some people believe that the group would be better off over the long term without it, like taking a pebble out of your shoe. Certainly the Eurozone would have been better off if Greece had never joined. However, having joined, the question is not whether the Eurozone would be better with or without Greece; the question is whether a country can leave the euro. If a country, any country, can leave the euro, then investors in European assets have currency risk that they didn’t have before. Any German or Dutch investor holding Portuguese or Italian or Spanish assets suddenly has a new risk to hedge. The market cap of the Italian stock market is around EUR 600bn. If investors hedge even 10% of that, it’s EUR 60bn outflow, a significant amount. Spain is even bigger. We also have to wonder if residents of these countries will look at Greece and think, maybe we’re next? And start to move their money out of the country too. That would be negative for the euro as well.

• ECB to the rescue The ECB is likely to be in the market to prevent such contagion. It said in its statement that “The Governing Council is closely monitoring the situation in financial markets and the potential implications for the monetary policy stance and for the balance of risks to price stability in the euro area. The Governing Council is determined to use all the instruments available within its mandate.” In short, the ECB will do “whatever it takes” to contain the Greek risk, prevent contagion and protect the Eurozone as a whole. As we saw in 2012, sometimes mere words from the ECB are enough to restore confidence, and indeed the relatively muted move in the FX market today (EUR/USD down 1.6% at the European opening, a big move but still well within its recent trading range of around 1.09-1.14) may reflect confidence in the ECB’s ability to contain matters.

• Besides jawboning, the ECB has many tools that it can use to prevent contagion. These include:

Frontloading its bond purchases within the context of the QE program, i.e. increase the size of the monthly purchases for the time being

Buying more of the bonds of vulnerable countries, such as Italy, Spain and Portugal

Offer special liquidity injections if some parts of the Eurozone suffer from a severe shortage of liquidity

Finally, it could activate the “Outright Monetary Transactions” (OMT), a program that the ECB instituted in 2012 to allow it to buy bonds of troubled countries in the secondary market without limit.

• Japan’s industrial production falls; yen strengthens Japan’s preliminary industrial production for May showed a larger-than-expected fall as production of cars slowed. The negative impact on stocks was amplified by the Greek news, which hurt companies that export to Europe. As stocks fell and risk aversion set in, the yen strengthened as usual. This morning it’s the only G10 currency that’s significantly stronger vs USD than it was Friday morning.

• COT report shows plenty of room for new EUR shorts Briefly, Friday’s Commitment of Traders (COT) report showed that investors increased their short EUR positions during the week. Nonetheless investors are not exceptionally short, with the latest reading being only the 32nd percentile. There’s plenty of room to increase EUR shorts. The speculative market’s NZD position is now historically extreme, but relatively small on both an absolute basis and relative to the net long positions the market has had in the past (some 30k contracts maximum). Against the background of further room for easing in New Zealand, I think there is room for NZD shorts to expand further into record territory.

• Today’s highlights: During the European day, the German CPI for June is coming out after several regional states release their data in the course of the morning. As usual, we will look at the larger regions for a guidance on where the headline figure may come in, as an indication for the near-term direction of EUR. Following the introduction of the QE program by the ECB, the German CPI as well as the Eurozone’s CPI had less impact on EUR than usual, because ECB policy is basically on auto-pilot until the QE program ends in Sep. 2016. However, there’s also the question of when they will start to raise rates after QE ends. If the inflation rate shows signs of approaching the ECB’s 2% target, then investors are likely to bring forward their expectations for when the ECB will start raising rates. That would have an impact on the currency markets. Market expectations are for the change in prices to accelerate on a mom basis but decelerate on a yoy basis. But of course today will be dominated by Greek concerns, not economic fundamentals.

• From the US, we get pending home sales for May. Existing home sales beat expectations last Monday, therefore, we could see another positive surprise from pending home sales. This could be USD-positive.

• On Tuesday, as mentioned above the spotlight will be on Greece’s payment to the IMF, which looks doubtful at this point. As for the indicators, we get the final estimate of the UK GDP for Q1. The final figure is expected to be revised up again to show a better pace of growth than the +0.3% qoq at the 2nd estimate. This is likely to strengthen GBP a bit.

• On Wednesday, the Bank of Japan releases its quarterly Tankan business confidence survey for Q2. This is the most important indicator that comes out of Japan and so will be closely watched. All the indices for larger companies and the small companies are expected to increase a bit or remain unchanged. This could be a favorable result for Japanese stocks, which are trading at their highest level since 1996 as measured by the Nikkei index, and could push USD/JPY towards the psychological 125 level again.

• In the US, the ADP employment report for June is coming out, this time only one day ahead of the nonfarm payroll release as US markets will be closed Friday due to the US Independence Day holiday on Saturday. The ADP report is expected to show that the private sector gained more jobs in June than it did in the previous month. That would suggest a strong nonfarm payroll figure as well and boost the dollar.

• On Thursday, the main event of the day will be the US nonfarm payrolls! The market forecast for June is for an increase in payrolls of 225k, below the 280k in May. Nevertheless, another reading above 200k would indicate that the US labor market continues to improve. A strong figure is likely to strengthen USD.

• Besides the NFP, Sweden’s central bank holds it monetary policy meeting Thursday. At their last meeting, the Bank surprised the market and left its official cash rate unchanged at -0.25% but expanded its QE program by SEK10bn-20bn. Strong data recently and the unexpected rise in Sweden’s CPI rate in May take some pressure off the Riksbank to take any further action at this meeting.

• On Friday, we get the final service-sector PMIs for June from the countries we got the manufacturing data for on Wednesday being released. As usual, the market reaction at these releases is minimal as the final figures tend to confirm the preliminary readings.

Currency Titles:

EUR/USD gap lower after Greece’s unexpected referendum call

GBP/USD in a consolidative mode

USD/JPY also gapped lower

WTI just below 59.00

Gold above 1180 again

Currencies Image Url:

http://shared.ironfx.com/Morning_Pictures_2015/June2015/June29/EURUSD.PNG

http://shared.ironfx.com/Morning_Pictures_2015/June2015/June29/GBPUSD.PNG

http://shared.ironfx.com/Morning_Pictures_2015/June2015/June29/USDJPY.PNG

http://shared.ironfx.com/Morning_Pictures_2015/June2015/June29/WTI.PNG

http://shared.ironfx.com/Morning_Pictures_2015/June2015/June29/XAUUSD.PNG

Currencies Text:

• EUR/USD hit a fresh three-week low, as the uncertainty over Greece’s future in the EU rose after the unexpected referendum call by the Greek PM. The pair started the week with around 150 pips gap-lower, opening just below the psychological 1.1000 (S1). The pair then bounced up immediately to trade above that level, thus I would prefer to keep it as a support zone and wait for a decisive break to trust further declines. A break of the 1.1000 (S1) support area could pave the way towards 1.0915 (S2) and below. Our short-term momentum indicators support further declines. The RSI dipped below the 30 line and is pointing down, while the MACD, already below its zero and trigger lines show no signs of bottoming. However, I would expect the pair to remain sensitive to headlines and any positive signs of Greeks voting in favor of the creditors’ proposals and their stay in EUR to push the rate a bit higher.

• Support: 1.1000 (S1), 1.0915 (S2), 1.0860 (S3)

• Resistance: 1.1080 (R1), 1.1145 (R2), 1.1240 (R3)

• GBP/USD bounced up a bit after finding resistance at the crossroad of the 1.5675 (S1) support line and the 80-period moving average. The advance was limited however and the pair remained in a sideway path. A clear dip below the 1.5675 (S1) barrier will signal the end of the price’s consolidative mood and will turn the bias back to the downside following the break below the black uptrend line. Looking at our momentum indicators, however, further declines may not be immediate. The RSI found resistance at its 50 line and points down, while the MACD moves along its zero and trigger lines pointing sideways. These momentum signs suggest weak downside momentum. Therefore, I would prefer to adopt a neutral stance and wait for a break to get confident about further declines. On the daily chart, I see that after rebounding from the 50% retracement level of the 14th of April - 15th of May up leg, GBP/USD moved back above the 80-day exponential moving average. In my view, the move above 1.5800 on the 17th of June confirmed that the overall picture has turned positive.

• Support: 1.5675 (S1), 1.5620 (S2), 1.5545 (S3)

• Resistance: 1.5815 (R1) 1.5950 (R2), 1.6000 (R3)

• USD/JPY also opened the week with a gap lower, falling below two support lines in a row. The pair found some buy orders near the key 122.00 (S2) support level and bounced up to recover some of its losses. During the early European session, the pair is trading just below our support-turned-into-resistance line of 123.80 (R1). A failure to break that level could push the rate back towards the well-tested 122.55 (S1) support line, where a decisive dip is likely to target once again the key support zone of 122.00 (S2). This notion is supported by our short-term momentum signs. The RSI fell below its 50 line and is pointing south, while the MACD fell below its zero and trigger lines, with no signs of bottoming. In the bigger picture, the break above the 122.00 (S2) zone on the 26th of May triggered the continuation of the long-term upside path. I would treat any further near-term declines as a corrective phase of the larger uptrend.

• Support: 122.55 (S1), 122.00 (S2), 121.40 (S3)

• Resistance: 123.80 (R1), 123.80 (R2), 124.35 (R3)

• WTI tumbled on Monday, opening with a gap lower and falling below the support-turned-into-resistance line of 59.25 (R1). The break below the well-tested 59.25 (R1) resistance zone could carry larger bearish implications and push the price towards the 58.30 (S2) support line. However, a break of the 58.70 (S1) support zone marked by the low of the 9th of June is needed to trigger further declines. As a result, I would see a negative short-term picture given the rate falls below the aforementioned support hurdle. As for the broader trend, the break above 55.00 on the 14th of April signalled the completion of a double bottom formation, which could carry larger bullish implications in the not-too-distant future. However, WTI has been trendless since the beginning of May and this is supported by our daily oscillators as well. Both the 14-day RSI and the daily MACD lie near their equilibrium lines and point sideways.

• Support: 58.70 (S1),58.30 (S2), 57.85 (S3)

• Resistance: 59.25 (R1) 59.60 (R2), 60.40 (R3)

• Gold gapped higher on Monday, rising above the 1180 (S1) support level but the advance stayed limited below the 1188 (R1) resistance line and the black uptrend line drawn from the low of the 5th of June. Looking at our short-term momentum indicators further advances cannot be ruled out. The RSI rose above its 50 line and is pointing up, while the MACD, already above its trigger line, poked its nose above the zero level. These momentum signs amplify the case for further short-term advances but as long as the metal is trading below the short-term uptrend line, I would consider the short-term picture to be somewhat negative. A move above 1188 (R1) and the uptrend line is needed to trust further advances. As for the bigger picture, the overall outlook remains somewhat negative, with the precious metal trading below it 50- and 100-day moving averages.

• Support: 1180 (S1), 1170 (S2), 1162 (S3)

• Resistance: 1188 (R1), 1195 (R2), 1205 (R3)

Benchmark Currency Rates:

http://shared.ironfx.com/Morning_Pictures_2015/June2015/June29/benchmark.JPG

Market Summary Url:

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[IronFx]

IronFX Daily Commentary | 30/06/15

Language English

Currency Titles:

EUR/USD covered the gap and moved higher

GBP/USD still in a consolidative mode

USD/JPY heads towards the key level of 122.00

WTI test the 57.90 support level

Gold below 1180 again

Currencies Image Url:

http://shared.ironfx.com/Morning_Pictures_2015/June2015/June30/EURUSD.PNG

http://shared.ironfx.com/Morning_Pictures_2015/June2015/June30/GBPUSD.PNG

http://shared.ironfx.com/Morning_Pictures_2015/June2015/June30/USDJPY.PNG

http://shared.ironfx.com/Morning_Pictures_2015/June2015/June30/WTI.PNG

http://shared.ironfx.com/Morning_Pictures_2015/June2015/June30/XAUUSD.PNG

Currencies Text:

• EUR/USD rose on Monday, covered the gap and moved a bit higher to find resistance at 1.1240 (R1) and the cross of the 50- and 100-period moving averages. A break above that level is needed to carry larger bullish implications and drive the pair towards the round number of 1.1300 (R2). The advance on Monday pushed the pair back into the sideways channel it had been trading since early June, therefore, I would like to remain neutral as far as the short-term picture is concerned. Our short-term momentum indicators add to my view. The RSI lies just above the 50 line relatively neutral, while the MACD, just above the zero line points sideways. On the daily chart, the rally on Monday pushed the rate above the 50- and 100-day moving averages, which keeps the bigger picture somewhat positive.

• Support: 1.1145 (S1), 1.1080 (S2), 1.1000 (S3)

• Resistance: 1.1240 (R1), 1.1300 (R2), 1.1380 (R3)

• GBP/USD remained in a consolidative mode on Monday, trapped in a range between the 1.5675 (S1) support line and the 1.5815 (R1) resistance hurdle. A break in either direction is needed to determine the forthcoming near-term bias. Today, we get the UK 3rd estimate of Q1 GDP, which if revised up, could trigger a challenge of the 1.5815 (R1) resistance zone. Looking at our momentum indicators, they both trade along their neutral levels. The RSI is a touch below the 50 line and moves along it, while the MACD stands very close to its zero and trigger lines. These momentum signs suggest a neutral bias, thus I would prefer to adopt a neutral stance and wait for a break in either direction to determine the near-term bias. On the daily chart, I see that after rebounding from the 50% retracement level of the 14th of April - 15th of May up leg, GBP/USD moved back above the 80-day exponential moving average. In my view, the move above 1.5800 on the 17th of June confirmed that the overall picture has turned positive.

• Support: 1.5675 (S1), 1.5620 (S2), 1.5545 (S3)

• Resistance: 1.5815 (R1) 1.5950 (R2), 1.6000 (R3)

• USD/JPY declined on Monday, breaking below our support-turned-into-resistance line of 122.55 (R1). During the early European morning, the rate heads towards the key level of 122.00 (S1). A break of that support level is needed to see scope for further declines. Looking at our momentum indicators however, further declines may not be immediate. The RSI found support at its 30 line and is pointing sideways, while the MACD, although below its zero and trigger lines show signs of bottoming. Another interesting point is that any dips of the RSI below 30 were short-lived, which amplifies the case to wait for a break of the 122.00 (S1) support zone to trust further declines. On the daily chart, the pair lies above both the 50- and 100-day moving averages, which keeps the longer-term upside path intact.

•Support: 122.00 (S1), 121.40 (S2), 120.60 (S3)

• Resistance: 122.55 (R1), 123.20 (R2), 123.80 (R3)

• WTI plunged on Monday, falling below the support-turned-into-resistance line of 58.70 (R1). The break below the well-tested 59.25 (R2) resistance zone carried larger bearish implications and shifted the near-term picture to the downside. However, a break of the 57.90 (S1) support zone is needed to trigger further declines. As a result, I would see a negative short-term picture given that the rate has fallen below the R1 and R2 support hurdles. As for the broader trend, the gap on Monday pushed the price below the 50-day moving average, which turned the medium-term bias negative in my view. This is supported by our daily oscillators, which have moved lower from their equilibrium levels.

• Support: 57.90 (S1), 57.50 (S2), 56.75 (S3)

• Resistance: 58.70 (R1), 59.25 (R2) 59.60 (R3)

• Gold moved lower on Monday, completely covering the gap it opened the week with and falling below the support-turned-into-resistance line of 1180 (R1). I believe that the failure to break above the 1188 (R2) resistance zone and the black uptrend line drawn from the low of the 5th of June have shifted the bias back to the downside. Our short-term momentum signs stand near their equilibrium levels, pointing somewhat lower. However, I would need a break below the 1170 (S1) territory to get confident for further declines. On the other hand, any advances that stay limited below the short-term uptrend line keep the picture somewhat negative. As for the bigger picture, the overall outlook remains negative as well, with the precious metal trading below it 50- and 100-day moving averages.

• Support: 1170 (S1), 1162 (S2), 1153 (S3)

• Resistance: 1180 (R1), 1188 (R2), 1195 (R3)

Benchmark Currency Rates:

http://shared.ironfx.com/Morning_Pictures_2015/June2015/June30/benchmark.JPG

Market Summary Url:

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IronFX Daily Commentary | 01/07/15

Language English

•The last try fails Greece made a last-ditch effort to secure more funding before its current program ran out, but was basically told that it would be impossible unless he cancelled the referendum. It all came to nothing and the country failed to deliver the money it owed to the IMF, which quickly declared Greece to be “in arrears.” That declaration gives the European Financial Stability Fund (EFSF) the right to demand immediate repayment of their EUR 142bn in loans to Greece if they want to. Failure to repay those loans on demand would trigger all sorts of cross-defaults and might make it impossible for the ECB to continue to support the banking system. In other words, the collapse of the government’s finances and the banking system. So far the indications are that the EFSF will not pull the trigger at least until after the referendum. The possibility of them sending the country into bankruptcy does increase the pressure on Greece.

• ECB Board member Ewald Nowotny said that July 20th, when Greece must pay the ECB EUR 3.5bn, is “probably the most important date.” “…(H)ow can a country which has no access to the ECB continue its activities?” he asked, indicating that if Greece votes “no” on the referendum and therefore fails to get a new funding package, it will not be able to repay the ECB and the ECB will have no choice but to cut off its Emergency Liquidity Assistance (ELA). That would mean that the banks would become insolvent and have to close.

• Conclusion: it all comes down to the referendum on Sunday So the last door slammed shut and now there’s nothing to do but to wait for the results of the referendum on Sunday. The indications are that the result may be finely balanced. Older people who have pensions and remember what life was like before Greece joined the EU are said to be leaning towards voting “yes,” while younger people with no savings, no job, no future and nothing to lose think that a “yes” vote will at least give them hope. It’s likely to be close. After seeing the results of the UK election, I wouldn’t place too much confidence in polls.

• Tankan beats expectations, but Greece seems more important The Bank of Japan’s quarterly Tankan business confidence survey for Q2 was much better than expected, at least for large companies, but the muted response in the stock market (up only about 0.25% in early afternoon Tokyo trading) suggests that events in Greece are just as important to investors in Japan as the domestic economy. Moreover, other signs of activity suggest that the Japanese economy probably slowed or even contracted in Q2. USD/JPY was slightly higher this morning but nothing significant. Although I remain long-term bullish on the pair, I would be cautious about going long USD/JPY at this point, because I think there could be a “flight to safety” that would push it down if the situation with Greece gets uglier.

• Australian building approvals for May were much better than expected, nearly double the mom rise that the market was forecasting. It’s not clear though whether that was the reason why AUD was the best performing G10 currency over the last 24 hours. In fact AUD/USD seems to have tracked Japanese stocks fairly closely – perhaps a risk-on play? China’s final manufacturing PMIs for June, both the official and HSBC versions, were revised down from the initial estimates, so that didn’t help. Meanwhile iron ore prices fell below USD 60 a ton for the first time in five weeks – although that was because of an estimate that shipments from Australia will rise 10% next year. Perhaps investors feel that the increase in volume will make up for the fall in prices. I think the rally is overdone, given all the problems in China, and would expect AUD to fall back today.

• CAD weakened the most of any of the G10 currencies despite another rise in oil prices, after the April GDP figure showed the fourth consecutive monthly contraction in activity. GDP was down 0.1% mom instead of rising 0.1% as expected. Not only did oil and gas and other natural resources activity fall for the sixth consecutive month but also non-energy exports and consumer spending have failed to show the strength that the Bank of Canada was counting on to take over as drivers of growth. USD/CAD is now challenging the recent highs of end-May/early June (1.2563 on 1 June) and could meet some resistance.

• Today’s highlights: Weekly ECB meeting The weekly ECB meeting will as usual reconsider the Emergency Liquidity Assistance (ELA) that it supplies to Greek banks. It should continue the money, but the fact that the country defaulted to the IMF may change things – perhaps make the ECB demand more collateral. That would put additional pressure on the government by reducing even further the amount of money available to the public. The effort could backfire, however. Articles I’ve read suggest that Greeks blame the European authorities, not their own government, for the inconvenience of having to line up for limited amounts of money every day and that the humiliation is making them more determined to vote “no” on the referendum in order to demonstrate their independence.

• During the European day, we get the final manufacturing PMI figures for June from several European countries, and the Eurozone as a whole. As usual, the final forecasts are the same as the initial estimates, thus the market reaction on these news is usually limited, unless we have a huge revision from the preliminary figures.

• UK manufacturing PMI is for June is forecast to increase a bit, which could prove GBP-positive. In addition, Bank of England Governor Mark Carney presents the Bank’s semi-annual assessment of financial stability risks. Since the December report, the central bank has highlighted market-liquidity risks and the weakening global economic outlook.

• In the US, the ADP employment report for June is coming out, this time only one day ahead of the nonfarm payroll release as US markets will be closed Friday due to the US Independence Day holiday on Saturday. The ADP report is expected to show that the private sector gained more jobs in June than it did in the previous month. That would increase expectations of a strong nonfarm payroll figure as well and boost the dollar, although in fact the correlation between the two indicators is not particularly wonderful. The final Markit manufacturing PMI and the ISM manufacturing PMI both for June are also due out.

Currency Titles:

EUR/USD finds support near 1.1115

GBP/USD trades in sideways mode

EUR/JPY hits resistance at 138.00 and declines

DAX futures trade slightly above the key zone of 10870

Gold fails to reach 1162

Currencies Image Url:

http://shared.ironfx.com/Morning_Pictures_2015/July2015/01July/EURUSD.png

http://shared.ironfx.com/Morning_Pictures_2015/July2015/01July/GBPUSD.png

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http://shared.ironfx.com/Morning_Pictures_2015/July2015/01July/DAX.png

http://shared.ironfx.com/Morning_Pictures_2015/July2015/01July/GOLD.png

Currencies Text:

• EUR/USD traded lower on Tuesday to hit support at around 1.1115 (S1). During the European morning Wednesday, the rate stands marginally above that barrier. If it manages to fall below it, I would expect a test at our next support hurdle of 1.1050 (S2). Today, the US ADP employment report is expected to show that the private sector gained more jobs in June than in May. This could be the catalyst for the aforementioned bearish move. Our short-term oscillators detect negative momentum and support the case that the forthcoming wave is likely to be negative. The RSI fell below its 50 line, while the MACD, already negative, has topped and could fall below its trigger line soon. In the bigger picture, I would maintain my neutral stance. I believe that a move above the psychological zone of 1.1500 is the move that could carry larger bullish implications, while a break below 1.0800 is needed to confirm a forthcoming lower low on the daily chart and perhaps turn the overall bias back to the downside.

• Support: 1.1115 (S1), 1.1050 (S2), 1.1000 (S3)

• Resistance: 1.1240 (R1), 1.1285 (R2), 1.1400 (R3)

• GBP/USD continued trading in a sideways mode on Tuesday, remaining trapped between the support of 1.5675 (S1) and the resistance of 1.5800 (R1). Today, the UK manufacturing PMI for June is forecast to increase, something that could cause the rate to rebound from the lower bound of the range. Nevertheless, even if the next leg is positive, I prefer to see a break out of the aforementioned trading range before I get confident on the forthcoming short-term direction. Therefore, I would see a flat near-term picture for now. Our momentum studies corroborate my view. Both the RSI and the MACD have been oscillating around their equilibrium lines. Switching to the daily chart, I see negative divergence between both the daily oscillators and the price action. Therefore, it is possible to see the pair exiting the short-term range to the downside in the not-too-distant future. However, as long as Cable is printing higher peaks and higher troughs above the 80-day exponential moving average, I would see a positive medium-term picture. As a result, I would treat any possible future declines as a corrective phase.

• Support: 1.5675 (S1), 1.5620 (S2), 1.5540 (S3)

• Resistance: 1.5800 (R1), 1.5910 (R2), 1.6000 (R3)

• EUR/JPY raced lower after hitting resistance at 138.00 (R1), the lower bound of the sideways range it had been trading in from the 2nd of June until Monday. The decline was halted near 135.85 (S1) and subsequently the rate rebounded somewhat. Taking into account that EUR/JPY exited the aforementioned sideways path to the downside, and that it is trading below the uptrend line taken from the low of the 14th of April, I would consider the near-term outlook to be negative. A break below 135.85 (S1) is likely to open the way for another test at 134.50 (S2). On the daily chart, the rate hit support at 133.75 (S3) on Monday, which stands pretty close to the 50% retracement level of the 14th of April – 4th of June advance. I would like to see a daily close below that area before I assume that the medium-term picture has turned negative as well.

• Support: 135.85 (S1), 134.50 (S2), 133.75 (S3)

• Resistance: 138.00 (R1), 139.10 (R2), 141.00 (R3)

• DAX futures traded lower on Tuesday, and are currently trading above the key support line of 10870 (S1), which happens to be the 38.2% retracement level of the 16th of October – 10th of April advance. As long as the index is trading below the longer-term uptrend line taken from the low of the 16th of October, and within the downside channel that had been containing the price action since the last days of March, I would consider the outlook to be somewhat negative. Nevertheless, I would prefer to see a clear close below the 10800 (S2) zone before I get more confident on the downside. Such a break is likely to set the stage for extensions towards the 10600 (S3) support zone, marked by the lows of the 9th and 10th of February.

• Support: 10870 (S1), 10800 (S2), 10600 (S3)

• Resistance: 11150 (R1) 11300 (R2), 11385 (R3)

Benchmark Currency Rates:

http://shared.ironfx.com/Morning_Pictures_2015/July2015/01July/benchmark.JPG

Market Summary Url:

http://shared.ironfx.com/Morning_Pictures_2015/July2015/01July/table.JPG

currency tags:

EUR

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[IronFx]

IronFX Daily Commentary | 02/07/15

Language English

• Like as the waves make towards the pebbled shore… The news from Greece keeps coming, but there’s no real change. There was talk yesterday that PM Tsipras had agreed to most of the Troika’s – oh, pardon me, the institutions’ – conditions, but then they reminded him that a) “most of” is not the same as “all of,” and b) the offer is no longer on the table anyway. In any event, he insisted that the referendum would go ahead regardless, which only confused matters more.

• To make matters worse (if possible), the Council of Europe, Europe’s top human rights institution, said the referendum would fall short of international standards if held as planned on Sunday, as the time period was too short and “the questions... not very clear.” This is absolutely true: Tsipras stressed in his TV appearance that a “no” vote would “not mean a rupture with Europe.” Contrast that with what French President Hollande said: “It’s about knowing if the Greek people want to stay in the euro zone.” Sigmar Gabriel, Germany’s vice-chancellor, agreed, saying that if the Greeks voted “no,” they were voting “against remaining in the euro.” Clearly the Greek government and the other EU governments don’t agree. I would think that if the poll rejects the compromise, the two sides will probably not be able to reach a new agreement by the time the country’s payment to the ECB comes due on 20 July and so the ECB’s aid to the Greek banking system is likely to be withdrawn. That would make it nearly impossible for the country to stay in the euro.

• Meanwhile, the polls suggest that as people see that being closed off from the EU means no euros coming out of the ATMs, they are starting to lose their enthusiasm for the idea. The polls show the vote has gone from 57% no/30% yes/13% I don’t know before the bank holiday to 47%/37%/17%. Nonetheless the “no”s are still the largest group = plenty of room for volatility next Monday! That is of course assuming the referendum does take place. The opposition parties have filed suit to have it cancelled on the grounds that it’s unconstitutional.

• US data surprising on the upside While the focus is on Greece recently, that doesn’t mean the rest of the world has stopped. The US economic news has been surprising on the upside recently, adding to the dollar’s strength. The ADP report yesterday was better than expected, with the only disappointment being jobs in the energy sector – hardly a surprise. The news has heightened expectations surrounding today’s US nonfarm payrolls (see below) and added 5 bps to the end-2016 Fed funds rate expectations. That helped the dollar gain against all the G10 currencies and almost all the 15 EM currencies that we track (except the INR).

• The commodity currencies were particularly hard hit as oil prices fell sharply on news that US inventories rose unexpectedly in the latest reporting week. The market was expecting a 2.5mn barrel drop in inventories but instead there was a 2.4mn barrel increase! Market participants had expected US oil production to fall in the face of weaker prices, but instead it has remained relatively steady at record high levels. The four-week moving average at the beginning of the year was 9.129mn b/d and in the latest week it was 5% higher at 9.600mn b/d, showing that the sharp fall in the rig count has not caused a concomitant fall in output.

• NZD weakens as dairy prices keep falling Please send us the correct images

• Today’s highlights: During the European day, Sweden’s central bank holds its monetary policy meeting. At their last meeting, the Bank surprised the market and left its official cash rate unchanged at -0.25% but expanded its QE program by SEK10bn

• In the UK, we get the construction PMI for June. Following the weak manufacturing PMI on Tuesday, another soft reading could weaken GBP.

• The highlight of the day will be the US nonfarm payrolls. Usually it’s released on Friday, but this week it’s being released a day early, as the US markets will be closed Friday due to the US Independence Day holiday on Saturday. The market forecast for June is for an increase in payrolls of 230k, below the 280k in May. Nevertheless, given the strong ADP report on Wednesday, there could be an upside surprise. The “market whisper” among traders in New York is reportedly around 260k. At the same time, the unemployment rate is forecast to decline to 5.4% from 5.5%, while average hourly earnings are expected to rise at the same pace as in May. Another figure above 200k would suggest that the US labor market is gaining momentum and would leave the September rate hike scenario alive. That’s likely to boost the dollar across the board.

• From Canada, we get the RBC manufacturing PMI for June.

• As for the speakers, Riksbank First Deputy Governor Kerstin af Jochnick speaks

Currency Titles:

EUR/USD falls and hits support at 1.1030

USD/JPY races higher after finding support at 122.00

NZD/USD hits the 0.6700 hurdle

Gold falls below 1170 again

WTI collapses and hits support at 56.65

Currencies Image Url:

http://shared.ironfx.com/Morning_Pictures_2015/July2015/02July/EURUSD_02July2015.PNG

http://shared.ironfx.com/Morning_Pictures_2015/July2015/02July/USDJPY_02July2015.PNG

http://shared.ironfx.com/Morning_Pictures_2015/July2015/02July/NZDUSD_02July2015.PNG

http://shared.ironfx.com/Morning_Pictures_2015/July2015/02July/XAUUSD_02July2015.PNG

http://shared.ironfx.com/Morning_Pictures_2015/July2015/02July/CLQ5_02July2015.PNG

Currencies Text:

• EUR/USD tumbled yesterday, falling below the support (now turned into resistance) barrier of 1.1115 (R1). The decline was stopped at 1.1030 (S1) and subsequently the rate rebounded somewhat. The short-term outlook remains somewhat negative, but I would prefer to see a clear dip below the psychological zone of 1.1000 (S2) before I get confident again on the downside. A strong US employment report today could be the trigger for a move below 1.1000 (S2). Such a break is likely to initially target our next support at 1.0950 (S3). Taking a look at our short-term oscillators, I would be careful of a further rebound ahead of the US employment data. The RSI, although below 50, it has turned up, while the MACD shows signs of bottoming and could move above its trigger line soon. In the bigger picture, I would maintain my neutral stance. I believe that a move above the psychological zone of 1.1500 is the move that could carry larger bullish implications, while a break below 1.0800 is needed to confirm a forthcoming lower low on the daily chart and perhaps turn the overall bias back to the downside.

• Support: 1.1030 (S1), 1.1000 (S2), 1.0950 (S3)

• Resistance: 1.1115 (R1), 1.1175 (R2), 1.1240 (R3)

• USD/JPY raced higher after it hit support at the key zone of 122.00 (S3) on Tuesday. During the early European morning today the pair is trading slightly above the 123.20 (S1) hurdle and I would expect it to continue to move higher towards the resistance line of 124.00 (R1). Our short-term oscillators corroborate my view that the rate could trade north. The RSI moved above its 50 line, while the MACD, already above its trigger line, is headed towards its zero line. On the daily chart, the rebound from the 122.00 (S3) key hurdle zone is a first sign that the downside corrective move is probably over and that the overall uptrend is gaining back is upside momentum.

• Support: 123.20 (S1), 122.55 (S2), 122.00 (S3)

• Resistance: 124.00 (R1), 124.35 (R2), 125.00 (R3)

• NZD/USD traded lower on Wednesday, hitting the crossroad between the support line of 0.6700 (S1) and the lower boundary of the downside channel that has been containing the price action since the last days of April. As long as the rate is trading within that channel, I would consider the short-term outlook to be negative. A clear and decisive break below 0.6700 (S1) is likely to set the stage for further bearish extensions and perhaps pave the way for the next hurdle of 0.6580 (S2), marked by the lows of the 7th and 8th of June 2010. Our short-term oscillators detect accelerating downside speed and support the notion. The RSI fell below 30 and is now pointing down, while the MACD continued lower, below both its zero and signal lines. As for the bigger picture, the break below 0.7200 on the 28th of May signaled the continuation of the long-term downtrend started back in July 2014.

• Support: 0.6700 (S1), 0.6580 (S2), 0.6475 (S3)

• Resistance: 0.6805 (R1), 0.6880 (R2), 0.6925 (R3)

• Gold traded lower on Wednesday to trade once again below the 1170 (R1) barrier. This time, the bears managed to close the day below 1170 (R1) and therefore, I would expect them to pull the trigger for the support hurdle of 1162 (S1), defined by the low of the 5th of June. As long as the metal is trading below the short-term uptrend line drawn from the low of the 5th of June, I would consider the short-term picture to be somewhat negative. Our momentum studies support the bearish outlook. The RSI kept falling after crossing below 50, while the MACD lies below both its signal and zero lines, detecting negative momentum. As for the bigger picture, the overall outlook remains somewhat negative. However, I prefer to see a decisive close below the previous low at 1162 (S2), before I get more confident on the downside.

• Support: 1162 (S1), 1153 (S2), 1146 (S3)

• Resistance: 1170 (R1), 1175 (R2), 1180 (R3)

• WTI collapsed on Wednesday after the surprising build in US stockpiles last week. The fall was halted at 56.65 (S1) and subsequently the price rebounded somewhat. After the downside exit of a trading range on the 29th of June, the bias has turned negative in my opinion. A clear break below 56.65 (S1) is likely to extend the short-term downtrend and perhaps challenge our next support at 56.10 (S2), defined by the low of the 28th of April. However, looking at our hourly oscillators, I would be careful that the current rebound may continue for a while before the bears shoot again. The RSI appears ready to exit its below-30 territory, while the MACD has bottomed and could move above its trigger line soon. As for the broader trend, the break above 55.00 on the 14th of April signalled the completion of a double bottom formation, something that could carry larger bullish implications in the not-too-distant future. As a result, I would treat any further declines that stay limited above 55.00 as a corrective phase.

• Support: 56.65 (S1), 56.10 (S2), 55.75 (S3)

• Resistance: 57.50 (R1) 58.00 (R2), 58.85 (R3)

Benchmark Currency Rates:

http://shared.ironfx.com/Morning_Pictures_2015/July2015/02July/benchmark.JPG

Market Summary Url:

http://shared.ironfx.com/Morning_Pictures_2015/July2015/02July/table.JPG

currency tags:

EUR

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