5 July: Trend table outlook for FX, Commodities, Indices

By | July 5, 2019

Thursday has been very quiet because of the US holiday and will probably remain so until the release of the US Jobs/NFP/Average Hourly Earnings data. The FX markets are all flat in the short term charts, while stocks still look constructive and seem likely to see further blue sky as they make new all-time highs. A low NFP figure will ramp up expectations of a Fed rate cut, pushing the dollar lower and commodities/stocks higher, while the opposite will most likely be the case if we see a reading of above 160K and an increase in the Average Hourly Earnings.

EurUsd:  The Euro chopped around in a tight range on Thursday and remains pretty much unchanged, at 1.1280 and I would imagine that it will be pretty quiet today ahead of the US employment report. On the downside, support will be seen at, below 1.1275/80, the initial, strong support would arrive nearby, at 1.1260 (50% of 1.0306/1.0411/100 DMA), but a break of this would then allow for a move towards 1.1223 (61.8%) and eventually to 1.1178 (76.4%). On the topside, minor resistance will once again be seen at 1.1300 and at 1.1315 ahead of the200 DMA at 1.1350.Above here looks unlikely but further gains could then see a run towards 1.1400 and the 25 June high of 1.1411, beyond which the next target is at 1.1447 (20 March high), which ties in with the Fibo level (23.6% of 1.2555/1.1106). The daily charts look a little heavy but that could change on a weak NFP outcome, but overall I still prefer to look to sell rallies in the Euro.

DXY:  (96.74)  The DXY is unchanged at the end of Thursday trade, but still looks mildly positive heading into the US employment report, with the daily momentum indicators pointing mildly higher, suggesting that buying dips is the general theme. If so, the initial resistance is seen at 96.88, above which, look for a run to 97.00 and to the 100 DMA at 97.08.  Beyond here would open the way to 97.20 (minor) and then to 97.97 (18 June high), but probably not today. Support arrives at 96.57 (100 DMA) ahead of 96.40 (minor) and 96.00 (200 WMA) and then at last week’s low of 95.84. Buying dips currently seems to be the plan, but without looking for too much upside momentum I suspect, and it could end up being a volatile day but not too far removed from current levels..

US$Jpy: is unchanged on Friday, at 107.80. While the daily charts still look mildly positive, the short term momentum indicators are mixed/neutral, suggesting a rangebound session ahead. Support will be seen at 107.53 (session low) ahead of 107.35 and 107.00, below which buyers would be seen at 106.75/80. If this area gives way there are only minor support levels at 106.50 and at 106.20 ahead of the next Fibo level at 105.98 (76.4% of 104.00/112.40).  On the topside, resistance will now be seen at 108.00 and at 108.30 ahead of the 108.55 trend high. As we said before, if we can regain this level, further gains may be slow as there will be plenty of offers appearing in the month-long, choppy, sideways price action, which goes all the way up to 108.80. Nevertheless, the daily charts do look mildly constructive and the next Fibo level is seen at 108.90 (38.2% of 112.40/106.78), above which would open the way to 109.00 and higher, with minor resistance seen at 109.1, beyond which would open 109.50 (50% of 112.40/106.78). I remain neutral on the pair, but direction will continue to be driven by safe haven demand and by US yields as well as today’s US jobs data. Wait and see.

 AudUsd:  The Aud has moved sharply higher to reach a peak of 0.7048 yesterday , where it attempted, but so far failed, to break above the 18 month descending trend resistance. While the short term momentum indicators look a little heavy right now, the medium term momentum charts seem constructive and it may be that we see further gains although this will be dependent on a weak NFP outcome. If so, offers will again lie immediately ahead at 0.7035/40, (Daily cloud top/100 DMA), above which look for further gains towards 0.7050 (Session high: 0.7048), and to 0.7070 – which should be strong – (61.8% of 0.7207/0.6831/ weekly cloud base, ahead of the 200 DMA at 0.7095. On the downside, support will be seen at, 0.7000 and again at 0.0.6996 (23.6% of 0.6831/0.7048), below which could see a move towards 0.6965 (38.2% of 0.6831/0.7048) although this looks unlikely today. If wrong, further targets arrive at 0.6940 (50%) and to 0.6913 (61.8%). A cautious stance is required although I still prefer to be structurally short given the RBA outlook although bear in mind that the Fed will most likely be cutting rates on July 31.

NzdUsd: The Kiwi remains below both the 100 DMA and the 200 DMA (0.6690/0.6708), and the short term momentum indicators look mildly heavy although the daily charts still point higher, so further gains may lie ahead although if the US jobs report is weak. Having reached a high of 0.6726 on Monday, it has since chopped around below here but above the Tuesday low of 0.6656 and the minor Fibo support at 0.6665 (23.6% of 0.6486/0.6726), currently at 0.6685. Below the Fibo level opens the way back to 0.6650/55 (minor) and then to 0.6635 (38.2%) and to 0.6600. On the topside, resistance will be seen at 0.6690 (100 DMA) and then at 0.6708 (200 DMA) ahead of 0.6725, above which there is little to stop the Kiwi heading back towards 0.6750 and then to 0.6780.

Not trade ideas today – Wait for the NFP and go with the flow.