Morning Report: Risk Reverses On Greek & China Optimism

Market Commentary  

Greece submitted a new bailout proposal that includes pension savings and tax increases to secure the EUR53.5bn for the country to remain in the EU. Interestingly, fresh terms of the proposal are similar to that rejected by the voters on 5 July. The local press says that the Syriza party could split over the reforms. Trade was still cautious with the optimism in European markets not quite shared with the bourses in New York. DJI, S&P and NASDAQ ended up +0.2% each. Adding to the cautious sentiments, IMF’s downgraded its 2015 global forecast to 3.3% from previous 3.5%. There was “euphoria” in the Chinese markets with Shanghai Comp up +5.8% after CSRC banned major shareholders from cutting stakes in the next six months. Players now await the verdict from the EU Summit on Greece this weekend before taking on larger positions. Eyes are on Fed Yellen’s speech today. Before that, Fed Rosengren speaks as well.

EURUSD expect muted range of 1.1030 – 1.1150 ahead of risk -event this weekend player unlikely to head into the weekend with heavy positions. Near term momentum has a slight bias to the upside. Day ahead brings May FR IP, manufacturing production.

GBPUSD climbed back above 1.5400 level on strong housing market and supported by a British budget bill. The Bank of England kept interest rates unchanged; policymakers focus on how to balance improving wage growth in Britain. Expect 1.5330 – 1.5420 range intra -day; bias to buy dips near lower end of the range. Day ahead brings May construction output, trade balance.

USDJPY After sinking to a low not seen since 22 May of 120.69, pair bounced back above the 121 -handle to 121.65 in the wake of a resurgence in the Chinese stock market. Intraday momentum signalling a bullish bias.

Technical  Commentary 

EURUSD Short Term (1-3 Days): Bullish  – Medium Term (1-3 Weeks) Bearish

  • Focus remains on upside resistance at 1.1155, a break of this resistance opens a retest of key 1.1240/60 as we continue to oscillate in a contracting range trade. Downside breach of 1.09 should warrant a quick test of 1.08 bids. Trading condition remain choppy and headline driven ahead of headline risk this weekend.
  • Daily Order Flow bullish; OBV up, Linear Regression and Psychology rotate around midpoints
  • Monitoring intraday price and Order Flow indicators on a test of 1.13 or 1.08

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GBPUSD: Short Term (1-3 Days): Bearish  – Medium Term (1-3 Weeks) Bearish

  • 1.5550 while this level acts as intraday resistance bears target a symmetry corrective target at 1.5285, below 1.5285 opens psychological 1.50 next. Over 1.56 opens retest of 1.58
  • Daily Order Flow bearish; OBV sideways to up, Linear Regression and Psychology bearish
  • Monitoring intraday price action and Order Flow indicators on a test of 1.5285 or 1.6010

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USDJPY: Short Term (1-3 Days): Bullish  – Medium Term (1-3 Weeks) Bullish

  • Test of key 120 area attracts buyers on first test while this area supports expect retest of 122.50 from below above 123 targets 125 next. Failure at 120 opens 119
  • Daily Order Flow bullish ; OBV sideways, Linear Regression and Psychology bearish but attempting to pierce midpoints from below
  • Monitoring intraday price action and Order Flow indicators on a test of 128 or 120

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EURJPY: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bearish

  • 133/34 support in range trade, breach of 133 opens retest of 2015 lows while above 138 opens 143
  • Daily Order Flow bearish; OBV sideways, Linear Regression and Psychology bearish but testing midpoints from below
  • Monitoring intraday price action and Order Flow indicators at 138 and 133

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