Morning Report: Month End Flows

Market Commentary  

US Q2 GDP as expected, better revisions enough to move needle on rate hike odds but still priced at less than 50% for September meeting; USD modestly higher versus majors but flies against Emerging Markets/high beta currencies as commodity meltdown continues. Developed Market yield curves, especially US treasuries, flatten as USD strength triggers global macro, disinflation fears. According to Interbank reports month end flows and the rebalancing of FX hedges at month-end are expected to lead to moderate amounts of USD selling.

EURUSD was steady yesterday at 1.0975s, but then the pair gradually edged down to 1.0892 low after the release of Eurozone data. Eurozone consumption inflation expectation was down to 4.2% from 4.8% previous, while consumer confidence was in line with expectation -7.1%, but still was down 1.5% from last month.

GBPUSD grinded higher to 1.5637 before eased back to 1.5599 after the release of US GDP. Cable rose to a one-week high of 94.3 against the BoE’s trade-weighted index, boosted by the strong expectation of raising interest rates in UK which is likely to follow the US rate hike in the coming months.

USDJPY printed a high of 124.58 post Fed policy meeting. Data showed Japanese unemployment rate rose to 3.4% in June from 3.3% in May. The pair retreated below 124 level as Japan nationwide CPI beat the market consensus, read at 0.4% YoY

Technical  Commentary 

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

  • Bids just below 1.09 the figure stem downside reaction for now but while pivotal 1.1020/40 caps upside expect another assault on 1.08 over 1.1050 sees stops eyed above this weeks highs.
  • Daily Order Flow bearish; OBV sideways to up, Linear Regression and Psychology pierce midpoints from above
  • Monitoring intraday price and Order Flow indicators on a test of 1.1040/60 or 1.08

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

  • A fourth failure toward 1.57 frustrates bulls a close below 1.55 would suggest bearish symmetry target at 1.5285 remains in play. While intraday downside reactions are contained by pivotal 1.5550 another assault on 1.57 is possible.
  • Daily Order Flow bullish; OBV sideways, Linear Regression and Psychology rotate around midpoints
  • Monitoring intraday price action and Order Flow indicators on a test of 1.5285 or 1.5750

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

  • Bulls target 125.85 and 128 in extension, intraday downside reactions remain supported towards 123 only a failure at pivotal 122.50 concerns medium term bullish view, failure here opens 120 in retest of ascending triangle trend line.
  • Daily Order Flow bearish; OBV sideways to down, Linear Regression and Psychology pierce midpoints from below
  • Monitoring intraday price action and Order Flow indicators on a test of 128 or 122.50

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

  • 133/34 range support continues to hold while intraday downside reaction remain supported at the 1.35 trendline this suggests a retest of 138, advance above here opens 143.
  • Daily Order Flow bullish; OBV sideways to up, Linear Regression and Psychology rejected at midpoints from below
  • Monitoring intraday price action and Order Flow indicators at 138 and 133

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