Morning Report: Yuan Moves Keeps FED On Pause ?

Market Commentary  

Second day of Yuan weakening hit the USD across G10 FX in broad rethink of when and how much the Fed can raise rates. Yuan end-of-day guidance up to just a one percent loss gave some hope the weakening will be controlled, less fallout in commodities. WTI brushed against March lows but held, 2yr UST’s yelds held their July 15 swing low & US stocks rebounded midday from deep early losses to post one of the largest intraday reversals in the past three years. EURUSD’s inverse relationship with the falling DAX (-3.2%) underpinned EURUSD yest All eyes on next Yuan fix and US Retail Sales Today.

EURUSD outperformed among its G10  peers; EURUSD continued to rally from 1.1039 to 1.1212 high amid the revaluation positioning of Yuan for  two consecutive days. The Greek government has agreed to the outlines of a bailout plan provided by its creditors over the weekend.

GBPUSD hit a 1.5532 low owing to the disappointing labour report and the reverberations of Yuan before finding its feet and pressing 1.5650 in late NY trading. The UK unemployment rate remains at 5.6% in Q2, inline with the expectation, however, earnings (incl bonuses) slowed to a three-month low, down to 2.4% in June from 3.2% previous, undershooting the forecasted 2.8%.

USDJPY fell more than 140 pips from the day high as the greenback came under broad pressure amid reports that the Chinese authorities may have intervened by selling the US dollar to prevent further Yuan decline after the PBoC set the second round of sharp depreciation in the reference rate.  Japan need not worry about China’s Yuan devaluation because it can always offset the effects by easing monetary policy, said Koichi Hamada, an adviser to Prime Minister Shinzo Abe

Technical  Commentary 

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

  • Initial retest of offers above 1.12 attracts profit takers on the move up from 1.0850 while 1.1060/80 supports intraday downside reactions bulls target 1.1250 next, failure to hold primary intraday support, suggest a run to 1.1010/30 to test buyers at the 50% of the advance
  • Daily Order Flow bullish; OBV sideways to down, Linear Regression and Psychology bullish but stalling
  • Monitoring intraday price and Order Flow indicators on a test of 1.1250 or 1.10

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

  • Intraday support moves up to 1.5580/60 while this area holds expect another assault of 1.57 offers, below 1.5550 open retest of bids towards pivotal 1.5420 failure here opens 1.5285
  • Daily Order Flow bullish; OBV sideways to up, Linear Regression and Psychology bearish but lack downside momentum attempting to recapture midpoints from below
  • Monitoring intraday price action and Order Flow indicators on a test of 1.5550 or 1.5750

gu2015-08-13 07_40_46-

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

  • Bulls target 125.85 and 128 in extension, intraday downside supported moves to 124 only a failure at pivotal 122.50 concerns medium term bullish view
  • Daily Order Flow bullish; OBV sideways, Linear Regression and  Psychology pierces midpoint from above
  • Monitoring intraday price action and Order Flow indicators on a test of 125.85 or 123

uj2015-08-13 07_42_56-

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

  • While 137.40 caps intraday downside reactions bulls now target a retest of 138.80 ahead of the initial symmetry objective at 141.70
  • Daily Order Flow bullish; OBV sideways, Linear Regression and Psychology bullish but stalling
  • Monitoring intraday price action and Order Flow indicators at 141 and 137.30

ey2015-08-13 07_55_20-

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