Morning Report: China & Greece Pressure Markets

Market Commentary  

Equities remain in the spotlight as China fears continue to roil markets; Europe down hard; major indices pressing the often watched 200 day moving averages; commodity collapse ongoing, copper down 7% in two days. Bank reports suggest Global macro outlook is turning down on China, Europe; Fed end-year rate hike odds now only 50/50, Sep at 1-in-5; 30 yr Treasuries back under 3%, lowest yield in 5 weeks. EURUSD down but off lows as progress seen in Greece talks; peripherals still under heavy pressure as bad debt precedents feared. USDJPY lower with stocks; GBPUSD holds 200 day moving average for now.

EURUSD sold off to 1.0915, but then rebounded to 1.10 area as the latest emergency meeting of European leaders ended with a silver of hope for Greece. Euro zone members gave Greece a chance to come up with a new proposal for sweeping reforms in return for loans. German Chancellor Merkel said if Greece took “prior actions” and came up with satisfactory proposals, short-term financing could be made available to help Greece over a repayment.

GBPUSD traded in tandem with the EUR, skidded to a four-week low of 1.5412 against the dollar due to safe-haven German bond yields and the move into the greenback. UK industrial production rose 2.1% YoY in May, better than the expected 1.6%, while manufacturing production growth rose to 1.0% YoY in May from a downwardly revised 0.1%, fell short of the forecasted 1.8%.

USDJPY dropped to retest the 122 handle at the opening of US session but found the support there, then rebounded and closed at 122.54. The BoJ could boost its monetary stimulus to address any surge in the yen triggered by the Greek crisis, said Koichi Hamada, an adviser to Prime Minister Shinzo Abe.

Technical  Commentary 

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

  • Price breaks lower to retest 1.09 support zone which once again attracted buyers focus shifts to initial upside resistance at 1.1150 as we continue to oscillate in a contracting range trade with a bearish bias for now. Downside breach of 1.09 should warrant a quick test of 1.08 bids. Trading condition remain choppy and headline driven
  • Daily Order Flow bearish; OBV down, Linear Regression and Psychology bearish but lack momentum
  • Monitoring intraday price and Order Flow indicators on a test of 1.13 or 1.08

eu2015-07-08 07_28_12-

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

  • Breaches primary trendline support at 1.5550 while this level now acts as intraday resistance bears target a symmetry corrective target at 1.5285. A close today back inside the channel suggests a false break and further upside towards 1.58.
  • Daily Order Flow bearish; OBV sideways to down, Linear Regression and Psychology bearish
  • Monitoring intraday price action and Order Flow indicators on a test of 1.5285 or 1.6010

gu2015-07-08 07_34_08-

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

  • 121.80/122 remains the key pivot to the upside advance while these areas support target a retest of 124 enroute to 2015 highs. Failure at 121 opens deeper correction to 120
  • Daily Order Flow bearish ; OBV sideways to down, Linear Regression and Psychology break bearish
  • Monitoring intraday price action and Order Flow indicators on a test of 128 or 122/21

uj2015-07-08 07_37_16-

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

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

ey2015-07-08 07_39_24-