Morning Report: Greece Yes Vote, EUR At Two Month Lows

Market Commentary  

USD rose even before Fed Chair Yellen gave her semi-annual testimony to the Congress. Her message was perceived to be rather upbeat. She reiterated that the first rate lift-off is likely within 2015 as she expects growth to pick up. Responding to questions, she said that raising rates earlier allow the central bank room to follow a more gradual path. The DXY touched a high of 97.31 before levelling off.

EURUSD fell overnight to test 1.09 lows this morning following the “Yes” vote on Greek bailout bill (229 members of the 300 -member parliament voted in approval to pass legislation on the latest set of measures in an attempt to satisfy pre -conditions required to secure the EUR86bn bailout package. Among those who opposed the bill were 32 members from PM Tsipra’s own Syriza party – a sign of potential political backlash which could see a cabinet reshuffling as early as later this evening. Next steps see the other Euro -member states voting to approve the bailout (85% majority required in this emergency instance) – expect headlines to drive EUR sentiment. Next focus on ECB meeting later as ELA cap could soon be raised to allow for liquidity and President Draghi could be questioned by media on how the short term financing can be bridged. Greece needs to repay the ECB EUR3.5bn SMP bond maturing on 20 July.

GBP rally was capped as unemployment rate, claimant count and weekly earnings disappointed markets amid broad USD strength. GBP closed little changed overnight at 1.5640 levels. This morning, pair traded 1.5630 levels. While labour data was a touch softer, they remain healthy and continues to show improvement.

USDJPY is grinding higher towards the 124 -handle in the wake of US Fed Chair Yellen’s testimony yesterday that signalled a 2015 lift-off in the fund rate was still on track and the passage of the reform package by the Greek government. Yesterday, the BOJ maintained its existing policy of expanding the monetary base at an annual JPY80tn pace as expected but surprised with a cut to its inflation outlook for the FY2015 (Apr 2015-Mar 2016) to 0.7% from 0.8% and for FY2016 to 1.9% from 2.0%. Also cut was its growth outlook to 1.7% from 2.0% for FY2015 but maintained its FY2016 growth forecast at 1.5%. These downward revisions increased the markets perception of the possibility that the BOJ could add to its ultra-loose monetary policy in October,

Technical  Commentary 

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

  • Continue to oscillate in a contracting range trade with a bearish bias. Downside breach of 1.09 should warrant a quick test of 1.08 bids. Trading condition remain choppy and headline driven, intraday while 1.1040/60 caps upside reactions expect further downside pressure only above 1.1240/60 concerns immediate bearish bias.
  • Daily Order Flow bearish; OBV sideways, Linear Regression and Psychology rotate around midpoints with bearish bias
  • Monitoring intraday price and Order Flow indicators on a test of 1.13 or 1.08

eu2015-07-16 07_26_13-

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

  • With 1.56 offers eroded price is retesting the ascending trendline from below as potential resistance, while 1.57 caps upside a break back below 1.5550 suggests bearish symmetry target at 1.5285 remains in play a close above 1.57 negates near term bearishness and resets focus on the 1.60 upside psych objective.
  • Daily Order Flow bullish; OBV sideways, Linear Regression and Psychology test midpoints from below
  • Monitoring intraday price action and Order Flow indicators on a test of 1.5285 or 1.5750

gu2015-07-16 07_29_28-

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

  • The break and close above 123 targets 125.85 next and 128 in extension. Failure at 122.50 again opens 120 in retest of ascending triangle trend line
  • Daily Order Flow bullish; OBV sideways to up, Linear Regression and Psychology pierce midpoints from below
  • Monitoring intraday price action and Order Flow indicators on a test of 128 or 120

uj2015-07-16 07_33_29-

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 to down, Linear Regression and Psychology bearish rejected at midpoint test from below
  • Monitoring intraday price action and Order Flow indicators at 138 and 133

ey2015-07-16 07_37_45-