There were plenty of worrying signs on Monday. The US yield curve narrowed as recession worries grew. We saw a healthy GDP miss out of China, and some more data misses out of Europe including an abysmal Eurozone industrial production print.
Audio Updatehttps://www.lmax.com/blog/wp-content/uploads/sites/4/2024/07/15jullmaxaudio.mp3Technical highlights* EURUSD Rallying back to range top * GBPUSD Sights set on 2023 high * USDJPY Well supported on dips * AUDUSD Carving out major base * USDCAD Bullish consolidation * NZDUSD Remains capped into rallies * US SPX 500 Healthy correction imminent * GOLD (spot) Outlook constructive
Fundamental highlights EURUSD Euro stalls on soft EZ industrial production * GBPUSD Pound slows down ahead of inflation data * USDJPY Yen demand cools as rate checking digested * AUDUSD China GDP miss hits Australian Dollar * USDCAD BoC survey fuels more Canadian Dollar selling * NZDUSD Kiwi hit on dreadful housing number * US SPX 500 Risk Fed outlook lets the market down * GOLD (spot) Macro themes* supportive of higher price
30-Day Performance vs. US dollar (%)Further reading AI will eventually destroy almost every job that now exists, R. Rahn, The Washington Times (July 8, 2024) * Take Profits in Apple Stock Before AI Hype Runs Its Course, L. Navellier, InvestorPlace* (July 8, 2024)
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GOLD EURUSD – technical overviewThe Euro has been in a multi-month consolidation since bottoming out in 2022. Setbacks have since been exceptionally well supported on dips below 1.0500, with a higher platform sought out ahead of the next major upside extension. Look for a push through the 2023 high at 1.1276 to strengthen the constructive outlook and extend the recovery run towards 1.2000. Only back below 1.0400 negates.
R2 1.0982 – 8 March high – Strong
EURUSD – fundamental overviewThe Euro has finally stalled out after trading to its highest level since March after Eurozone industrial production came in much weaker than expected. Key standouts on Tuesday’s calendar come from Eurozone trade, German ZEW reads, Canada housing starts and inflation, US retail sales, import and export prices, business inventories, and NAHB housing.
EURUSD – Technical charts in detailWatch now
GBPUSD – technical overviewSigns have emerged of the market wanting to put in a longer-term base after collapsing to a record low in September 2022. The door is now open for the next major upside extension towards the 2023 high at 1.3143. Any setbacks should be well supported ahead of 1.2500.
GBPUSD – fundamental overviewThe Pound traded up to its highest level against the Buck since July 2023, before running into some selling pressure with the market not wanting to get too ahead of itself before tomorrow’s anticipated UK inflation data. Key standouts on Tuesday’s calendar come from Eurozone trade, German ZEW reads, Canada housing starts and inflation, US retail sales, import and export prices, business inventories, and NAHB housing.
USDJPY – technical overviewThe market remains confined to a strong uptrend, most recently extending to a multi-year high through 160.00. Key support comes in at 151.95, with only a weekly close below to delay the constructive outlook. Next major resistance comes in at 165.00.
USDJPY – fundamental overviewAll of the talk around the BOJ checking rates has further contributed to the recent strength in the Yen. However, Yen demand has slowed down after a lackluster Monday session of trade. Key standouts on Tuesday’s calendar come from Eurozone trade, German ZEW reads, Canada housing starts and inflation, US retail sales, import and export prices, business inventories, and NAHB housing.
AUDUSD – technical overviewThere are signs of the potential formation of a longer-term base with the market trading down into a meaningful longer-term support zone. Only a monthly close below 0.6200 would give reason for rethink. Back above 0.6900 will take the big picture pressure off the downside and strengthen case for a bottom.
AUDUSD – fundamental overviewThe Australian Dollar was an underperformer on Monday, weighed down by lower commodities prices and a miss on China GDP. Key standouts on Tuesday’s calendar come from Eurozone trade, German ZEW reads, Canada housing starts and inflation, US retail sales, import and export prices, business inventories, and NAHB housing.
USDCAD – technical overviewAbove 1.3000 signals an end to a period of longer-term bearish consolidation and suggests the market is in the process of carving out a more significant longer-term base. Next key resistance now comes in up into the 1.4000 area. Setbacks should be very well supported down into the 1.3000 area.
USDCAD – fundamental overviewThe Canadian Dollar took a hard hit on Monday, weighed down on declining energy prices and a Bank of Canada survey revealing weak business investment plans and subdued inflation expectations. Key standouts on Tuesday’s calendar come from Eurozone trade, German ZEW reads, Canada housing starts and inflation, US retail sales, import and export prices, business inventories, and NAHB housing.
NZDUSD – technical overviewOverall pressure remains on the downside with the market continuing to stall out on runs up into the 0.6500 area. At the same time, there are some signs of the market wanting to put in a longer-term base. Ultimately, a break back above 0.6500 would be required to take the medium-term pressure off the downside and encourage this prospect. A monthly close below 0.5800 will intensify bearish price action.
NZDUSD – fundamental overviewThe New Zealand Dollar was hammered on Monday after taking in a dreadful New Zealand housing number. June REINZ house sales fell 25.6% year on year, the worst since February 2023. Key standouts on Tuesday’s calendar come from Eurozone trade, German ZEW reads, Canada housing starts and inflation, US retail sales, import and export prices, business inventories, and NAHB housing.
US SPX 500 – technical overviewLonger-term technical studies continue to look quite extended, begging for a deeper correction ahead. The latest rally has extended to reach and even exceed a 355 point measured move extension target objective in the 5,640 area, adding to the case for an imminent correction. At this stage, additional upside should be limited to allow for overbought studies to unwind. There is now room for a pullback towards previous resistance turned support in the form of the previous record high from April around 5,290.
US SPX 500 – fundamental overviewThough we have seen a healthy adjustment of investor expectations towards the amount of rate cuts in 2024, the market still hopes policy will end up erring more towards the investor friendly, accommodative side of things. This bet has kept stocks well bid into dips and consistently pushing record highs. Still, if there is a sense the Fed will need to be more sensitive towards erring on the side of higher rates, it could invite major disruption to the stock market.
GOLD (SPOT) – technical overviewThe 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs and this next major upside extension into the 2500-3000 area. Setbacks should now be well supported above 2000 on a monthly close basis.
GOLD (SPOT) – fundamental overviewThe yellow metal has pushed record highs in 2024 with solid demand from medium and longer-term accounts. These players are more concerned about inflation, geopolitical risk and a less upbeat global growth outlook. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an end.