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The Daily Edge is authored by Ivan Delgado, Market Insights Commentator at Global Prime. The purpose of this content is to provide an assessment of the market conditions. The report takes an in-depth look of market dynamics, factoring in fundamentals, technicals, inter-market in order to determine daily biases and assist one’s decisions on a regular basis. Feel free to follow Ivan on Twitter & Youtube.
Not a whole lot of price action to be inspired with on Monday, with a speech to be delivered by Fed Chair Powell as part of the opening remarks at an event hosted by the Federal Reserve Bank of Boston, potentially the aperitif of what’s to come as the week gets busier. If Tuesday tus out to be a non-event, vol seekers hope that the man at the helm of the Fed himself gets more concrete and shed further light on the current Fed stance on its monetary policy outlook by Wednesday, when Powell is due to testify on the Semiannual Monetary Policy Report before the House Financial Services Committee. Until then, as the tepid moves in the currency market reflect and very low tick volume also attests, we have to contend with compressed ranges. In the short-term, the hegemony of the USD as the central thematic is back in vogue on the heels of an impressive US NFP payrolls last Friday. Regardless of how stellar the 224k print was, trade war-related ramification on demand shocks, oversupply of stocks, weaker economic activity, alongside the dramatic fall in inflation expectations globally, and wage gains in the US stagnant, it leads the market to still hold, as the Fedwatch CME tool suggests, an unshakable conviction that the Fed will deliver a 25bp rate cut by July 31st. By looking at the lay of the land in the currency indexes below, we can see the EUR having reached key support where constant rejections have ensued in the last week. The USD has regained its baseline (13ema) even if the overall market structure is still macro bearish while below a descending trendline. The Yen remains in a bearish path but low volumes warrant caution as the direction sees no committed flows for now. The NZD, out of all the currencies, is probably the best positioned technically speaking, as AUD struggles at key resistance and the CAD, while still defying gravity, it has reached a major macro target (100% proj target) and I see the risk for a retracement even if the last word will come from Wed’s BOC policy meeting. Lastly, the CHF finds itself at critical support with volume taper not boding well for a breakout so far.
* The Information is gathered after scanning top publications including the FT, WSJ, Reuters, Bloomberg, ForexLive, Institutional Bank Research reports.
EUR/USD: Faces Key Support Area, Momentum Clearly Bearish
GBP/USD: Volume Taper Into Macro Support
AUD/USD: Range Settles In, Awaiting New Clues
USD/JPY: Breakout & Close Above Key Resistance
USD/CAD: Macro Proj Target Hit, Range In Lower Timeframes