Dollar and Yen in Brief Retreat as Stocks and Yields Rebound

Market overviews

Dollar and Yen retreat as markets enter into US session. Stock markets are staging a mild rebound in Europe, while US futures also point to higher open. Treasury yields also recovered from earlier decline, with US 10-year yield back above 1.4 handle at the time of writing. New Zealand Dollar leads Australian and Sterling higher. But overall, major pairs and crosses are bounded inside Friday’s large range.

Technically, Dollar is likely turning into some brief consolidations. Though, there is no sign of bottoming, nor sustainable pull back. Recent rise should resume sooner rather than later as long as some 4 hour 55 EMA holds. The EMAs now stand at 1.2036 in EUR/USD, 1.4018 in GBP/USD, 0.7634 in AUD/USD, 0.9073 in USD/CHF, 1.2238 in USD/CAD.

In Europe, at this time of writing, FTSE is up 0.19%. DAX is up 0.65%. CAC is up 0.24%. Germany 10-year yield is up 0.018 at -0.180. Earlier in Asia, Nikkei dropped -3.29%. Hong Kong HSI dropped -1.08%. China Shanghai SSE rose 0.12%. Singapore Strait Times dropped -0.84%. Japan 10-year JGB yield dropped -0.0147 to 0.045.

Silver and Gold find some footing below 61.8% retracement level

Silver edged lower to 25.53 earlier today but appears to have found some buying below 61.8% retracement of 23.76 to 28.73 at 25.65. Downside momentum also eased as seen in 4 hour MACD. Focus is back on 26.59 minor resistance. Break there will bring stronger rebound back to 55 day EMA (now at 26.69) and above.

Overall, Silver is seen as extending consolidation pattern from 29.84 (made in Aug 2020). A break of 23.76 support cannot be ruled out for the moment. But we’re not expecting a break next support level at 21.88.

Similarly, Gold also recovered after edging lower to 1760.71 earlier today. Downside momentum also diminished as seen in 4 hour MACD. Focus is back on 1803.20 minor resistance. Break there will bring stronger rebound to 55 day EMA (now at 1833.62) and above.

Similar to the view on Silver, Gold is seen as in consolidation from 2074.85 (made in Aug 2020). Even in case of another fall, we’d expect strong support from 1676.65 to bring rebound.

Australia retail sales rose only 0.1% mom in May, dragged by Victoria lockdown

Australia retail sales rose 0.1% mom in May, well below expectation of 0.7% mom. Comparing to a year ago, sales rose 7.4% yoy.

Ben James, Director of Quarterly Economy Wide Surveys, said: “There were mixed results across the industries and states and territories, with COVID-19 restrictions in Victoria impacting the May result. Victoria fell 1.5 per cent as the state entered its fourth lockdown on May 28 with trade restricted for physical stores.”

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.3746; (P) 1.3845; (R1) 1.3899; More….

A temporary low is formed at 1.3785 in GBP/USD with current recovery. Intraday bias is turned neutral for the moment. Deeper fall is still expected as long as 4 hour 55 EMA (now at 1.4008) holds. Current decline from 1.4248 is seen as the third leg of the consolidation pattern from 1.4240. Below 1.3785 will target 1.3668 support and below. However, sustained break of the 4 hour 55 EMA will bring stronger rise back to retest 1.4240/8 resistance zone.

In the bigger picture, as long as 1.3482 resistance turned support holds, up trend from 1.1409 should still continue. Decisive break of 1.4376 resistance will carry larger bullish implications and target 38.2% retracement of 2.1161 (2007 high) to 1.1409 (2020 low) at 1.5134. However, firm break of 1.3482 support will argue that the rise from 1.1409 has completed and bring deeper fall to 1.2675 support and below.

Economic Indicators Update

GMT Ccy Events Actual Forecast Previous Revised
23:01 GBP Rightmove House Price Index M/M Jun 0.80% 1.80%
1:30 AUD Retail Sales M/M May P 0.10% 0.70% 1.10%