AUDUSD TECHS: Gains Considered Corrective
- RES 4: 0.7040 High Aug 16
- RES 3: 0.7009 High Aug 26 and a key short-term resistance
- RES 2: 0.6913 50-day EMA
- RES 1: 0.6857 20-day EMA
- PRICE: 0.6843 @ 16:17 BST Sep 9
- SUP 1: 0.6699 Low Sep 7
- SUP 2: 0.6682 Low Jul 14 and the bear trigger
- SUP 3: 0.6647 0.764 proj of the Apr 5 - May 12 - Jun 3 price swing
- SUP 4: 0.6612 Low May 29
A bearish theme in AUDUSD remains intact and short-term gains are considered corrective. The continuation lower, earlier this week, strengthens bearish conditions and confirmed a resumption of the bear leg that started Aug 11. Attention is on 0.6682, the Jul 14 low and a key support plus an important bear trigger. A break would confirm a resumption of the broader downtrend. Initial firm resistance to watch is at 0.6857, the 20-day EMA.
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AUDUSD TECHS: Resistance Cleared
- RES 4: 0.7170 3.0% Upper Bollinger Band
- RES 3: 0.7141 76.4% retracement of the Jun 3 - Jul 14 downleg
- RES 2: 0.7120 2.0% 10-dma envelope
- RES 1: 0.7102 High Aug 10
- PRICE: 0.7094 @ 16:47 BST Aug 10
- SUP 1: 0.6870 Low Aug 5
- SUP 2: 0.6786 Low Jul 18
- SUP 3: 0.6682 14 and the bear trigger
- SUP 4: 0.6647 0.764 proj of the Apr 5 - May 12 - Jun 3 price swing
The bounce off the July lows accelerated for AUDUSD Wednesday, with the pair clearing nearby resistance on the way higher to 0.7102. This strengthens the short-term bullish outlook, proving recent pullbacks as corrective in nature. Clearance of 0.7047, Aug 1 high, is significant and opens scope for a climb toward 0.7141, a Fibonacci retracement. Support to watch is at 0.6870, Aug 5 low.
EURJPY TECHS: Monitoring Resistance At The 50-Day EMA
- RES 4: 140.07 High Jul 25
- RES 3: 139.41 High Jul 28
- RES 2: 138.50 50-day EMA
- RES 1: 138.32 High Aug 9
- PRICE: 137.01 @ 16:42 BST Aug 10
- SUP 1: 135.81 Low Aug 5
- SUP 2: 134.84/133.40 Low Aug 3 / 2 and a bear trigger
- SUP 3: 132.66 Low May 12 and a key support
- SUP 4: 131.99 61.8% retracement of the Mar 7 - Jun 28 bull leg
EURJPY reversed the Tuesday gains into the Wednesday close, but is still managing to hold the bulk of its recent bounce. The recovery from 133.40, Aug 2 low, is likely a correction if moving average studies are correct in highlighting a downtrend. The next resistance to watch is 138.50, the 50-day EMA. A reversal lower and a breach of 133.40 would resume the bear cycle and open 132.66, May 12 low. Clearance of the 50-day EMA would suggest scope for a stronger recovery.
US: Late Corporate Credit Update: Credit Risk Cools After Flat Inflation Read
Investment-grade corporate credit risk fell sharply Wednesday after flat CPI inflation for July helped yield curves climb off deeper inversion as chances of 75bp rate hike in mid-Sep evaporated, while stocks surged higher, SPX breaching May 31 resistance. Currently, SPX eminis trade +79.0 (1.9%) at 4203.5; DJIA +470.82 (1.44%) at 33248.26; Nasdaq +326.1 (2.6%) at 12820.61.
- Investment grade risk measured by Markit's CDXIG5 index -6.268 to 76.762 (mid-April lows); CDXHY5 high yield index at 102.408 (+1.429).
- Outperforming credit sectors (tighter or least wide): subordinated Financials (-5.0), Communications (-4.9), Materials (-4.7) and Consumer Staples (-4.6)
- Lagging sectors (wider or least narrow): Senior Financials (-1.2), Utilities (-2.8), Health Care (-3.8), Industrials (-4.0).
