USDCAD TECHS: Resistance Holds - For Now
- RES 4: 1.3427 High Jun 7
- RES 3: 1.3365 50-day EMA
- RES 2: 1.3355 High Jun 15
- RES 1: 1.3269/93 20-day EMA / High Jul 05
- PRICE: 1.3263 @ 16:18 BST Jul 5
- SUP 1: 1.3190/3117 Low Jun 28 / 27 and key support
- SUP 2: 1.3084 1.618 proj of the Apr 28 - May 8 - May 26 price swing
- SUP 3: 1.2992 50.0% retracement of the Jun - Oct 2022 bull rally
- SUP 4: 1.2954 Low Sep 13 2022
USDCAD is holding on to its most recent gains. The latest recovery still appears to be a correction and the trend is bearish. Looking at MA studies, they remain in a bear mode position, highlighting a downtrend. A resumption of weakness would open 1.2992, a Fibonacci retracement. On the upside, firm resistance is seen at 1.3269, the 20-day EMA. It has been pierced, a clear break would expose the 50-day EMA, at 1.3365.
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USDCAD TECHS: Remains Soft
- RES 4: 1.3730 76.4% retracement of the Mar 10 - Apr 14 low
- RES 3: 1.3695 High Mar 28
- RES 2: 1.3668 High Apr 28 and key resistance
- RES 1: 1.3523 20-day EMA
- PRICE: 1.3439 @ 15:57 BST Jun 5
- SUP 1: 1.3407/04 Low Jun 02 / May 16
- SUP 2: 1.3363 Low May 11
- SUP 3: 1.3315 Low May 8
- SUP 4: 1.3302 Low Apr 14 and a key near-term support
USDCAD traded sharply lower on Thursday as it extended the reversal from the May 26 high of 1.3655. The pair remains soft. The impulsive nature of the sell-off signals scope for a deeper pullback and the next support to watch is 1.3404, the May 16 low. A break of this level would expose 1.3315, the May 8 low and a key support. On the upside, initial resistance is at 1.3523, the 20-day EMA.
US TSYS: ISM Miss Helps Tsys Snuff Bearish Engulfing Candle
- Treasury futures reversed early losses, gapped to new session highs (TYU3 114-03.5 high, yield tapped 3.6563% low) after May ISM services miss. Curves rebound with short end rates outperforming (2s10s taps -77.212 high).
- Despite the bounce, technical focus is on the bearish engulfing candle posted Friday, signaling the end of the recent recovery and suggesting potential for a continuation lower. Attention is on key short-term support and the bear trigger at 112-29+, the May 26 / 30 low.
- May ISM services disappointed: 50.3 (cons 52.4) after 51.9, printing the lowest since Dec’22. New orders led the decline at 52.9 (-3.2pts), driven domestically rather than external.
- The prices paid index is notable, dropping to lowest since May’20 at 56.2 (-3.4pts) as they build further on March’s particularly sharp -6.1pt drop. Employment component also fell back below 50 (49.2, -1.6pts) for first time since December.
- FOMC-dated OIS have lifted off lows seen after the ISM services miss. Near-term meetings are relatively little changed compared to the start of today’s NY session with June +7bp (unch) and July +20bp (-1.5bp) for a terminal that doesn’t fully price another hike.
- Beyond that, implied rates are down more heavily on the day but remain notably higher than before Friday’s payrolls report. For example, the 4.99% implied effective for the Dec FOMC (marking 9bp of cuts from current levels) is down 4bps since the start of the session but still 11bps higher since payrolls.
AUDUSD TECHS: Resistance Seen At The 50-Day EMA
- RES 4: 0.6818 High May 10 and key resistance
- RES 3: 0.6710 High May 16
- RES 2: 0.6654 50-day EMA
- RES 1: 0.6638 High Jun 02
- PRICE: 0.6623 @ 15:54 BST Jun 5
- SUP 1: 0.6567/6458 Low May 31 and the bear trigger
- SUP 2: 0.6403 76.4% of the Oct - Feb bull cycle
- SUP 3: 0.6387 Low Nov 10 2022
- SUP 4: 0.6272 Low Nov 3 2022
AUDUSD traded higher Friday, extending the recovery from last Wednesday’s low. The 20-day EMA has been breached and attention turns to resistance at the 50-day EMA, which intersects at 0.6654. A clear break of this EMA would signal scope for a stronger recovery. The trend outlook remains bearish, a reversal lower would refocus attention on the bear trigger at 0.6458, the May 31 low.
