EURGBP TECHS: Resistance Remains Intact For Now

• Stocks are drifting sideways after climbing off early Friday lows, rather muted late afternoon trade with many plying the sidelines - wary of headline risk over the coming weekend.
• Risk sentiment was subdued after Pres Trump accused Iran of a ceasefire violation after Iran launched attack drones at ships attempting to transit the Strait of Hormuz. Markets drew more selling after a Trump social media post threatening European countries with "100% TARIFF on any and all Goods" sent to the US if they implement a Digital Services Tax.
• Chip stocks weighed heavily on the IT sector with ON Semiconductor leading the rout at more than 24% decline after announcing a $7B all stock deal to purchase Synaptics. Other laggers included Western Digital (-13.25%), Seagate Technology (-9.25%) and Sandisk Corp (-9.10%).
• On the positive side, pharmaceuticals led advances with Moderna rising 10.7% after the WSJ reported on new research efforts for autoimmune disorders. Other gainers included Eli Lilly (+7.1%), Veeva Systems (+7%), Biogen Inc (+5.35%) and Incyte Corp (+5.3%).

StatCan's advance estimate for May wholesale (ex petroleum, products, other hydrocarbons, oilseed & grain) sales is -0.7% M/M, which would mark the first contraction since January. Though the last 3 months have seen slowing (2.3% Feb, 1.6% Mar, 0.1% Apr), the 3M/3M annualized rate of growth would still be close to 11%.  

• While this was a weak outturn, this is an extremely volatile series that is heavily influenced by idiosyncratic factors such as precious metals prices. The other major sales advance reports for May were solid (retail sales 1.0% M/M and manufacturing sales 1.1% M/M), with the main caveat being high inflation reducing the translation into real terms.
• Though goods sector growth is looking more positive in the month than services based on these estimates, they set up for a positive May advance GDP by Industry estimate next week, with June 30 release of the StatCan GDP report for April.
• StatCan's advance GDP estimate for April is +0.4% M/M, with "increases in mining, quarrying, and oil and gas  extraction, manufacturing and transportation and warehousing ... partially  offset by decreases in agriculture, forestry, fishing and hunting."
• If confirmed, it means Q2 is shaping up to see a strong GDP bounce vs Q1's surprise contraction (-0.1% Q/Q SAAR, vs BOC forecast 1.5%) on a nominal basis. Consensus is currently for a 1.4% Q/Q SAAR GDP outturn in Q2, similar to the BOC's April projection despite the big miss in Q1. This comes with the big asterisk that GDP by industry has been increasingly unreliable as a guide to overall GDP, particularly given the Q1 disappointment vs consensus.
• Consensus is firmly for StatCan's 0.4% April GDP estimate to be confirmed in the final, with some moderation in growth seen in the advance May estimate. Some notes:
• CIBC: 0.4% M/M for Apil; for May, "a strong employment report, further increase in manufacturing activity and higher homes sales point to another solid month for GDP. "
• Desjardins: 0.4% M/M April; for May, "growth remained positive but slowed compared to April".
• RBC: 0.4% M/M in April; "data has been pointing to a firming in economic activity in Q2 with early May data also looking broadly better."
• TD: 0.4% M/M in April; May: "moderation towards 0.1-0.2%".

• RES 4: 163.59 2.000 proj of the Jan 27 - Feb 9 - Feb 12 price swing
• RES 3: 163.00 Round number resistance
• RES 2: 162.28 1.764 proj of the Jan 27 - Feb 9 - Feb 12 price swing
• RES 1: 161.95 High Jul 3 ’24 and a major resistance
• PRICE: 161.71 @ 16:05 BST Jun 26
• SUP 1: 160.99 Low Jun 19 
• SUP 2: 160.64 20-day EMA 
• SUP 3: 159.68 50-day EMA 
• SUP 4: 158.74 Low May 25 

The trend condition in USDJPY remains bullish. The recent breach of resistance at 160.72, the Apr 30 high, confirmed a resumption of the medium uptrend. Sights are on 161.95 next, the Jul 3 ‘24 and Jun 25 major high. A clear break of this hurdle would confirm a resumption of the primary uptrend. Moving average studies are in a bull-mode position, highlighting a dominant uptrend. Key support is at the 50-day EMA, currently at 159.68.