Flash PMI, Canada inflation, Brexit and US banks in focus

Stock markets are mixed so far today with US index futures the Nikkei and the Hang Seng flat. European markets are down slightly with the FTSE and Dax both down 0.5%. Crude oil continues to stabilize, while gold is bouncing back.

In currencies today, GBP is rallying while EUR is weaker on the first anniversary of the historic Brexit referendum. The street appears to be responding favourably to PM May’s plan to transition EU citizens living in the UK to settled status. Hawkish talk from outgoing MPC member Forbes may also be having an influence.

On the other hand, ‎soft flash manufacturing PMI reports for Germany, France and Japan that missed expectations, were down over month or both, have dragged on the Euro and stocks.

US flash PMI reports are due at 945 am EDT today. Apparently it’s the annual rebalancing day for the ‎Russell indices so we could see trading activity around that. US Banks, which fell yesterday ahead of stress test results could attract renewed interest after all 34 banks tested passed. USD could ba active around speeches from FOMC members Bullard, Mester and Powell today.

CAD could be active today with Canadian inflation figures due. Yesterday’s strong retail sales report boosted the loonie and today’s numbers may also impact direction depending on whether they enhance or undermine the cause for an interest rate increase. This may also set the stage for next week’s inflation numbers from the US, Germany and Japan.

Blackberry may attract attention from a mixed quarterly report where earnings beat the street but sales fell short of expectations. The company still expects to generate positive cash flow this year even before the Qualcomm award.

Chart Signals: Sterling, gold and oil rebound while stocks struggle

We continue to see renewed interest in some of the markets which had underperformed earlier this week and month including GBP pairs, gold and crude oil. Meanwhile, US and European indices continue to have difficulty making headway and are looking technically vulnerable.

North American and European Indices

US 30 continues to retreat following the completion of a bearish Evening Star candle pattern earlier this week. Resistance falls toward 21,400 from 21,470 with the index trading near 21,355. RSI falling away from 70 indicates a deepening correction with next potential support near 21,270 a 23% retracement of the previous uptrend.

US SPX 500 has levelled off in the 2,428 to 2,440 range, having dropped back from a recent peak near 2,454. RSI slipping back from 70 indicates upward momentum downshifting into neutral. Next support on a breakdown possible near 2,420.

US NDAQ 100 remains unable to retake 5,800 the extension of a broken uptrend line that has become resistance. Similarly, the RSI appears to be stalling out just above 50. Initial pullback support possible at the 50-day average near 5,700 followed by 5,580 a 23% retracement of the recent uptrend.

UK 100 continues to trend downward with resistance falling toward 7,440 and the index testing 7,400 the neckline of a head and shoulders top. RSI under 50 and falling indicates increasing downward pressure. Next potential support in place near 7,375 then 7,350.

Germany 30 continues to struggle with lower resistance near 12,800 and has dropped back toward 12,700. It remains in an uptrend above 12,670 but if that fails an ascending triangle would fail. Similarly, RSI breaking 50 would signal a downturn with next support near 12,600 and the 50-day average.

Commodities

Gold continues to climb up out of a rounded bottom. The price held its 200-day average to keep its underlying uptrend intact and now appears to be resuming its upward course. Support has moved up to $1.250 and the price has rallied to test its 50-day average near $!.258 with next potential resistance closer to $1.270. RSI testing 50 where a breakout would confirm an upturn in momentum.

WTI crude oil looks like the recent selloff is over for now with $42.00 support holding. AN oversold RSI and positive divergence indicate upward momentum slowing and a bounce possible. Recently trading between $42.40 and $43.10, next potential resistance appears near $43.50 then $44.00.

FX

US Dollar Index is holding steady just above 97.00 as it continues to trade in a 96.10 to 97.50 channel. Higher lows are forming an ascending triangle base. RSI sitting on 50 indicates sideways momentum.

USDJPY is sitting on its 50-day average about 111.25 near the middle of a 110.60 to 112.15 Fibonacci trading range. RSI near 50 confirms sideways momentum.

EURUSD is bouncing up off of $1.1140 support testing $1.1170 where a breakout would call off a descending triangle and assert the primacy of a $1.1120 to $1.1290 sideways range with initial resistance near $1.1200. RSI holding 50 and perking up suggests underlying uptrend intact and accumulation may be resuming.

EURGBP continues to turn downward with both the pair and the RSI rolling over in tandem. The pair has dropped back under 0.8800 confirming a recent double top near 0.8860 and has dropped toward 0.8770. Next potential support near 0.8715 then 0.8645.

GBPUSD continues to recover from recent weakness, rallying up from $1.2670 higher support through $1.2700 and on toward $1.2740. RSI indicates downward pressure easing. Next potential resistance near $1.2790 a Fibonacci level and the neckline of a head and shoulders top.

USDCAD is consolidating its recent drop from the 200—day average near $1.3340 trading well below $1.3300 near $1.3235. RSI under 50 and in a downtrend confirms ongoing distribution with next potential support near $1.3200 then $1.3160.

CADUSD is consolidating its recent bounce up off of $0.7500 above $0.7540 Fibonacci support trading near $0.7555. Upside resistance appears near $0.7570 then $0.7600. RSI in an uptrend confirms continuing accumulation.

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