Global FX Insights by LMAX Exchange Research & Analytics Comprehensive daily market research and analytics, with insightful commentary and charts

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1 Get Global FX Insights via - click here Global FX Insights by LMAX Exchange Research & Analytics Comprehensive daily market research and analytics, with insightful commentary and charts Fear of Systemic Risk from Brexit Wake-up Call There haven't been too many times in recent years where the Fed policy outlook has taken on a secondary role as far as influence on market movement goes. But that's exactly where we re at right now, with the key focus on the EU referendum and recent momentum shift in favour of the leave camp. US retail sales ahead. Technical highlights Daily Video EURUSD Comfortable in the mid range GBPUSD Sights set on retest USDJPY Considers fresh downside EURCHF Back to multi-day range low AUDUSD Looking to carve lower top USDCAD Rounding out major bottom NZDUSD Retreats off recent 2016 high US SPX 500 Stalls yet again above 2100 GOLD (spot) Above 1307 opens 1400 Feature USDTRY Uptrend well intact Fundamental highlights EURUSD Eurozone industrial production due GBPUSD Market not too focused on UK inflation USDJPY Yen continues to show risk sensitivity EURCHF SNB up against strong macro forces AUDUSD NAB business readings offset USDCAD OIL weakness weighs on Loonie NZDUSD May food prices come in cooler US SPX 500 Investors worried about Brexit risk GOLD (spot) Yellow metal increasingly attractive Feature USDTRY Lira focused on external themes Five day performance v. US dollar Suggested reading Brexit s Long History, P. Stephens, Financial Times (June 13, 2016) 6 Events That Could Make Soros a Winner, M. El-Erian, Bloomberg (June 13, 2016) Page 1 of 12

2 EURUSD technical overview Rallies have been very well capped towards area internal resistance, with the market stalling out well ahead of the 2016 peak at and rolling back over. Overall, we are seeing a lot of choppy sideways trade, though a break below will do a good job of putting the pressure back on the downside and accelerating declines towards next mediumterm support in the s. R Jun high Strong R Jun high Medium S Jun low Medium S Figure Medium EURUSD fundamental overview The Euro is coming off a light Monday session of trade, with the price action reflecting the empty calendar. No real movement into Tuesday with the market deferring to a period of consolidation ahead of the more active calendar that picks up today with the release of Eurozone industrial production and the more critical US retail sales. Page 2 of 12

3 GBPUSD technical overview Despite signs of the potential for a medium-term base, rallies continue to stall out ahead of , keeping the overall pressure on the downside. This latest topside failure has opened a drop back below key support at , exposing a more direct retest of critical psychological barriers at in the sessions ahead. Rallies should be very well capped ahead of with only a break above to force a shift in the outlook. R May low Medium R Jun high Medium S Jun low Medium S Apr low Strong GBPUSD fundamental overview The Pound continues to take its hits, breaking back down towards as the leave camp gains further momentum in the referendum polls. Many polls are showing leave out in front, while the betting houses have tightened odds up, showing a less confident 65% chance of remain, down from over 80% a couple of weeks back. EU referendum headlines are expected to continue to dictate flow in the Pound, right up to the referendum result next week, with economic data taking a secondary role. Unless today s UK CPI data comes in much hotter or colder, don t expect much of a reaction. Later today, we get an important US retail sales reading out of the US. Page 3 of 12

4 USDJPY technical overview Overall, the pressure remains on the downside after the market recently stalled out ahead of the previous lower top at A fresh lower top is now potentially in place at ahead of the next major downside extension through and towards Ultimately, only back above would negate and take the pressure off the downside. Look for any intraday rallies to be well capped ahead of R Jun high Strong R Jun high Medium S May/2016 low Strong S Psychological Strong USDJPY fundamental overview The risk of a UK exit from the EU is a risk that extends well beyond the borders of the UK, with the fallout projected to have a major impact on the global economy. This has fueled a fresh wave of risk off trade, which in turn has opened downside pressure in the major pair on its traditional correlation with risk appetite. Looking ahead, referendum headlines will continue to dictate flow, while the market will also be looking to US retail sales and upcoming policy decisions from the Fed and BOJ later this week. Page 4 of 12

5 EURCHF technical overview The market has come back under intense pressure in recent trade, with the cross gravitating towards critical mediumterm support in the area. Previous dips into this area have been well supported and with setbacks starting to look extended on the daily chart, it s quite possible the market will once again look to bounce around the area. A daily close below would however hint at a more significant bearish structural shift. R Jun high Strong R Jun high Medium S Jun low Medium S Feb low Strong EURCHF fundamental overview Renewed downside pressure on this cross rate over the past few sessions, with the price action starting to turn heads. We are coming off the weakest week for the cross rate since the January 2015 collapse, and while this doesn t even come close to comparing, it s definitely worthy of attention. Ongoing Brexit risk and exhausted monetary policy have been sourced as primary drivers behind the Franc appreciation, which could soon force the SNB off the sidelines and into action to defend against unwanted appreciation in the local currency. Page 5 of 12

6 AUDUSD technical overview The market has entered a period of correction after recently breaking down to fresh multi-day lows at However, any additional upside should be well capped below on a daily close basis, with a lower top sought out ahead of the next major downside extension below and towards the 2016 base at further down. Last Thursday s bearish outside formation strengthens the bearish outlook. R Jun high Strong R Jun high Medium S Jun low Medium S June low Strong AUDUSD fundamental overview A quiet start to the week for the Australian Dollar, coming off Monday holiday trade. The early Tuesday Aussie data was offsetting with NAB business confidence sliding, but NAB business conditions improving. Looking ahead, the key focus will be on EU referendum headlines and an upcoming US retail sales release which should dictate direction for the remainder of the day. Page 6 of 12

7 USDCAD technical overview The market could finally be in the process of establishing a meaningful base following this latest impressive reversal out from multi-month lows below However, the current round of setbacks will need to hold above to keep this prospect alive. An eventual break back above will confirm the basing outlook and accelerate gains towards further up. Back under negates and opens a direct retest of the yearly low. R Jun low Medium R Jun high Strong S Jun low Medium S Jun low Strong USDCAD fundamental overview The Canadian Dollar has come back under pressure in the new week, with most of the selling driven off risk liquidation flow from Brexit headlines and this latest pullback in the price of OIL. But today s economic calendar is also likely to play a part, as the market digests an important US retail sales reading. Page 7 of 12

8 NZDUSD technical overview The latest break to fresh 2016 highs beyond suggests the market could be in the process of a more significant structural shift. Still the market will need to establish above critical previous support around to strengthen the bullish prospect, while inability to do so could invite another topside failure. Daily studies have recently traded into overbought territory, though a break back below would be required to take the immediate pressure off the topside. R Jun/2016 high Strong R Jun high Medium S Psychological Strong S Jun low Medium NZDUSD fundamental overview The recent surge in the New Zealand Dollar has been an unwelcome development for local exporters, with the strength of the currency ultimately dragging on the economy. This is something the RBNZ has been mindful of, but at the same time, hasn t done anything to help itself with after a less dovish decision in the previous week. However, we are seeing renewed downside pressure into Tuesday after May food prices came in cooler than expected, which should give the RBNZ more of an excuse to think about cutting rates at its next policy decision. Looking ahead, US retail sales is the major standout on today s calendar. Page 8 of 12

9 US SPX 500 technical overview The market continues to show signs of exhaustion on rallies above 2100, with the most recent attempt once again stalling out ahead of the 2133, 2015 record high. Monday s daily close below 2085 takes the immediate pressure off the topside and now opens the door for deeper setbacks ahead. But ultimately, a break below 2020 would be required to officially force a shift in the structure. R Jun/2016 high Strong R Jun high Medium S Jun low Medium S Psychological Strong US SPX 500 fundamental overview The stock market is once again looking vulnerable at lofty heights, with 2016 rallies continuing to feel like they have very little behind them. The fact that monetary policy is exhausted on a global scale is not something that should be a comfort to investors, especially after dovish implications from the June US employment report have done little to bolster sentiment. The upside follow through has been unimpressive and it doesn t look like the market will be able to push much higher on this lower for longer monetary policy fuel. The systemic risk associated with Brexit is only adding to a further deterioration in risk appetite. Looking ahead, US retail sales comes into focus. Page 9 of 12

10 GOLD (SPOT) technical overview The market has done a formidable job recovering out from an intense round of setbacks into the 1200 area. Overall, while the price holds above critical previous medium term resistance at 1191, the structure remains constructive, with scope for the formation of the next medium term higher low ahead of a resumption of gains back through 1300 and towards 1400 further up. R May/2016 high Strong R Jun high Medium S Jun low Medium S May low Strong GOLD (SPOT) fundamental overview GOLD has been very well supported in 2016, with the yellow metal finding solid demand from medium-term players on the back of fears over the limitations of exhausted monetary policy, a downturn in risk sentiment and extended global equities. All of this will almost certainly continue to keep the commodity supported ahead of of an eventual push beyond the 2015 peak at 1307 and towards 1400 further up. Page 10 of 12

11 Feature technical overview USDTRY remains exceptionally well supported on dips, with the latest round of setbacks propped around From here, look for a higher low in favour of the next major upside extension through and back towards a retest of the 2016 high from January at Ultimately, only a daily close below would delay the constructive outlook. R May high Strong R May high Medium S Jun low Strong S May low Medium Feature fundamental overview Last week s better than expected Turkish GDP figures and narrowing in the deficit have done little to inspire additional bids in the Lira, with the emerging market currency moving in the opposite direction and tracking lower in the early week as broader macro flows dictate trade. Brexit risk, exhausted monetary policy, and worry over the China outlook are some of the major drivers behind this latest exodus from emerging market FX. Page 11 of 12

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