NZD/USD – Daily Chart

An interim low was formed at .7693 but the July peak at .8107 hasn’t been reached – neutral

Last week NZD/USD hammered out a bottom at .7693 and has since risen to the 38.2% Fibonacci retracement of the April-to-June decline at .8063.
A rise above this level will push the next higher .8080/.8107 resistance area, made up of the five month resistance line and the July high, to the fore. There NZD/USD is expected to be capped, however, if reached at all that is.
We will retain our medium term bearish forecast while the currency pair stays below its .8139 June peak on a daily New York closing basis.
Our medium term downside target zone is still made up of the .7456/.7371 May 2012 low and November 2011 low. These remain our downside targets for the months to come but will only be back on the map once last week’s low at .7693 has been fallen through.
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Gold – Daily Chart

Is to overcome the 1350 region but is likely to run out of steam around the 1400 mark

The gold price is about to reach the 1350 level where the July high was made.
Even though this level is expected to be bettered we will retain our longer term bearish forecast while the gold price remains below the 1424.05 June high. This is likely to be the case since we are currently in the fifth minor up wave from the 1180.04 June low. This should then be followed by another decline back to the 1300/1250 region.
Short term the gold price looks bid, however, and we should see further upside in the days to come. Upside targets are the 1365.91 June 11 low and the 1395.41 June 13 high as well as the minor psychological 1400 region.
Unexpected failure at the current 1272.56 August low would our short term bullish outlook, however. In such ascenario the 1200 region would be back in play instead. This is not our favourite scenario, though.
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Complacency reigns

Despite market moving event risk in the coming weeks and months, volatilities remain at depressed levels. It is unlikely to last.

Coming into September the FX markets seem to be in a relatively sanguine mood. Consensus expectations are for Fed tapering to take place in the latter part of 2013 rather than at the September meeting. At the same time, the German election in September offers some event risk for EUR crosses, whilst the development of yields in Greece suggests the possibility of another Greek restructuring which has the potential to include official sector lenders for the first time. On the policy side the clear divergence in monetary policy between the Fed and the ECB could not be more clear, with the ECB doing all they can to keep rates low, whilst the Fed are gradually moving towards a normalization of policy, as the Fed’s Fisher hinted last week. All told it seems as though market volatilities should be set to increase.
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USD/JPY coming under increasing downside pressure

Cloud now acting as resistance. Increasing risk of a deeper sell off

This week we saw the market break and hold below its daily cloud, this is negative price action.
The market is now viewed as negative while trading below 100.00 and will make very little impact while capped by 101.60.
The Elliot wave count on the weekly chart is suggesting a potential 93.55/90.40 corrective count lower.
Given that the 93.75 June low is in close proximity to the 38.2% retracement at 93.55 we make this our preferred target zone.
From a timing perspective we would expect weakness to prevail until October 2013.
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S&P GSCI Total Return Index

Market has reversed ahead of its 5004 2011-2013 downtrend should ease back.

The S&P GSCI Total Return Index has recently faltered ahead of the 61.8% retracement (of the move down from the September 2012 peak) at 4998 and reversed ahead of the 2011-2013 resistance line at 5004. The market is currently simply sidelined below here. Failure at this zone suggests that the market has topped and that we are likely to see further weakness.
We look for a slide back to the 4769/55 day ma and eventually the 4629 3 month support line.
Key support remains 4588 the 2009-2013 uptrend which guards the 4493 2013 low and the 4442 50% retracement (of the move 2009-2011). We would expect this 4442 zone to hold the initial test. Failure to do so would see losses to 4212.50, the 2012 low.
Only a weekly close above 5004 will alter the chart to more positive (not favoured) and target the 5148 2013 high.
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NZD/USD – Daily Chart

An interim low has been formed at .7693; expect to see a bounce back towards the .8000 zone

A couple of days ago NZD/USD hammered out a bottom at .7693 and has since then risen to the 55 day moving average at .7918 which caps at present.
We expect it to soon give way, however, and for the .7970 July 11 high and the May 23 .8006 low to be targeted.
The next higher .8107/21 resistance area, made up of the July high and the five month resistance line, is expected to cap, if reached at all that is.
We will retain our medium term bearish forecast while the currency pair stays below its .8139 June peak.
Our medium term downside tar get zone is still made up of the .7456/.7371 May 2012 low and November 2011 low. These remain our downside targets for the months to come but will only be back on the map once this week’s low at .7693 has been fallen through.
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Gold – Daily Chart

Remains below its four month resistance line which should eventually give way, though

Last week the gold price was rejected by the four month resistance line at 1330.29 but the past couple of weeks’ slide looks to be corrective within the rally we have seen off the June multiyear low at 1180.04.
This is to say that we expect the 1350 region to be retested within the next few weeks even if we cannot rule out a slide back towards the 1250 region be fore such a rise occurs.
We will retain our view of the 1350/1400 area being revisited as long as the gold price does not drop below the 1208.08 July low. Should this unexpectedly happen, the 1180.04 June low will be back in the picture. Failure at 1180.04 would open the way up for the 1162.45/1145.25 significant support zone to be targeted. It contains the January and March 2010 highs, July 2010 low and the 61.8% Fibonacci retracement of the 2008-11 up trend.
We will retain our longer term bearish forecast while the gold price remains below the 1424.05 June high.
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Commodity Spotlight Agriculturals

Prices in Paris – more than a mirror image of US prices

Alongside wheat prices on Liffe in Paris, we will include Liffe quotations for corn and rapeseed in our forecast tables – and we have taken this opportunity to analyse these European markets in more detail in a publication. It is evident that the links between European prices and international benchmark prices vary from product to product. Whilst the correlation is usually very close in wheat, this applies only to some extent to corn and rapeseed. US prices cannot be transplanted to Europe one to one as either the products – soybeans instead of rapeseed – or the product qualities – e.g. genetically modified corn – differ.
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FX Alpha

Tapering doubts

Tapering doubts. The future path of monetary policy of Fed and ECB differs. While the Fed looks for the perfect timing to reduce stimulus the ECB just delivered some kind of forward guidance to make the markets believe that nothing will change. However, the fact that the euro did not really loose ground against the greenback illustrates that the market does not believe in the picture of differing monetary policies.

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EUR/PLN – Daily Chart

Late June three legged upside correction is expected to have ended at last week’s 4.2658 high

EUR/PLN weak three legged upside correction from its July 4.1994 low seems to have ended at last week’s 4.2658 high, between the 38.2% Fibonacci retracement of the April-to-June advance and the 55 day moving average.
While this resistance area caps on a daily chart closing basis, the 61.8% Fibonacci retracement at 4.1990 should be slipped through and the 200 day moving average at 4.1736 be reached. Another potential downside target zone is made up of the 55 week moving average and 2008-13 uptrend line which come in at 4.1559/10. Here the currency pair is expected to hold, however.
We thus recommend selling EUR/PLN between 4.2480 and 4.2640 while targeting the 4.1750 region with a stop loss being placed above 4.2750.
In case of an unexpected daily close above 4.2658 being made, the 4.3000 region and 4.3273 June 6 high would be targeted instead. This is not our preferred scenario, though.
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AUD/USD break below .9000 is viewed as critical

Next downside target is .8550 – the 50% retracement of the move from 2008.

AUD/USD has a fairly dreadful week last week, it has traded below and seen a weekly close below the psychological support at .9000. Our downside target remains .8550, the 50% retracement of the move up from 2008. Our longer term downside target measured from the top is 0.7700.
We note the 13 count on the 240 minute chart and the 240 minute RSI has yet to confirm the new low – both imply some consolidation ahead of further losses. While capped by key resistance at .9388/.9405, a downside bias will persist. These are the 2011 low and highs from 2009 and 2010. The 24th July high at .9318 should also act as strong resistance.
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Sterling weakness is prominent

EUR/GBP has severed its 2008-2013 downtrend

EUR/GBP has exploded higher through the .8710/14 resistance (recent high and also the 2008-2013 resistance line) – and this targets the .8793/.8814 highs seen earlier in the year.
These are also now vulnerable and above here targets the psychological resistance at .9000 and the 2011 high at .9082.
The market remains immediately bid above the accelerated uptrend at .8621, initial support is the 23.6% retracement at .8682.
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NZD/USD – Daily Chart

Correction higher has terminated ahead of the 3 month downtrend and resumed its longer term down move.

NZD/USD has seen 3 failures at .8107 and failed ahead of the 3 month downtrend at 0.8148. The Elliot wave count has marked this as wave ‘4’ and we look for the resumption of downside pressure. Our short term downside target is 0.7683, the June low.
We will retain our medium term bearish forecast while the currency pair stays below its .8139 June peak and the 200 day ma at .8229.
Our medium term downside target zone is made up of the .7456/.7371 May 2012 low and November 2011 low. These remain our downside targets for the months to come.
Very near term the market has found some support at the 55 day ma at 0.7941, rebounds from here are expected to remain tepid.
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S&P GSCI Total Return Index

Market has reversed ahead of its 5004 2011-2013 downtrend and is under pressure in its range.

The S&P GSCI Total Return Index as expected the up move faltered ahead of the 61.8% retracement (of the move down from the September 2012 peak) at 4998 and reversed ahead of the 2011-2013 resistance line at 5004. Failure at this zone suggests that the market has topped and that we are likely to see further weakness.
We look for a slide back to the 4787/38.2% retracement and eventually the 4622 3 month support line.
Key support remains 4582 the 2009-2013 uptrend which guards the 4493 2013 low and the 4442 50% retracement (of the move 2009-2011). We would expect this 4442 zone to hold the initial test. Failure to do so would see losses to 4212.50, the 2012 low.
Only a weekly close above 5004 will alter the chart to more positive (not favoured) and target the 5148 2013 high.
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EUR/PLN – Daily Chart

Correction lower has terminated at the 4.1990 Fibo support

The correction lower in EUR/PLN has terminated as expected at the 61.8% retracement at 4.1990.Rallies will need to regain the 4.2607 55 day ma in order to re-focus attention to 4.3273 the 6 the July high then the 4.4125/4.4315 resistance area , made up of the 2009-13 resistance line and the May 2012 peak. En route lies the June high at 4.3708 which first needs to get exceeded, however.
The currency pair’s advance is likely to run out of steam in the 4.4147/4.4315 resistance area. Should it be bettered, the 4.5334 September 2011 high and also the 2011 peak at 4.5993 will be back in the picture.
Below 4.1990 would introduce scope to re-test the 4.1537/4.1477 55 week moving average and the 2008-2013 uptrend, which is expected to hold.
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Gold – Daily Chart

Pushing hard into downtrend and 55 day ma at 1333/40.

Gold is pushing hard into the 2 month downtrend and the 55 day moving average at 1333/40. While dips lower are contained by the short term uptrend at 1297 we will assume an immediate upside bias.
Above the 1340 would alleviate immediate downside pressure for a deeper retracement to 1415/ 1424.05 – the June high and the 38.2% retracement of the same move and possibly 1485/87, the highs seen at the beginning of May.
Failure here and a break below 1297 will alleviate upside pressure for another down leg towards the current July low at 1208.08 and the 1180.04 June low will soon be underway. Failure at 1180.04 will open the way up for the 1162.45/1145.25 significant support zone to be targeted. It contains the January and March 2010 highs, July 2010 low and the 61.8% Fibonacci retracement of the 2008-11 up trend.
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US Dollar weakness is approaching stronger supports

We continue to look for EUR/USD to remain capped by the 1.3360/1.3417 resistance

EUR/USD is approaching tougher resistance offered by the 2013 resistance line at 1.3337 and the key resistance at 1.3360/1.3417. This is where the 2011-2013 downtrend, the 200 week ma and the June high meet and we look for it to hold the topside and provoke failure. We note the 13 count on the 240 minute chart and this offers
additional resistance at 1.3325.
The market stays bid intraday above 1.3165. Below here targets 1.30 and loss of this zone is needed to re-target the 1.2755/40 recent low and April low.
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Daily Market Technicals

EUR/CHF – negative below resistance line at 1.2421

EUR/CHF having failed on the topside attention has reverted to the 55 day ma at 1.2312.
Below 1.2313 would cast attention back to the 200 day ma at 1.2247.
The market will remain offered below the 1.2421 re-drawn resistance line. Only above the current 1.2466 July high would target 1.2545/57 and above here will refocus attention on the 38.2% Fibonacci retracement of the 2007-11 decline at 1.2655.
Above 1.2655 sits the 1.2765 September 2010 low and 1.2815, the 200 week ma.
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Commodity Spotlight Energy

Power market in Germany: electrified

The German electricity market is in a state of transition: following the liberalisation of the market at the end of the 1990s, the ambitious goals of the energy reforms (“Energiewende”) are now forcing rapid changes. However, while the intensified expansion of renewable energies is driving end-consumer prices to new record levels, wholesale prices have plummeted. In this study we take a closer look at the interplay of supply and demand on electricity exchanges, and explain why a coal price recovery and a rising carbon price could slow the downward trend of electricity prices on the exchanges, at least temporarily.
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Looking for GBP/USD to fail at its 61.8% retracement

Close below its trendline at 1.5315 required

GBP/USD as we highlighted yesterday, we considered that the market was likely to fail at the 1.5393 61.8% retracement and this is now being seen. We have a TD perfected set up on the daily chart and a 13 count on the 240 minute chart. Attention reverts to the 1.5315 accelerated uptrend – a close below here is required to signal the resumption of downside pressure and re-target the 1.4854/32 support zone.
Above 1.5393 would signal further gains to 1.5551 the 78.6% retracement.
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