EUR, Gold keeps bearish tone intact

Greece stayed in the spotlight for most of the past week, with the debt-embattled nation finally missing a crucial debt repayment of €1.6 billion to IMF on Tuesday. While markets looked ahead for Sunday’s Greek referendum for bailout with high volatility building up heading in to the risk event over the weekend. Moreover, Thursday Tsipras letter release across the wires citing Greek government’s willingness to the bailout conditions lifted sentiments around the euro.

However, during the latter part of the week, focus also shifted towards much awaited employment data from the US – non-farm payrolls which were published on Thursday, earlier than usual, as US stock markets remained closed on Friday for the Independence Day holiday.

Against the backdrop of these two major events, we published two macro ideas in the week gone by. The first report was published on EUR/JPY under JPY Forecast and the second one on Gold posted under Gold Analysis. Both the ideas played out well.

EUR/JPY keeps downside intact

The first macro report titled “JPY Forecast” was published on July 1. The underlying forecast of further EUR weakness on Greece worked out well in a broad sense. EUR/JPY dropped to 133.90 lows on July 5, almost close to our anticipated target of 133.33 levels. Our analysis that ongoing Greek debt negotiations and Greek referendum is likely to weigh on the European currency across the board played out. While poor US jobs creations reflected by NFP figures had negligible impact on the EUR/JPY cross as Greece crisis overshadowed US jobs report.

As anticipated in the report, “In the week ahead, it is expected EUR/JPY may once again give a channel bearish breakout and fall to 100-DMA located at 133.33 levels. Bolstering further case for downside, the cross trades below most moving averages while the daily RSI around also struggles to inch higher. Moreover, the ADX standing at 29.50 shows that the downside momentum in the cross is slowly picking strength, while the MACD aims lower below the signal line further supporting bearish bias.”

Gold bounces-off 1155.80

The second report titled “Gold Analysis” was published on July 2. This idea was contingent on a stronger non-farm payrolls data. Although the NFP figures missed forecasts, gold prices reached four month lows at 1155.80 just before NFP release as markets widely anticipated a better NFP show on Thursday. Gold prices fell nearly $ 5 dollar short of our expected 1150 target.

As the report notes, “gold has breached the descending triangle support, giving a bearish breakout. Moreover, the daily RSI at 34 aims sharply lower, although in an extreme oversold region. Also, there is a moving average crossover between the 10-DMA and 20-DMA while MACD also remains below the signal, bolstering the case for further downside. Hence, the pair is expected to test 1150 – psychological levels on better than expected non-farm payrolls data from the US.”

Week Ahead:

After today’s Greek referendum outcome, markets now look forward key Greek bailout negotiations between Athens and its international creditors in the week ahead. While RBA’s rate decision tomorrow, FOMC minutes due out on Wednesday and Thursday’s BOE monetary policy decision will also be closely watched. While, Friday’s Canadian employment data along with Fed Chair Yellen’s speech on the economic outlook will wrap up this eventful week.