Gold rallies on stops, Cable hits fresh highs

Market Brief

New Zealand job advertisements declined by 5.2% in May recording the first drop in five months, the consumer confidence in June improved. NZD/USD daily price chart confirms the formation of tweezer top as the pair failed to break above 0.8736 through yesterday session. The candle patterns suggest minor reversal pattern, the technicals however remain comfortably positive. The key resistance stands at 0.8780. AUD/NZD sees resistance at the 100-dma (1.0793).

After breaking resistance at 1,300/05, XAU/USD rallied on stops to $1,322.50 on the Comex in New York. The geopolitical tensions in Iraq and Ukraine combined to weak USD build a favorable environment for gold longs. June 17th harami formation technically defines a short-term bottom at $1259. Given the overbought conditions, a downside correction wouldn’t be surprising before the week close. Bids are eyed at $1,284/1,300 (50 & 100 dma).

EUR/USD consolidates gains above the 21-dma (1.3600), technical indicators confirm the short-term bullish reversal. Offers trail above the 100-dma (1.3735), yet the negative pressures on USD is likely to benefit to EUR/USD longs before the closing bell. EUR/GBP trades flat at about 0.80000, the oversold conditions ease: the RSI at 28%, the 30-day lower BB at 0.70709. Option barriers remain solid at 0.80800/81000, the bias remains on the downside.

The Cable steadily extended gains to 1.7063 in New York yesterday (highest since October 2008). The 1.7043/50 critical zone was breached without resistance. The bullish trend strengthens while the tech indicators ring once again the overbought alarm: RSI at 70%, 30-day upper BB at 1.7030. The key short-term support lies at 1.6923.

USD/CAD tests the 1.0804 Fibonacci support on 2009-2011 drop, with trend and momentum indicators marginally bearish. The retail sales and inflation data are due pre-weekend, the expectations are flat-to-positive. The break below 1.0804 suggests deeper retracement towards the 200-dma (1.0779). EUR/CAD hovers around its 200-dma (1.47391). Given the fragility of the EUR-leg, we remain seller on rallies.

Today’s economic calendar consists of German May PPI m/m & y/y, French 1Q (Final) Wages, ECB April Current Account SA & NSA, Italian April Industrial Sales m/m & y/y, UK May Public Finances (PSNCR), Public Sector Net Borrowing, Central Government NSR, Canadian April Retail Sales m/m & y/y, Canadian May CPI m/m & y/y, Euro-Zone June (Prelim) Consumer Confidence Index.