Market Outlook for 29th July 2016

Market Outlook for 29th July 2016

The Bank of Japan released its monetary policy after two-day meeting. The central bank eased the policy by doubling purchases of exchange traded fund (ETF) to its total annual pace of 6 trillion yen, while interest rates stay unchanged at -0.1% and monetary policy base unchanged at 80 trillion yen.
The USDJPY yen is highly volatile and hit fresh 2-week low at 102.68, after moving within nearly 300-pips span, on immediate reaction on BOJ’s decision.
Fresh yen’s strength comes on investors’ disappointment on BOJ’s modest policy action, as they were expecting more radical stimulus measures from the central bank.
The US dollar remains at the back foot, holding under fresh lows against the basket of currencies in early Friday’s trading. The greenback was hit by modestly hawkish Fed on Wednesday and maintains weak tone at the last day of the week, being on track for strong weekly bearish close, after three-week uptrend.
Antipodean currencies showed no significant changes in trading against US dollar, but fell sharply against Japanese yen. Kiwi dollar hit fresh 3-week low against yen at 73.09, while Australian dollar dipped to 2-week low against Japanese currency at 77.47.

Spot Gold ticked lower after markets digested BOJ policy data, following knee-jerk reaction and $15 span movements, immediately after data were released. However, the yellow metal is on track for bullish weekly close, after past two weeks in red and also signaling the second consecutive bullish monthly close.
Oil prices fell further on Friday, extending uninterrupted fall in the seventh consecutive day and hitting fresh lows, last traded in April. Oil price faces strong headwinds from oversupply, with slowing global economic growth, worsening the situation.
Crude benchmarks, Brent and WTI oil are now down about 20% from recovery peaks, hit in early June.
Outlook remains negative, as some analysts predict oil price’s weakness to extend into 2017.
WTI oil approaches psychological $40.00 support, loss of which would trigger further weakness, while Brent oil tests important technical support at 42.45.

Highlights of the day

Europe
After Bank of Japan’s monetary policy release that was the key event of Asian session, focus turns towards Eurozone’s CPI and GDP data. Inflation is expected to stay unchanged at July at 0.1%, with Core CPI also seen unchanged at 0.9%
EU’s GDP is seen lower in Q2, according to the forecast at 0.3%, compared to 0.6% in Q1.
Unemployment rate in the Eurozone is expected to stay unchanged in June at 10.1%

America
GDP data from Canada and USA are in focus in American session.
Canada’s GDP is expected to fall in May, according to -0.5% forecast, compared to 0.1% in April.
The US Bureau of Economic Analysis publishes its advance GDP data for the second quarter of 2016. Last month’s estimate figures showed that real GDP increased at an annual rate of 1.1% in the first quarter of 2016, when the consensus among analysts was for a rise of 2.6%. The consensus this time is that GPD rose in a range of 2.2% to 3.4% in the second quarter.
Both releases are due at 12:30GMT.
Important levels

USDJPY
The pair consolidates above fresh low at 102.68, following post-BOJ movements, spanned between 105.60 and 102.68. Overall tone is bearish, as important supports at 103.22 and 102.84 were cracked on fresh extension lower. Falling daily cloud continues to pressure (cloud base currently at 104.44).
Weekly close below 102.84 (Fibo 61.8% of 99.97/107.47) is needed to confirm strong bearish stance and open way towards next supports at 102.00 and 101.74.
CRUDE OIL
US oil price heads towards psychological $40.00 support, after yesterday’s close below $41.87 (Fibo 38.2% of $26.04/$51.65 recovery. Bearish extension below $40 support, wouldn’t face significant obstacles until $ 39.00, with bearish technicals and fundamentals, supporting scenario.
Initial resistance lies at $41.18, followed by $42.20 and strong barrier at $43.02 (former low of 10 May)., Market Analysis