FX moving this morning with the JPY in particular looking interesting.
USDJPY has fallen further following the break of rising support and the 55-day MA. The 200-day MA at 151.51 now looks a reasonable target with very good horizontal support around 151.86-151.91.
The "Icing On The Cake" here would be a monthly close below 154.55. That would constitute a bearish outside month at the trend high and the first bearish outside month in the whole rally up from 102.60.
EURJPY also looks heavy (even more so than CHFJPY given the bearish outside week in EURCHF last week).
It has broken to new lows today below rising trend line support at 170.13 and the 55-day MA at 170.63
Next good support is at 167.53 and then 163.86-164.30 (200-day MA and horizontal support)
Below 167.53 would also open up the possibility of a bearish outside month at the trend high
CADJPY also has a possible bearish outside month on a close under 112.96
In that respect USDCAD is setting up for one of my favourite patterns- A Double bottom within a triangle. It is already testing the triangle top at 1.3751 with the double bottom neckline at 1.3792. The target on a break above here would be close to 1.40 with good resistance at 1.3899 and 1.3977
In addition, a monthly close over 1.3792 would be a bullish outside month here
At the margin the weak Oil price is probably helping here. CL1 is lower this morning but part of that is a function of the new contract. The bias here is still lower with trend line support at $73.24 and then $72.23
Gold has had a small bounce this morning but still needs to clear back over $2,431.50-$2,450 to re-establish the bullish trend.
On Silver we have very good support around $28.57 (recent low and 76.4% pivot). A close below would be concerning to the bullish picture and would suggest a danger of an even deeper retracement towards $25.76-$26.02.
A close today above $29.43, if seen, would be more constructive and a bullish outside day off this support area.
Copper continues to look heavy with the 200-day MA in sight at $407.85. Below there and an extension towards the converged 55 and 200 week MA's at $401.50-$401.70 would look likely.
Soft commodities and grains are also looking very soft. While not necessarily a Macro theme it does have some inflation considerations down the line. Cocoa is down 32% since April, Corn is down 16% since May, Cotton is down 16% since May, Soybeans are down 11% since May, Wheat is down 25% since May.
As a generalisation, both industrial metals and Oil continue to be heavy suggesting that broad based economic demand is moderating. In particular the China picture remains of concern as reflected in recent price action in yields and Equities.
The Chinese 2-year yield has hit another trend low at 1.536%. This is the lowest seen outside of the April 2020 trend low at 1.31% which is increasingly looking like a likely target now. This as the Chinese 2's 10's curve has steepened dramatically (Bull steepening)
It is now approaching the neckline of a clear double bottom formation at 70 bp's. A break above would suggest a return back towards the 2020 peak at 120 bp's +. China is the World's 2nd largest economy and a huge engine of Global demand both for commodities and finished product. The fact that so little mention is being made of these developments in financial markets as we are distracted by other economic, political and geopolitical dynamics is quite frankly astounding to me.
At the same time the Shanghai Composite is down 8% since May and the HSCEI is down 11%
In addition, during this period the Citi Economic Surprise Index for China has fallen precipitously.
While this is concerning on a Global basis, I cannot help but feel it is even more concerning for Europe/Germany whose growth is very export /China demand driven.