The US Treasury Secretary told the Japanese Finance Minister that it was important to refrain from competitive currency devaluation during the G7 talks on Saturday. 

This is the second time Washington has warned Tokyo not to intervene in the market to stem yen gains this year, and it may affect the Japanese central bank's ambitions to push  monetary stimulus further. Separately, the recently released Japan Q1 GDP was far better than market expectation, which helped to erase concerns of a technical recession. 

USD/JPY has retraced to 109.80 this morning from its three-week high of 110.16. The immediate support and resistance levels for USD/JPY are 111.00 and 108.30 respectively.

The dollar index climbed to six-week highs of 95.35 last Friday, though a 68% RSI shows an overbought signal in the near term.

Equities
Asian equities finished higher on Friday, led by Japan and Hong Kong. Singapore's Straits Times Index rose 23.7 points or 0.87% to close at 2,763.8 points. Singapore’s market has corrected quite significantly in the month of May on poor earnings and worries about a faster pace of US rate hikes this year. In the near term, bad news has been priced in and the market may see some stabilisation or find itself range bound this week, due to a relatively quiet event calendar. 

Commodities
Crude oil came off from its seven-month highs. WTI crude oil futures opened at $48.47 and slid to the $48.10 area this morning. Selling activity due to June contract expiry may play a role, though the three selling signals discussed previously – strong resistance at the upper end of the channel, RSI being overbought and MACD negative divergence – have indicated a possible correction. A stronger US dollar continued to extend pressure on commodity prices, as Gold and Silver dropped last week.

Crude Oil West Texas July 2016


 
Key technical levels to watch:

  • Strong resistance at the upper end of the channel
  • RSI coming off from the overbought zone
  • MACD forming negative divergence

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