New York Forex Report: Trump Trade Tiring?

New York Forex Report: Trump Trade Tiring?

New York Forex Report: USD continues to trade lethargically and is narrowly mixed against its G10 counter-parts on the session so far. Although it is another light day in regards to the data calendar, GBP has so far stabilised, with PM May, post her interview at the weekend, trying to smooth away the thought process around a “hard Brexit” saying it is a term she doesn’t recognise. Chinese data overnight is likely to be the focus of conversation, particularly the strength of the PPI data, hot on the heels of the recent run of strong PMI data in the major economies.European stocks are mixed, as are developed market bonds; US Treasury bonds are under-performing slightly, giving the USD a very modest yield advantage. Lumpy option expiries this week especially in EUR and the President-elect’s looming press conference (Wednesday) may be curtailing trade while traders might be starting to wonder if the impact of the election on US financial markets is starting to tire as US equity markets struggle to advance more obviously. The only data we get today is out of the US. Part of the reason why US economic growth picked up in the second half of 2016 was the turn in the inventory cycle. The first half of 2016 saw cutbacks in production as manufacturers in particular reduced stock levels with a resulting drag on GDP. In contrast after about mid-year producers seem to have been more comfortable with their stock levels. That is likely to be reflected in a rise in today’s data for December wholesale inventories and Friday’s wider measure for the business sector as the whole. The US Small Business Optimism Index for December was released earlier this morning and showed a huge 7.4 gain in the month, the largest single month rise since the 1980s, as businesses turned significantly more constructive on the outlook for the economy and sales prospects. JOLTs job opening survey, which is favoured by Fed Chair Yellen, will likely show the labour market remains tight.

FX Majors: EUR Sentix investor confidence increased from 10.0 in December to 18.2 in January. Economic optimism rose to the highest level since August 2015 as economic momentum gathered steam. In tandem, labour market continued to tighten as unemployment rate remained at its lowest level in more than seven years at 9.80% in November. GBP Report from Halifax showed that house prices in the UK climbed 6.50% YOY in the three months through December. After a 6.00% YOY climb in November, prices accelerated at its quickest pace in four months. On a cautious note, the report added that “slower economic growth, pressure on employment and a squeeze on spending power, together with affordability constraints, are expected to reduce housing demand.” JPY Tokyo returns from coming of age public holiday overnight, lower China funding pressure has given some relief to USDJPY.

EURUSD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish

Technical: Close over 1.0550 opens symmetry swing resistance sited at 1.0640 before pivotal 1.0720. Anticipate sellers to emerge at these levels, as this band of resistance caps upside bears target retest of 1.0338 lows. Near term support sited at 1.05 failure here suggests early reversal to trend.
Retail Sentiment: Bearish
Trading Take-away: Long

GBPUSD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish

Technical: As anticipated short squeeze subsides and 1.2198 eroded overnight, a close below here opens 1.21, near term resistance sited at 1.23. A close over 1.23 suggests false downside break an opens move back to test 1.2430
Retail Sentiment: Bullish
Trading Take-away: Short

USDJPY
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bullish

Technical: Testing pivotal 114.70 trend support, resistance sited at 117 eroded, a second close over this level resets bulls attention on 120 upside objective. Key upside hurdle is 117.61 symmetry swing resistance.
Retail Sentiment: Neutral
Trading Take-away: Neutral

EURJPY
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bullish

Technical: Buyers on the front foot while 121.60 supports on a closing basis, 124.42 symmetry swing resistance remains the upside objective, anticipate sellers to emerge and price to stall on the initial test of this level for a retests of 123.80 from above.
Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX: GOLD price benefited from a broadly weaker US dollar and also safe haven demand on UK Brexit concerns. This gold price increased by US$7.80 to close at US$1,181.20 on Monday. OIL prices were probably the most volatile among the various asset classes on Monday (9 Jan) as the US and global crude oil prices clocked in the biggest price declines in a month on various reasons. Early declines were triggered by worries of increase in US crude oil production from more rigs in US. That was followed by concerns about Iraqi compliance with OPEC production cuts even though Kuwaiti Oil Minister Essam Al-Marzouk assured the markets on Monday that OPEC and its partners will fulfill their implementation of a deal to cut output. The US Nymex WTI finished the session much lower by US$2.20 to close at US$51.79. AUD Australia trade balance registered a surplus for the first time since March 2014 in November amid the 8.40% surge in exports. Trade surplus position was AUD retail sales growth softened to 0.20% MOM in November (October: +0.50% MOM), posting signs that household consumption may pull the brakes on growth in the final quarter of 2016. On a brighter note, underlying details indicated robust online sales in November. CAD upbeat Bank of Canada’s Business Outlook Survey, OIS have softened, moderating the extent of anticipated BoC tightening over the next 12 months.

AUDUSD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish

Technical: While .7370 contains upside reactions on a closing basis .7092 AB=CD is the next downside objective. Near term support is sited at .7270, a failure here suggests early trend resumption.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

USDCAD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bullish

Technical: 1.3620 becomes the next upside objective. The close below 1.3250 concerns the bullish bias, a second failure here opens symmetry swing support sited at 1.3090. Near term resistance is sited at 1.3290.
Retail Sentiment: Bullish
Trading Take-away: Sidelines

XAUUSD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish

Technical: 1190 pivotal for the near term bearish thesis to remain in tact, a close above 1190 opens 1220 symmetry swing trend resistance. Near tern support is sited at 1150, failure here suggests trend resumption and opens 1113 symmetry swing objective.
Retail Sentiment: Neutral
Trading Take-away: Neutral

USOIL
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bullish

Technical: Sharp rejection from equality objective area at 55.30, a close below symmetry support at 50.68 confirms a medium term high and opens a retest of pivotal 49.00. Current consolidation pattern is constructive suggesting a retest of recent cycle highs.
Retail Sentiment: Bearish
Trading Take-away: Long