London Forex Report: May DUP’ed, Cable Crumbles

London Forex Report: May DUP’ed, Cable Crumbles

London Forex Report: Initial risk appetite seen at the start of this week somewhat fizzled into the New York close last night as US equities reversed gains and closed their Asian open gaps. Further uncertainty over the Brexit talks whipsawed the British pound, as market-watchers’ cheer over UK May’s compromise to allow Northern Ireland to remain in the EU customs union and continue to follow EU regulations, only to see the disagreements from the Democratic Unionist Party that it “will not accept” the deal. US domestic politics remains in focus on Tuesday as the market continue to watch for extension of the US federal spending plan to keep the government open (after 8 Dec), US tax reform developments, and developments on special Counsel Mueller’s Russian investigation probe.

NORTH AMERICA Both US factory orders and durable goods orders fell in Oct by 0.1% and 0.8% MoM respectively in Oct. The only comfort was the declines came in smaller than expected and that the final prints of durable goods orders were more upbeat vs the initial estimate. Orders ex-transportation indeed expanded, pointing to still positive underlying business spending. Factory orders ex-transportation rose 0.8% MoM in Oct (Sep: +1.1% revised) while growth in durable goods orders ex-transportation was revised higher to 0.9% MoM from the first estimate of 0.4% MoM even though it still marked a moderation from the 1.1% MoM gain in Sep.

EUROPE The Eurozone Dec Sentix investor confidence survey eased more than expected to 31.1 (from 34.0 in Nov and well below the forecast of a smaller decline to 33.4). Eurozone Oct PPI increased at 0.4MoM (2.5%YoY) while the September pace of increase was revised lower to 0.5%MoM (2.8%YoY). UK construction PMI for Nov was unexpectedly higher to 53.1 (from 50.8 in Oct and well above the forecast of 51.0)

ASIA Japanese consumers were the most upbeat in four years, with the consumer confidence index ticking up 0.4pt to 44.9 in Nov as expected. Expectations over overall livelihood, income growth, employment and willingness to buy durable goods all improved, offering hopes that consumer spending will continue to support recovery in the Japanese economy going forward.

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

Technical: 1-3 Day View – 1.2092 cycle high vulnerable to retest, near term upside hurdle sited at 1.2010/30, near term support moves to 1.1810, below 1.18 suggests a false upside break an opens a retest of 1.17

1-3 Week View – 1.2130 the next upside objective. Weekly close below 1.16 neutralises bullish objectives opening a test of 1.14
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – 1.3460 achieved, through here opens prior cycle highs at 1.3650 near term support sited at 1.3340 only below 1.3230 concerns bullish bias

1-3 Week View – 1.3263 achieved as this acts as support 1.3836 is the next upside objective only a close back below 1.30 would jeopardise the bullish advance.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: 1-3 Day View – Initial 110.85 test prompts profit taking , near term resistance moves to 113.30, a breach of this level opens 114.70, below 11.45 opens 109.30/10 as the next downside objectives

1-3 Week View – As 108.40 equidistant swing support survives on a weekly closing basis bulls will look for a grind higher to retest 115, a close below 108 negates the broader bullish theme and opens the psychological 100 magnet
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – retest of 134 range resistance underway a closing breach opens 136 as the primary upside objective. Only failure below 130.66 concerns bullish bias and opens pivotal 127.50.

1-3 Week View – 136.10 is the principle upside objective as this area caps the current advance expect a retest of 131.50 to set a base for the next leg higher, a closing breach of 131 concerns the bullish basis.
Retail Sentiment: Bearish
Trading Take-away: Long

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