New York Forex Report: Oil Prices Drag Commodity Currencies Lower

Retail sales to clear path for fed liftoff next week; turbulence in the global financial markets prior to the September meeting has settled somewhat and tentatively economic conditions in the US suggest that the central bank is on track to tighten monetary policy in the two day meeting ending on Wednesday. The continued slide in Oil prices is weighing heavily on commodity currencies which are led lower by the risk-off tone dampening markets as Equities finish the week heavily lower.

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

Fundamental: EUR remained supported over the European morning as German CPI data printed in line with expectation at 0.4% YoY and 0.3% YoY harmonised. Key data focus for the US session is US retail sales at 1330 GMT expected to improve to 0.2% from 0.1%, followed by University of Michigan Consumer Confidence at 1500 GMT.

Technical: While 1.0850 caps intraday downside corrections expect a grind higher to test 1.1050

Interbank Flows: Bids 1.0850 stops below. Offers 1.10 Stops above.
Retail Sentiment: Neutral
Trading Take-away: Sidelines

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

Fundamental: GBP was little changed in light of BoE’s decision to keep interest rates on hold at 0.5%. As the central bank raised concerns over the recovery of economic growth and inflation next year, markets expected a further delay in the timing of a first BoE rate hike. GBPUSD fell to 1.5147 from 1.5178 before the publication of the minutes and rate decision. Rate remains range-bound over the European morning ahead of key US data later today.

Technical:  While 1.5050 caps intraday downside attempts expect renewed upside pressure to retest offers at 1.52

Interbank Flows: Bids 1.5050 stops below. Offers 1.52 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Fundamental: USDJPY was sharply lower over the European morning as sliding Oil and equity market prices saw safe-haven demand for the Japanese Yen.

Technical: While 122.50 caps intraday upside attempts expect a retest of bids at 121.00, a breach of 122.50 opens 123 offers next

Interbank Flows: Bids 121 stops below. Offers 123 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Fundamental: A dominant Yen saw mild EUR strength ignored with EURJPY weaker over the early European session today.

Technical:  While 132.70 supports intraday downside expect a test of 134.80 offers a failure at 132.50 opens a retest of bids at 131..

Interbank Flows: Bids 132.50 stops below. Offers 134.50 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Fundamental: The Aussie remains under pressure today as commodity currencies take a beating amidst a risk-off tone. AUD unemployment declined further to 5.8% yesterday but is doing little to support sentiment currently.

Technical: Testing offers into .72. Whilst .72 holds, expect a rebound into .7260 area. Below 72 expect a sharp decline to mid 71. area first.

Interbank Flows: Bids .7200 stops below. Offers .7450 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Fundamental: USDCAD broke higher yesterday as Oil prices continues to forge lower ground. Rate currently soft ahead of key US data later today.

Technical: Bulls have the ball while 1.3450 supports intraday downside expect a grind higher to test stops above 1.3600. A close below 1.3389 would ease the near term bullish bias and suggest a correction is underway.

Interbank Flows: Bids 1.34 stops below. Offers 1.36 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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