New York Forex Report: Black Gold Buying

New York Forex Report: Black Gold Buying

New York Forex Report: Renewed worries about geopolitics and an over three percent rally in the price of crude oil, which sent commodity-sensitive currencies soaring against the greenback. Friday’s batch of generally soft U.S. economic reports did little to help the greenback’s cause. The main events for last week- U.S. retail sales and CPI on Friday- both undershot market expectations. And while the figures were not likely weak enough to meaningfully alter the outlook for the Fed to likely raise U.S. borrowing costs two more times this year, the marginal decline in the odds of a June rate hike from about 80% before Friday’s data to about 70% this morning, was enough to keep the greenback on the defensive against most of its major rivals.

The main story in global financial markets this morning is the massive rally in crude oil from an opening price of around $47.85/barrel to about $49.60/barrel, its highest price in over two weeks. The spike in oil this morning came after both Russia and Saudi Arabia pledged to keep agreed-upon cuts in production in place until March 2018. The resulting jump in crude oil sent the broader commodity complex higher and lifted commodity-sensitive currencies like the Canadian dollar to a two-week high and the Australian dollar to its highest level in 10-days against the U.S. currency.

USD After a 0.30% MoM contraction in March, US consumer prices rose 0.20% MoM in April amid the increase in energy (+1.10%) and food prices (+0.20%). Core inflation, on the other hand, only climbed 0.10% last month. On annual basis, CPI ticked up 2.20% YoY in April (March: +2.40% YoY). Other economic indicators were equally upbeat. Retail sales surged 0.40% MoM in April followed a 0.10% MoM increase in March and University of Michigan consumer sentiment index climbed to a four-month high of 97.7 in May (April: 97.0).

EUR German GDP rose less than expected with Eurozone monthly industrial production stats showed contraction in April in stead of expected growth. Annual production also rose by less than expected. Next Wednesday’s Eurozone inflation will be considered in the context of European Central Bank (ECB) interest rate hikes. Annual inflation in April is forecast to rise from 1.5% to 1.9%, which could boost Euro demand. The ECB’s outlook is still cautious, but consistently rising inflation will pressure the central bank to eventually act on interest rates.

GBP disappointing manufacturing data after Bank of England‘s decision to cut 2017 GDP growth. Governor Mark Carney urges policy makers to increase rates faster than anticipated as fears rise on wages growth weakness, consumer slowdown and tough times for UK households.

JPY Japan’s April PPI which accelerated more than expected by +0.2%MoM, 2.1%YoY (from 0.2%MoM, 1.4%YoY, and well beating forecasts of – 0.1%MoM, 1.8%YoY) while March loans growth eased to 3.2%YoY (from 3.4% in Feb).

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

Technical: 1-3 Day View – 1.10 upside attempt has failed the first test as profit taking emerges near term resistance is sited at 1.0950 as this contains expect a test of 1.08 a breach here opens symmetry swing support sited at 1.0684. A close over 1.1030 opens symmetry swing objective at 1.14

1-3 Week View – While 1.10 contains corrective attempts higher focus remains on a retest of 1.03 ahead of 1.0118 extension objective form 2015/17 consolidation. Only over 1.14 sets upside focus on 1.1876
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – Psychological 1.30 magnet remains the upside objective for now with weekly symmetry swing objective at 1.3060 , only below 1.2750 concerns near term bullish bias.

1-3 Week View – The weekly closing breach of 1.2880 opens 1.30 as the next upside objective ahead of symmetry swing objective sited at 1.3238
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – 113 descending trend line test prompts profit taking, as 111.75 supports 115 becomes the next upside objective only back below 110 would concern the near term bullish bias

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

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

Technical: 1-3 Day View – A close over 124.40 opens 129.44, near term support is sited at 122.90, only below 121.30 concerns near term bullish bias

1-3 Week View – The weekly close above 118.50 arrested the immediate downside risk, resetting focus on pivotal 124.40 a weekly breach of this level opens 129.44 as the broader upside objective
Retail Sentiment: Bearish
Trading Take-away: Long

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