London Forex Report: 2017 Trading Underway

London Forex Report: 2017 Trading Underway

London Forex Report: US Chicago purchasing manager index dropped more than expected by 3 points to 54.6 in December. The index reflected slower new orders and production last month after surging to a near two year high in November. Despite the slight slowdown in the Midwest region, manufacturing indicators from other region continued to point to broad based recovery in the sector in 4Q. USD climbed against all G10s in the opening trade of 2017 while the Dollar Index rose 0.56% to 102.78 on the back of renewed weakness in European majors.

FX Majors: EUR European elections, ECB QE and Italian banking woes all weigh on the single currency.Monday’s better than expected Eurozone manufacturing PMIs have largely been shrugged off and the market will now look ahead to German employment data. GBP the prospects for the pound is still not optimistic, Brexit concerns continue to weigh there is still a huge uncertainty regarding British Prime Minister May triggering Article 50 this March, near term domestic data on manufacturing and construction spending will be under scrutiny. JPY Domestic market on public holiday. The Bank of Japan announced last Friday that bond purchases will persists in line with the current plan to buy 110 billion yen for 25 years and longer in early January.

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

Technical: Near term bears have the ball below 1.0520 targeting a retest of 1.0350, a close over 1.050 opens symmetry swing resistance sited at 1.0720
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Near term sellers still in charge while below 1.23 targeting a retest of 1.2198 ahead of 1.21, only over 1.2440 suggest some selling relief.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Bulls have the ball as 116.10 supports looking for a challenge of psychological 120 level, a break below 116 opens pivotal 114.70
Retail Sentiment: Bearish
Trading Take-away: Long

EURJPY
Outlook: Short Term (1-3 Days): Bullish – 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
Retail Sentiment: Bearish
Trading Take-away: Long

Commodities FX: GOLD price ended lower on the last trading session of 2016 despite the weaker US dollar during the session. Notwithstanding the Friday losses, gold price did snap a 3-year losing streak with a full-year gain of 8.5% in 2016 although the gains came in mostly in first half of the year and the precious metal ended 2016 under tremendous selling pressure especially after the US elections and its outlook for 2017 remains highly uncertain amidst China’s worries and the renewed vigour of US under Trump. OIL ended mixed on the last trading session of 2016 on Friday (30 Dec) but that hardly mattered as the commodity saw a very volatile year and ended on top as the US Nymex WTI finished the year higher by about 45% to close at US$53.72 (although the highest close in 2016 was US$54.06 on 28 Dec). AUD Australia’s AiG performance of manufacturing index surged to 55.4 in December (November: 54.2), hitting a five month high thanks to the increase in the production sub-index. On a diverging trend, Vietnam’s Nikkei manufacturing PMI fell from 54.0 in November to 52.4 in December. CAD Canadian Dollar upside should be limited as the Fed policy divergence theme is ultimately expected to trump the other drivers.

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

Technical: While .7300 contains upside reactions .7092 AB=CD is the next downside objective.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: 1.3620 becomes the next upside objective. Only a close below 1.3250 concerns the bullish bias
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: As 1165 stems the upside correction bears target 1113. Over 11.65 on a closing basis opens 1190
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: As 52.50 supports bulls target a test of 55.30 as the next upside objective, below 51.80 opens a retest of pivotal 49.00.
Retail Sentiment: Bearish
Trading Take-away: Long

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