London Forex Report: Alabama Surprise Stalls Risk Rally

London Forex Report: Alabama Surprise Stalls Risk Rally

London Forex Report: In the US overnight the closely watched Alabama Senate election has been called in favour of Democratic candidate Doug Jones, this shock result reduces Republican control in Senate to 1 aside from pre-positioning ahead of CPI/FOMC this seems to be weighing on USD and S&P 500 futures overnight.

NORTH AMERICA US data surprised on the upside. PPI quickened more than expected to 3.1% YoY in Nov (Oct: +2.8% YoY), its highest in nearly six years, as a result of higher energy prices. Ex-energy and food, PPI sustained a 2.4% YoY increase, reflecting firm underlying prices in the system. Another release showed small businesses turned more optimistic about future outlook. The NFIB small business optimism index rose more than expected to 107.5 in November, touching its highest level in three and a half decades as business owners turned more upbeat about business conditions and sales prospects in the next six months. Continuous improvement in US data shall pave the way for continuous policy normalisation by the Fed. All eyes will be on tonight’s quarterly projection and policy rhetoric for more clues on the pace and timing of further rate increases next year

EUROPE Eurozone ZEW expectations pulled back a little to 29.0 in December, but remained elevated as investors remained upbeat over the growth outlook of the euro region as recent data flow continues to suggest growth in the region is picking up steam. UK price reports signalled inflationary pressures continued to pick up in November, CPI ticked a notch higher to its 5-year high at 3.1% YoY in a surprised move while PPI rose 0.2ppt to 3.0% YoY as expected. RPI pulled back a tad to 3.9% YoY but remained elevated at close to a six year high, taking the hit from a weaker sterling post-Brexit vote.

ASIA Australia business confidence and conditions pulled back rather sharply in 3Q, pointing to a still soft business landscape and sentiments that is expected to translate into softer economic growth ahead. The confidence index slipped from 9 to 6 in 3Q while the current condition index plunged from 21 to 12 during the quarter.

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

Technical: 1-3 Day View – 1.1720 reversal encourages another run at 1.20, failure back below 1.17 opens 1.16 and then pivotal 1.1560

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: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – Near term support sited at 1.3290 as this survives expect a 1.34 test ahead of prior cycle highs 1.3545, below 1.3230 opens a retest of 1.3060

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: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – Near term resistance moves to 113.30/60, a breach of this level opens 114.70, below 11.73 opens 110.85 retest.

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: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – Retest of 134 range resistance persists 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 , rotation within the broader range persists breach of 132.20 sets a retest of 131.50, a closing breach of 131 concerns the bullish consolidation bias
Retail Sentiment: Bearish
Trading Take-away: Long

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