London Forex Report: Australia GDP Miss, Markets Mull ECB

London Forex Report: Australia GDP Miss, Markets Mull ECB

London Forex Report: Macro flows were mostly positive in the US, indicating firmer consumer confidence as well as improving economic optimism and brisker business demands, all continue to affirm the Fed to act on monetary policy this month. USD rebounded against all G10FX peers following firmer than expected US data as well as returning softness in European majors going into ECB meeting. The USD Index overturned early losses going into US morning before jumping higher to close at 100.49, up 0.4%.

FX Majors: EUR The final print of Eurozone GDP in 3Q came in within expectations on quarterly basis. The region grew 0.3% QOQ, steadying at the same pace in 2Q. Household consumption grew 0.3% in 3Q, picking up from 0.2% in the previous quarter while expansion in government expenditure also accelerated, rising 0.5% from 0.4% in 2Q. However, both were offset by much slower 0.2% growth in investment, sliding from a firm 1.2% in 2Q and bypassing the expected slowdown to 0.4%. Annually, the economy grew 1.7%, also steadying from 2Q. GBP The Bank of England got some good news as the current account deficit isn’t as massive as everyone thought. Just days after the central bank cited it as one of the key risks to UK financial stability, the Office for National Statistics said the balance of payments deficit is almost 3 billion pounds narrower than originally measured. JPY Japan’s foreign reserves dropped $1.22 trillion at the end of November and the government did not conduct any intervention between 28 October and 28 November, the Ministry of Finance said today. Japanese manufacturers’ confidence climbed for a fourth straight month to a 16-month high in December and the service sector’s mood also rose, according to a Reuters poll showed, with a weaker yen brightening prospects for Japanese exporters..

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

Technical: Break of 1.0740 targets medium term 1.0850 this is a key upside hurdle which will need to be captured on a closing basis to stabilise the pair and sets corrective sites on the symmetry swing resistance at 1.0950.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: The close over 1.2670 suggests further upside momentum to target the key structural resistance sited at 1.28, near term support is sited at 1.26 a failure below 1.25 reopens symmetry swing objective at 1.2270.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: 115.59 is the next upside objective representing the 61.8% retracement of the 2015/16 decline, near term support is sited at the symmetry swing level of 112.27 A breach of 111.07 would suggest a broader correction to the advance opening a move back to test symmetry swing support at 109.60
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 121.82 achieved as 119 supports scope for a test of offers above 123.50 as the next upside objective ahead of the pivotal symmetry swing resistance sited at 124.42. A break back below 119 opens 118.45 opens ahead of pivotal bullish trend support at 116.20
Retail Sentiment: Bearish
Trading Take-away: Long

Commodities FX: GOLD inched up as bargain-hunters moved in after prices touched their lowest in 10 months the session before, but a possible US rate hike as early as next week capped gains. OIL prices eased as crude output rose in almost every major export region despite plans by OPEC and Russia to cut production and triggered fears that a fuel glut witnessed for the past two years could be set to continue deep into 2017, according to a Reuters report. AUD Australia’s GDP contracted in 3Q, falling 0.5% QOQ after growing 0.6% previously. This was worse than market estimates of a soft 0.1% decline, and could worse further in 4Q, reigniting market outlook of an interest rate cut going forward. Contraction in Australia’s construction sector slowed in Nov as the AiG index rose to 46.6 from 45.9 in October. CAD weakened slightly against the USD as oil fell for the first time in a week and domestic trade figures showed a disappointing drop in export volumes. The loonie gained recently as oil surged after a deal among producers to limit output but slack in the domestic economy and weak exports look still weigh on the currency. The Bank of Canada is widely expected to hold interest rates at 0.50% today

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

Technical: .7092 AB=CD remains the downside objective. Near term resistance sited at .7440 has been eroded the correction should now challenge pivotal 7530/50 as this levels contains the upside reaction there is potential for resumption of downside pressure.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Price rotating lower set to test pivotal 1.3250 a failure here concerns the bullish bias and opens a retest of channel support sited at 1.3050. A hold of key 1.3250 sets base for 1.3650 attempt
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Technical: As equidistant swing objective sited at 1202 contains upside reactions bears target 1149 as the next downside objective. A close over 1220 suggest broader correction to the recent decline.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: The breach of 49.20 provided the anticipated quick test of offers above 50.00 and critically the equidistant swing objective sited at 51.79 as this level halts advance there remains an opportunity for a move to the downside targeting symmetry swing objective at 39.78. Over 52.40 opens 55.000 as the next upside objective
Retail Sentiment: Bearish
Trading Take-away: Long

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