London Forex Report: BoJ Stands Pat, Trump In Focus

London Forex Report: BoJ Stands Pat, Trump In Focus

London Forex Report: Household income rose 0.30% MOM in December, picking up from an unimpressive growth of +0.10% MOM in November. Rising income, low interest rates and solid job gains spurred spending which advanced at a quicker pace of 0.50% MOM last month (November: +0.20% MOM). In addition, housing and manufacturing metrics were also showing signs of improvement. USD was pressured on Monday after US President Donald Trump’s orders to curb immigration from certain countries, triggering uncertainty and protests across the world. The Dollar Index did hit high of 101.02 late Monday, before easing to 100.43.

FX Majors:

EUR Euro zone’s economic confidence index climbed to 107.9 in January (December: 107.8), its highest level since March 2011. Sentiments were broadly upbeat in the 19 nation bloc as economic momentum gathered steam in 2H. In addition, business climate indicator and consumer confidence index were unchanged at 0.77 and -4.9 in January. GBP The BOE releases its policy decision and Quarterly Inflation report Thursday while parliament may start the Article 50 debate this week. No policy change is expected from the BOE, but the inflation report is expected to be upgraded as the UK data since the Brexit vote has continued to surprise to the upside. It will be interesting to see if the BOE will try to highlight some of the potential longer term concerns to the economy as Parliamentary debate over Article 50 is being debated. JPY While keeping policy guidance unchanged, the Bank of Japan (BoJ) turned a bit more optimistic on growth, but remained concerned on the inflation outlook, all which were widely expected. The Bank kept short-term policy rate at -0.1% and target for the 10y JGB at 0%. Taking more focus was the BoJ’s economic outlook, where the GDP forecast was raised to 1.5% in FY2017, in line with earlier comments from BoJ governor Haruhiko Kuroda.

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

Technical: Test of pivotal larger 1.0788 symmetry resistance is the next upside objective. Anticipated sellers/profit taking to emerge at the initial test of this level. Near term support sited at 1.0670, on a close back below 1.0580 resets near term bearish bias.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Equidistant swing objective at 1.2679 encourages profit taking ahead of 1.2772. Near term support sited at 1.2435 as this survives bullish momentum persists. A close below 1.24 opens 1.2236 symmetry swing support.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Broader corrective phase to test 112 is now underway, a breach here will open 110.70 symmetry swing support underpinned by 109.90 50% retracement of the move from August 2016 lows. Near term resistance is sited at 116.10 only over 116.20 reasserts upside.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Symmetry swing support at 120.40 defended sets sights on, 124.42 symmetry swing resistance. Near term resistance is sited at 122.76. A failure below 120.40 opens 118.70
Retail Sentiment: Bullish
Trading Take-away: Short

Commodities FX: GOLD steadied on Monday as political uncertainty created by U.S. President Donald Trump’s move to ban people from seven Muslim-majority countries, and by elections in Europe, supported prices. OIL prices were dragged lower as market participants grew increasingly concerned that rising production in the US would offset output cuts pledged by OPEC and other producers. AUD Australia’s NAB business confidence, business conditions and private sector credit readings were all better than expected early Tuesday, which has helped to keep the Australian Dollar supported following a Monday session which saw the currency moderately lower on the back of broad based risk off flow. CAD has become decoupled from its usual drivers of late, as oil prices and yield spreads have meant less than political rhetoric.With the Fed later in the week and BOC Governor Poloz due to speak this afternoon, risks to CAD lay ahead this week.

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

Technical: Bullish attention on range highs towards .7800. The next upside objective is equidistant swing sited at .7631 Near term support is sited at symmetry swing level .7490 ahead of pivotal .7440
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Close below 1.3140 reestablishes a more bearish tone in erratic trade, 1.3150 now becomes resistance while this level contains upside reactions bears target a test of 1.30
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1220 symmetry swing trend resistance test underway anticipated profit taking/sellers emerged on the initial test of this level. Near tern support is sited at 1190, failure here opens 1153, near term resistance is sited at 1203 symmetry swing.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Rejection from equality objective area at 55.30, a close below symmetry support at 50.68 confirms a medium term high and opens a retest of pivotal 49.00. Near term resistance is sited at 54.50.
Retail Sentiment: Bullish
Trading Take-away: Short

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