London Forex Report: Bond King Calls An End To The Bond Bull Market

London Forex Report: Bond King Calls An End To The Bond Bull Market

London Forex Report: The US bond sell-off resumed and pushed the 10-year UST bond yield past the 2.55% mark before closing at 2.54% overnight, this prompted Bill Gross (Bond King of Wall St) to declare a “bond bear market confirmed”. This came amid sovereign debt supply concerns and BOJ’s trimming of weekly debt buying which fuelled some market speculation of a tapering. Major global curves were firmer on Tuesday but in aggregate, long-end rate differentials put the greenback on a superior footing as we head into today’s session. Nonetheless, the reaction of global yields yesterday demonstrates the market’s continuing belief that major global central banks may remain poised to tighten monetary conditions in 2018. In the interim, it remains to be seen if the DXY can stage a breakout beyond 92.50 on a sustained basis. In Asia, North and South Korean talks saw agreement that the former would participate in the Olympics in Pyeongchang next month and also to hold another round of talks. News of China’s latest adjustment to its currency-fixing mechanism by removing the counter-cyclical factor weighed on EM FX.

NORTH AMERICA Another session with very little data to digest; NFIB survey revealed that small businesses were less optimistic in Dec, with the index falling to 104.9 from 107.5, likely impacted by continued uncertainty prior to the passing of US tax reform bill.

EUROPE Eurozone’s labour market continues to tighten and improves the chances of upticks in consumer prices that could tilt the ECB towards normalising policy. The unemployment rate dipped from 8.8% in Oct to 8.7% in Nov, the lowest since Jan 2009.

ASIA Nikkei News reported that the US will decide by end of this month whether it will impose trade sanctions in order to remedy its trade deficits with China. It further mentioned that President Trump will make a decision on enacting safeguards on solar panels, while the administration will also consider restrictions on aluminum, steel imports on national security grounds based on Department of Commerce investigation.

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

Technical: 1-3 Day View – 1.1910 the next downside objective,as 1.20 caps intraday corrections markets focus shifts to a test of 1.1846, failure below here concerns the bullish bias and opens a more sustained downside move. Over 1.20 reestablishes upside momentum and and a 1.2130 test

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): Bullish

Technical: 1-3 Day View – Prior cycle highs of 1.3545 achieved as 1.3490 supports expect a test of 1.3657, only below 1.3450 concerns the near term bullish bias

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: Bearish
Trading Take-away: Sidelines

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

Technical: 1-3 Day View – Anticipated 113.30/60 resistance capped the advance a daily close breach of 112 will open a retest of pivotal 110.80/60, near term price action is consolidating in 113.60/112 range.

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): Bearish – Medium Term (1-3 Weeks): Neutral

Technical: 1-3 Day View – 136 the primary upside objective is achieved expect 136.70/137 to cap advance on initial test, pivotal 133.30 support test underway failure here will open a quick retest of 131 consolidation support.

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: Neutral
Trading Take-away: Neutral