London Forex Report: Brainard Adds To Hawkish Rhetoric

London Forex Report: Brainard Adds To Hawkish Rhetoric

London Forex Report: Post Trump Tuesday, markets were quick in shifting its focus back onto Fed rate hike outlook. Closely tracking other Fed officials, Fed Brainard also expressed his support for an interest rate hike soon, “assuming continued progress” in economic conditions. US data releases were largely positive with the exception of slower growth in personal spending, most probably as rising inflation dampened consumer real purchasing power. It was all about manufacturing prints on the data front, which reaffirmed continued expansion in manufacturing activities globally in February. US ISM manufacturing index climbed to a 30- month high at 57.7 and a similar gauge by PMI remained decent despite the slight pullback to 54.2 in February. USD strengthened against 90% of its G10 counterparts, after pulling away in Asian and European trades amid improving rate hike expectations. The Dollar Index pared gains after US data releases but nonetheless remained firm to close 0.65% higher at 101.78

FX Majors: EUR In the Eurozone, PMI manufacturing index rose to a near six year high. GBP Theresa May’s government suffered a setback in the progress of the Brexit bill after the House of Lords voted 358 to 256 to make an amendment to the bill. It now requires the government to publish proposals on how to protect EU citizens currently living in Britain within three months of triggering Article 50. JPY widening in the 2Y U.S.-Japan spread toward 155bpts at levels last seen in 2008, indicate that the central bank policy divergence is driving the weakening in the JPY.

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

Technical: Expected retest of 1.0521 base plays out forming interim double bottom, a closing breach opens a move to 1.0450 next, only over 1.0650 arrests near term bearish bias.

Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Price has broken recent range support as 1.24 caps upside corrections a test of 1.22 becomes the next downside objective, only over 1.2470 suggest false downside break and return to recent range
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Near term resistance sited at 113.80 removed and now becomes near term support, a close over 114.50 reasserts upside targets primarily at 115.50
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Near term resistance sited at 120.50 under pressure, only a close over 121.50 stems near term selling pressure and resets focus on upside objective. Near term support is sited at 119.60
Retail Sentiment: Bearish
Trading Take-away: Long

Commodities FX: GOLD fell to a one week low of 1,237.01 by early NY session as the dollar surged but pared losses subsequently to finish little changed at 1,249.69. OIL settled 0.3% lower to $53.82 per barrel after the weekly EIA report showed U.S. crude stockpiles rose 1.5 million barrels last week to touch a record high at 520.2 million barrels. AUD Australia’s trade surplus dropped to AUD 1.3 billion in January (December: AUD 3.3 billion) due to the 2.90% drop in exports coupled with the 3.70% increase in imports. On the other hand, building approvals climbed 1.80% MoM in January which reversed the 1.20% MoM contraction in December. CAD Bank of Canada (BOC) kept its interest rates on hold at 0.50% as widely expected. The central bank cited “significant uncertainties” weighing on its outlook with exports continuing to face competitiveness challenges.

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

Technical: The next upside objective is sited at .7750 as price continues to consolidate at elevated levels. Near term support is sited at symmetry swing level .7600 ahead of pivotal .7449
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Breach of 1.3210 opens anticipated move back to test 1.3370 as 1.32 supports bulls target the symmetry swing objective sited at 1.3480.Price action remains erratic as price attempts to base above pivotal 1.30.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: As 1225 acts as support bulls target symmetry swing resistance sited at 1299, only a close below 1215 concerns near term bullish bias.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

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