London Forex Report: Brainard To Decide Dollar Direction

London Forex Report: Brainard To Decide Dollar Direction

London Forex Report: The debate on low nominal inflation and low neutral rates versus robust labour markets and elevated asset values continues to rage on in the US. The President of the Federal Reserve Bank of Boston, Eric Rosengren, suggested on Friday that a case could be made for the central bank to raise its main interest rate sooner rather than later. There is one more speech from Governor Brainard today, which could move the dial either way. But given the split in views expressed so far, it seems the centralists will have the final say for September. Given what has been said so far it seems like it could go either way so brace for a little more volatility. The USD rallied on Friday as rates markets sold off. The speech from the Fed’s Lael Brainard today will be key for the USD

FX Majors: EUR posted its first gain in three weeks against the USD as market participants reassessed the monetary-policy paths of central banks in the US and Europe. The European Central Bank President Mario Draghi damped expectations of a fresh round of stimulus on last Thursday, driving Europe’s shared currency higher. GBP ended its three straight week of gains against the USD. Nevertheless, over the past four weeks, the currency has made gains of almost 3%. A report showed the trade deficit narrowing as exports to the European Union surged the most in almost six years. Trade figures suggested that exporters may find the benefits of the sharp decline in the pound. The deficit narrowed to 11.8 billion pounds with exports rising 3.4% and imports falling 0.9%. JPY speculation about further rate cuts in Japan weakened the JPY Friday. The currency pair scored a fresh daily high at 103.05 and then pulled back to end the week at 102.68. Prime Minister Shinzo Abe’s economic adviser, Etsuro Honda, said the Bank of Japan should add easing at its policy meeting to be held on 20-21 September, the Nikkei newspaper reported.

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

Technical: As 1.1230 supports 1.1366 is the next upside target with a further equidistant symmetry swing objective sited at 1.1530. Below 1.1120 suggest early reversal.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: As 1.3270 supports 1.3470 is the next upside objective. Failure below 1.3185 suggests early reversal to downtrend.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Breach of 102.80 support opens a move back to test base at 100.90, expect 102.80 to act as resistance near term. A close over 103 opens 106 equidistant swing objective
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: As 113.80 supports potential for another leg higher to target equidistant swing objective at 117.87. Failure below 113.60 opens move back to 112.
Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX: GOLD prices came under heavy selling pressure as losses in equity markets and the stronger USD weighed on investor sentiment. Oil continues to oscillate on speculation between a production freeze or voluntary output caps ahead of the informal producers meeting later this month. AUD Australia’s trade deficits narrowed to AUD printed one-week lows following hawkish speech from Fed’s member Rosenberg, posting its third daily loss in a row after being rejected from the 0.7730 region seen last Wednesday. CAD fell against the greenback even with a better-than-expected gain for August jobs in Canada released on Friday.

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

Technical: Breach of near term support is sited at .7610 opens a retest of symmetry swing support sited at .7490. Only a close below .7500 would be a threaten a more significant bearish reversal.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Initial test of 1.2830 bids garners support, near term resistance sited at 1.2970 removed next upside objective is 1.32. 1.2960 becomes near term support.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1301 AB=CD equidistant swing support has provided anticipated base. Near term resistance now at 1357, below 1320 opens move back 1301 base. Only below 1300 concerns near term bullish bias.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Equidistant swing resistance sited at 47.36 as this level rejected the corrective advance 41.38 becomes the downside objective over 47.50 targets retest of 48.90 potential double top.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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