London Forex Report: Bremain Support Puts A Bid Under Risk

London Forex Report: Bremain Support Puts A Bid Under Risk

London Forex Report: Global financial markets continue to see relief rally on hopes of a Bremain. Risk-on sentiments further spurred advances in major equities and commodities, vs paring of demand for safety including UST and gold. Although this Thursday referendum is beyond economic fundamental and calls, we see higher likelihood that the UK will remain in the EU. No data from the US and economic releases elsewhere were scant. USD extended its decline on fading Fed policy outlook, USD Index opened lower was mostly sideways through trading, settling 0.63% lower at 93.61.

FX Majors: EUR Construction output in the euro area declined 0.4% YOY in April (March: +0.5% YOY). Despite the increase in civil engineering projects, slowdown in other building projects posted drag on the headline figure. The print diverged from an earlier release of IPI which pointed to broad based increase in production in other sectors. GBP Two days ahead of the EU referendum, market was increasingly jittery amid uncertainty of the outcome of the vote. Separate polls showed leads for both sides. A YouGov poll for the Times newspaper indicating “Leave” at 44 % and “Remain” at 42% while a separate survey by ORB for the Daily Telegraph had “Remain” at 53% and “Leave” at 46%. The referendum continued to take its toll on UK’s economy as businesses scaled back on capital spending and household tightened their purse strings amid prevailing uncertainty. JPY Japan’s exports fell for eight straight months amid a stronger yen, compounding the drag from weak global demand. Trade deficits came in at ¥ 40.7 billion in May (¥823.2 billion surplus in April) as exports tumbled 13.5% MOM. A second report on department store sales was equally disappointing, undermining Abe’s effort to revive household consumption. Sales dropped 5.1% YOY in May, deeper than the 3.8% YOY decline in April. On a separate note, BOJ Governor Kuroda also admitted for the first time over policy failure in reviving inflation to the 2% threshold, reaffirming sign of persistent lackluster demand complicated by sharply weaker global commodity prices and global demand.

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

Technical: Whipsaw price action within broader 1.11/ 1.14 range while Gap through 1.13 maintains range trade with near term bullish bias while price holds above the Asian Gap antic pate a retest and break of yesterdays highs en route to testing offers above 1.1410.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Attentions now shifts tot the top side of the current trading range as offers over 1.47 are filled without much indent to the bullish advance, as 1.46 supports 1.4770 symmetry swing is the next upside objective. Expect volatility in GBP pairs ahead of Thursday’s vote.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: Downside ratchet breaks 105.55 lows the failure at 105 opens 103 as the next downside objective. 105.50 becomes the near term pivotal resistance. Potential daily double bottom pattern developing need a close over 104.85 to entice bulls.
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Technical: Weekly equality objective at 117.36 achieved. 119.30 near term resistance, only over 121.50 eases bearish pressure, while 119.50 caps upside bears target retest of 115.50 lows.
Retail Sentiment: Bullish
Trading Take-away: Sidelines

Commodities FX: GOLD finished 0.7% lower at $1,289.90 an ounce as safe haven demand retreated after the latest poll showed diminished odds of UK leaving the EU. The bullion however managed to find good support at the 1277 area for the fifth day. Oil (July contract) settled 2.9% higher, or $1.39, at $49.37 a barrel as the weaker dollar overnight boosted commodities priced in the U.S currency. AUD An upbeat tone to the Reserve Bank of Australia’s minutes of the June meeting means that the AUD has remained supported overnight. The headlines from the minutes suggested that the RBA is not in a rush to deliver further easing, commenting that June’s pause was ‘consistent with CPI returning to target’ and that the domestic economic data is generally positive. CAD strengthened to a one-week high against the USD as improved risk appetite ahead of the British referendum offset domestic economic figures that shown the second quarter began on weak basis. The value of Canadian wholesale trade rose 0.1% in April, far less than projected while volumes rose by 0.2%.

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

Technical: Gap higher at the Asian open puts pressure on .7450/70 offers as this level contains expect another leg of downside to target .7250. A close over .7510 targets .7640
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: 1.3150 is the next upside objective, the failure 1.28 opens 1.2650 next within broader trading range
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: 1331 is the next upside objective while 1280 now acts as near term support. Failure below 1275 sets up a bearish double top pattern targeting a rotation back to test 1230 support.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: Only a close below 46 threatens medium term bullish bias, as 46.00 survives on a closing basis expect rotation back towards 50.00 where a second wave of selling is likely to emerge.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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