London Forex Report: China Data Disappoints…Again

London Forex Report: China Data Disappoints…Again

London Forex Report: Positive data bag from the US was clouded by weak first tier data from China all disappointed and showed earlier signs of stabilization were short lived. Retail sales and industrial production growth moderated to 10.1% and 6.0% YoY respectively in April, while fixed asset investment tapered off to 10.5% in April YTD. This dataset posted evidence of inevitable slowdown in the China economy that points to the need of further policy-induce growth measures ahead. , reaffirming continued subdued outlook in the global economy. US retail sales rose the most since March 2015 by a whopping 1.3% MoM in April, spurred by higher car sales and added to signs consumers are willing to spend again. The surge in consumer sentiments to its highest since June 2015 also signalled consumers are more optimistic over economic outlook ahead. USD strengthened amid extended risk-off in the FX space and equities. The USD Index rallied post release of positive US data but pared some gains to close only 0.49% higher at 94.61.

FX Majors: EUR Eurozone growth accelerated to 0.5% QOQ in 1Q (4Q: +0.3%) driven by quicker growth in the region’s three biggest economies: Germany, France and Italy, suggesting that ECB’s stimulus program was boosting economic activities and drag from immigration crisis was petering out. GBP dropped to a three-week low against the USD last Friday, registering a second straight week of losses after the International Monetary Fund joined BoE to warn risks of Brexit. Carney, the chairman of Bank of England denied on Sunday that it is inappropriate for BoE to warn the short-run costs of leaving the European Union, after criticism from “Out” campaigners. The comments from Carney have cooled down the Brexit sentiment while more warnings from BoE are expected ahead of the referendum due in June. JPY was firmer against other major currencies on Monday after disappointing economic data out of China shored up demand for the safe-haven currency. Bank of Japan Governor Haruhiko Kuroda said on Friday the central bank will act “decisively” to achieve its 2% inflation target, stressing that it still has “ample” policy options available if it were to expand stimulus again.

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

Technical: Prior support at 1.1350 now becomes resistance while this area contains upside reactions, expect a test of 1.1240 as interim support as bears now target symmetry support at 1.1065, only over 1.1450 eases immediate downside bias.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: While 1.44 reject upside reactions expect a test of 1.4316 ahead of the broader symmetry swing support sited at 1.4261, only over 1.4550 eases immediate bearish bias.
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Technical: As 108.20 supports intraday expect a retest of offers at prior highs en route to symmetry swing resistance at 109.80 where trend selling should re-emerge, over 111 eases immediate bearish bias
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: Bears now target weekly symmetry objective at 120.60. Intraday resistance at 124.65 only a close above 126.80 eases immediate downside pressure.
Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX: GOLD pared early gains of 1% to finish up 0.77% at $1,273.45 an ounce, weighed by a strong dollar. For the week, the yellow metal was still down 1.2%, the biggest weekly decline since the week ended 25-March OIL A Baker Hughes report showed an expected drop in U.S. oil rigs count, falling by 10 last week to 310, compared to 660 a year ago. In a monthly report citing secondary sources, OPEC is said to have pumped 32.44 million barrels per day (bpd) in April, 188,000 bpd higher than March. This is the highest since at least 2008, according to a Reuters review of past OPEC reports. AUD skidded to an 11-week trough after another slide in commodities smashed risk sentiment, Aussie dropped lower after another fall in prices of iron ore, Australia’s top export earner. The mineral touched its lowest in two months last week, down nearly 3.8%. CAD weakened against the USD as oil fell and stronger-than-expected US figures supported the USD. Better news from Alberta last week, where some production restarted at oil sands facilities following a wildfire, was offset by stronger-than-expected US retail sales figures and hawkish comments by US Federal Reserve officials.

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

Technical: Below .7240 establishes a bearish medium term stance. While this level survives on a closing basis AUD has a window to correct the recent pullback to test symmetry resistance sited at .7580.
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Technical: 1.30 upside objective achieved expect a correction to retest 1.2740/60 from above as this level should now act as support for further upside corrective action.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Gold has tested and held the 1260 symmetry swing level, 1283 is now resistance for a further leg of corrective price action to set up a test of the pivotal 1240. Over 1285 suggests early upside reversal targeting a retest of 1303 next
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: Oil breaches prior cycle highs at 46.76 with 47.78 the next upside objective achieved as 46.70 supports 50.00 becomes the material upside objective, only a close below 43.00 threatens bullish bias.
Retail Sentiment: Bearish
Trading Take-away: Long

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