London Forex Report: Commodity FX Correcting

London Forex Report: Commodity FX Correcting

London Forex Report: The Fed continued to take centre stage as more policy makers expressed their support for a near term rate hike, prompting markets, including us, to become increasingly convinced that the Fed will raise rates again at the 14-15-March FOMC meeting. Joining his fellow colleagues, Fed Powell said yesterday that “the case for a rate increase for March has come together” after recent data showed inflation and employment are close to the Fed’s mandate. Market is now pricing in a 90% chance of a March Fed rate hike, from below 50% a week ago. Upcoming Fed Chair Yellen and Fed Fischer’s speeches will be closely watched

FX Majors: EUR consumer prices increased 2.00% YoY in February after an increase of 1.80% YoY in January. Tracking higher price acceleration, producers’ prices grew 3.50% YoY in January (December: +1.60% YoY). On the other hand, unemployment rate was unchanged at 9.60% YoY in January. GBP UK Markit/CIPS construction PMI was a tad higher at 52.5 in February (January: 52.2) as resilient economic backdrop despite Brexit talks and stabilization on client confidence since EU referendum continued to drive growth. JPY Japan’s household spending declined 1.20% YoY in January, contracting at a quicker pace than the 0.30% YoY fall in December. Separately, inflationary pressure picked up to rise 0.40% YoY in January, quickening from the 0.30% YoY in December but still nowhere near the central bank’s goal of 2.00% YoY. On the other hand, jobless rate was down by 0.10% at 3.00% in January.

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

Technical: Expected retest of 1.0521 base plays out interim double bottom retested, 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 1.25 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 dropped the most since mid-December, by 1.23% to 1,234.25, pressured by a strong dollar and increasing prospects of a March rate hike. OIL still weighed by record U.S crude inventories and also technical factors now that WTI has settled below the 50-day moving average for the first time since late November. AUD Economic indicators from Australia were turning increasingly downbeat in February as growth driven by the non-mining sector wasn’t making up for the slowdown in the mining sector. AiG performance of services index tumbled from 54.5 in January to 49.0 in February, marking its first contraction in five months. CAD Bank of Canada held rates at 0.5% and kept its overall dovish tone, although the statement was shorter than normal. While the BOC did acknowledge that growth, employment, and inflation were better than expected, they were prepared to “look through” the recent increases citing the rebounds as temporary (inflation) or at high risk due to continued labour market slack, trade policy uncertainty, and weak non-energy exports.

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

Technical: Breach of primary support pivot at .7600 suggest potential for broader correction to play out especially as .7610 caps near term upside, .7500 becomes the next downside objective
Retail Sentiment: Bullish
Trading Take-away: Short

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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