London Forex Report: Corporate Tax Cut Delay Dents Dollar

London Forex Report: Corporate Tax Cut Delay Dents Dollar

London Forex Report: US president Trump’s visit to South Korea saw him calling North Korea to “come to the table” to negotiate, but said the US stands ready “if need be” with South Korea. As Trump heads to Beijing, anticipate further rhetoric on North Korea and trade, even as back home the Senate Republican leaders are reportedly considering a delay in the implementation of the tax bill of up to a year to save US$100b. Meanwhile, RBA left its policy rate steady at a record low 1.5% but sounded more upbeat on the investment picture. Separately, Saudi Arabia said it only froze bank accounts of individuals and not the companies owned amid global investor concerns over the crackdown.

NORTH AMERICA Markets continue to watch for developments in the tax reform and President Trump’s trip in Asia. A Washington Post report in early Asia suggests Senate Republican leaders considering a one year delay in corporate tax cut though it could face resistance from President Trump who wants to implement immediately once passed. The Senate Finance Committee plans to release a tax bill as early as Thursday.

EUROPE Eurozone’s retail sector growth eased in October, according to PMI gauge that fell to 51.1 from 52.3 in September. Meanwhile, spending continues to firm up in the region, rising 3.7% YoY in September after 2.3% increase in the month prior. Sales were lifted by broad-based increase across major categories save pharma & medical goods, most notably in textiles, clothing & footwear (September: +8.5% vs August: +2.7%) and electrical goods & furniture (September: +5.2% vs Aug: +3.4%). Halifax survey of house prices in the UK revealed slower growth in October, registering a 0.3% MoM increase from the 0.8% gain previously, indicating slowdown remains the theme in the overheated housing market.

ASIA U.S. President Trump will be in China Wednesday-Thursday, with market eyeing the potential announcement of more commercial deals. On the agenda for Trump’s China visit will be the bilateral trade deficit and North Korea issues. China’s foreign-exchange reserves posted a ninth straight monthly increase to US$3.109 tn in October. The increase of US$0.7bn in October was lower than market’s forecast of US$1.5bn

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

Technical: 1-3 Day View –The close below 1.17 suggests second leg of broader correction underway targeting 1.1471 near term expect 1.1630/60 to act as resistance, only a move north of 1.1750 reasserts upside objectives.

1-3 Week View – 1.2130 the next upside objective. Weekly close below 1.16 neutralises bullish objectives opening a test of 1.14
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – Retest of 1.3330 sees a sharp reversal and price now testing broader range support at 1.3030 a failure here opens 1.2750 as the next downside objective, near term resistance is sited at 1.3150/70

1-3 Week View – 1.3263 achieved as this acts as support 1.3836 is the next upside objective only a close back below 1.30 would jeopardise the bullish advance.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – 114.50 achieved as pivotal support at 113.80/60 caps corrective downside expect a test of 115, only a closing breach of 113 concerns the bullish bias

1-3 Week View – As 108.40 equidistant swing support survives on a weekly closing basis bulls will look for a grind higher to retest 115, a close below 108 negates the broader bullish theme and opens the psychological 100 magnet
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – The breach of range support at 132 concerns the broader bullish bias, however the failure to secure the second daily close sub 132 prompts a return to the middle of the 134.50 /1.3150 range

1-3 Week View – 136.10 is the principle upside objective as this area caps the current advance expect a retest of 131.50 to set a base for the next leg higher, a closing breach of 131 concerns the bullish basis.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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