London Forex Report: Crude Crumble, Buck Buoyed

London Forex Report: Crude Crumble, Buck Buoyed

London Forex Report: OPEC and non-OPEC members decided to extend oil production cut for another nine months to March 2018. Global oil prices however fell about 4% on the news, probably as markets were expecting deeper cuts even though the nine-month extension had been well broadcasted recently. WTI and Brent crude oil retreated to $48.7 and $51.5 per barrel respectively.

USD Sustained strength in the US labor market despite modest growth at the start of the year has made it easier for policy makers to continue with gradual pace of monetary policy tightening this year. Initial jobless claims stood at 232k last week and average in the past month had been the lowest seen since 1973, painting a picture of firm labor market amid optimism in the outlook of the economy. Separately, Kansas City fed manufacturing activity index ticked up from 7 in April to 8 in May.

EUR Data from IHS Markit showed that firms are seeing business expand at its strongest pace in six years, giving rise to expectations for a strong quarter for the Eurozone economy. The German IFO index rose further to 114.6 vs expectation 113.1. This is a record high since the index was started in 1991 after reunification. Undoubtedly the news is good for the Eurozone outlook and investors expect the Euro to remain supported.

GBP Rising inflation and sluggish wage gains were taking a toll on consumer spending, exacerbating downside pressure on UK’s economic growth since Brexit talks started. After expanding 0.70% QoQ in the final quarter of 2016, the economy expanded only 0.20% QoQ in 1Q amid stalling consumer spending and declining export growth.

JPY Gains across Asian equity indices, with notable rallies in China, are lending a risk-on tone to markets. The broader tone remains the greatest near-term risk for JPY in the wake of China’s credit rating downgrade and concerns relating to the Fed’s balance sheet normalisation.

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

Technical: 1-3 Day View – As 1.1160 supports bulls target interim equidistant swing objective of 1.1291 en-route to a test of broader symmetry swing objective at 114.30. Only below 1.10 concerns near term bullish bias.

1-3 Week View – While 1.0830 supports 114.30 becomes the primary upside objective. A weekly close over 1.14 sets upside focus on 1.1876. Weekly close below 1.08 neutralises bullish objectives
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – Psychological 1.30 magnet achieved as 1.2880 supports interim symmetry swing objectives at 1.3060 & 1.3118 are targeted next, only below 1.2750 concerns near term bullish bias.

1-3 Week View – The weekly closing breach of 1.2880 opens 1.30 as the next upside objective ahead of the broader symmetry swing objective sited at 1.3238.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – 115 becomes the next upside objective only back below 110.20 would concern the near term bullish bias, near term 112.30 is the next upside hurdle.

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): Bullish – Medium Term (1-3 Weeks): Neutral

Technical: 1-3 Day View – Close over 124.40 opens 129.44, near term support is sited at 122.50, near term upside objective of 126.84 equidistant swing objective, only below 121.30 concerns near term bullish bias.

1-3 Week View – The weekly close above 118.50 arrested the immediate downside risk, resetting focus on pivotal 124.40 a weekly breach of this level opens 129.44 as the broader upside objective
Retail Sentiment: Bearish
Trading Take-away: Long

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