London Forex Report: Crude Squeeze Supports Commodity FX

London Forex Report: Crude Squeeze Supports Commodity FX

London Forex Report: Reports showing quicker gain in US inflation shored up expectations the Fed is on track to raise rates this year. Consumer prices increased 0.2% MOM after flat growth in July, as a result of higher housing and healthcare costs. On annual terms, headline consumer prices rose 1.1% (July was +0.8%). A separate report also showed consumer sentiments are holding up well in September, reflecting optimism over the health of the US economy. USD advanced, boosted by firmer US inflation figures that raised expectations on upcoming Fed rate hike. The USD Index surged post-US data to 96.10 at closing, climbing 0.86% for the day

FX Majors: EUR was hit hard following the upbeat US CPI data, but remained trading in the narrow range above 1.1120 against the USD. Markets will look to ECB Draghi’s speech this Thursday for hints on the EUR and the central bank’s future policy direction. Also, Eurozone will publish a raft of PMI figures this Friday. GBP BoE members voted to leave interest rates and its bond-buying programme unchanged at its rate decision meeting last Thursday, but hinted further rate cuts in November. GBPUSD dropped below 1.32 after BoE announced its decision and signaled another rate cut is still on the table by the end of the year. UK retail sales in August fell 0.2% MoM, beating market forecast. Data showed that spending by consumers since Brexit has been largely on track. JPY BoJ will announce its monetary policy meeting result this Wednesday, in which markets expect a BoJ re-assessment of its policy effectiveness. Low volatility in USDJPY is expected as Japanese markets will be closed today for Respect-for-the-Aged Day.

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

Technical: The breach below 1.1190 opens 1.1120, a failure of bid support here opens a retest of the base at 1.1050, near term resistance is sited at 1.12.

Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Failure below 1.3130 suggests early reversal to downtrend. As 1.3150 rejects corrective advances bears target 1.2870 as the next downside objective.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Offers ahead of 103.50 stall advance A close over 103 opens 106 equidistant swing objective. A break of 101.90 opens 101.20 next.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: As 113.80 supports potential for another leg higher to target equidistant swing objective at 117.87. Failure below 113.60 opens move back to 112
Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX: GOLD slid to a two-week of $1306.27 before settling down 0.3% at $1310.35, weighed by better rate hike prospects in the U.S after a better showing of consumer prices. Oil slumped 2% to close at $43.03 a barrel after sources cited Iran had raised crude outputs to almost pre-sanction levels of more than 2 million barrels per day in August. For the week, WTI has dropped over 6% from $45.88 the prior week. AUD traded softer and ended last week at 0.7488 after a bullish run on Thursday but managed to limit losses compared to other commodity currencies. Attentions will turn to RBA’s monetary policy meeting minutes due this Tuesday, in which details of Governor Stevens’ last meeting will be revealed. CAD Iran’s crude oil exports were reported to have increased by 15% MoM in August to reach 2.11 million barrels per day, but brent futures prices seemed to have found strong support at $45.6. With oil prices finding strong support, the Canadian dollar managed to cap its losses against the USD despite the upbeat US CPI data. Markets will pay attention to Canada’s retail sales and inflation data this Friday.

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

Technical: The next downside objective is symmetry swing support sited at .7412. Near term resistance is sited at .7560/80.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: 1.32 upside objective achieved. As 1.3030 supports 1.3372 is the equidistant AB=CD corrective objective, only below 1.2960 threatens near term bullish bias
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1301 AB=CD equidistant swing support has provided anticipated base. Near term resistance now at 1357, the break below 1320 opens move back to retest 1301 base. Only below 1300 concerns near term bullish bias
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Equidistant swing resistance sited at 47.36 as this level rejected the corrective advance 41.81 becomes the downside objective over 47.50 targets retest of 48.90 potential double top.
Retail Sentiment: Bullish
Trading Take-away: Short

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