London Forex Report: Deflated Dollar Awaits Dot Plot

London Forex Report: Deflated Dollar Awaits Dot Plot

London Forex Report: Global risk appetite may take a backseat this morning as US president Trump came out with guns blazing in his debut address to the United Nations, saying that “if forced to defend itself or its allies, we will have no choice but to totally destroy North Korea” and “Rocket Man is on a suicide mission for himself and for his regime”. Elsewhere, news of a 7.2 magnitude earthquake struck near Mexico City. Otherwise, it was a relatively quiet session for financial markets yesterday, with Wall Street and UST bond yields higher but the USD weaker, as investors are awaiting the FOMC decision.

NORTH AMERICA US housing market data was mixed as housing starts declined on a monthly basis even as building permits rebounded by the same measure. Number of new housing construction that began construction in August dipped 0.8% MoM to 1.18 million, and though improved from a 2.2% decline previously, it was lower than an expected increase of 1.7%. Building permits rose 5.7% MoM and rebounded from a 3.5% fall in July. While generally considered as a leading indicator of future demand, there is no assurance that it gets translated into firmer housing starts and sales.

EUROPE Save for construction output, data out of the Eurozone improved. The ECB’s current account surplus widened to €25.1b in July from €22.8b in June. ZEW’s survey of economic expectations returned more positive results as reading rose to 31.7 in Sept, up from 29.3 previously. Meanwhile, construction output grew slower by 3.4% YoY in July, easing from 4.3% previously.

ASIA Japan’s trade surplus narrowed in August, sliding to ¥113.6b from ¥421.7b. Even as exports growth surged 18.1% YoY to ¥ 6278, imports kept pace with a 15.2% increase to ¥ 6164. Minutes of the previous RBA meeting revealed that board members remain optimistic on employment growth, which was opined to be broad-based across the states, and further improvement is likely to continue based on forward indicators. Members also noted that macroeconomic data over the last month “had, on balance been positive and consistent with gradual pick-up in growth as forecast”.

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

Technical: 1-3 Day View – As 1.1990 acts as resistance expect a test of 1.1845 only below 1.1810 concerns the broader bullish bias, a close over 1.20 resets focus on upside objectives towards 1.2130

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: Bearish
Trading Take-away: Sidelines

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

Technical: 1-3 Day View – 1.3545 achieved as 1.3450 supports bulls target 1.3660 next, a breach of 13130 concerns the bullish bias opening 1.2910.

1-3 Week View – 1.3263 achieved as this acts as support 1.3836 is the next upside objective only a close back below 1.2770 would jeopardise the bullish advance.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – Close over 111 stabilises the pair near term support is sited at 110.70 as this area attracts bids 113 becomes the next upside objective, below 109 opens retest of 108.30

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: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – 133.60 achieved , as 133 supports anticipate a test of 136.10 only below 131 concerns the bullish bias opening a move back to 129 base

1-3 Week View – The weekly close above 118.50 arrested the immediate downside risk, 129.44 upside objective achieves as 128 supports bulls look for a move to test 133.36 as the broader upside objective.
Retail Sentiment: Bearish
Trading Take-away: Long

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