London Forex Report: Dollar Declines Halted

London Forex Report: Dollar Declines Halted

The broad-based retreat in global equities reaffirmed increased market volatility, as sentiments swing between shift in the outlook of macro fundamentals and event risks. Yesterday’s release of initial jobless claims that saw a 4K decline to 264K, which is still below the 300K threshold for a year now, somewhat alleviated concerns over the health of the job market. Meanwhile, the quickest gain in wholesale inventories in 10 months in April also bolstered expectations of better growth outlook ahead as businesses boost spending on machinery and increase inventories of farm products USD strengthened, rebounding from a 3-day decline as refuge demand responded to sliding equities and commodities. The USD Index wiped out losses of the last 3 days to close 0.39% higher at 93.95

FX Majors: EUR As the dollar rebounded against other major currencies due to the upbeat employment data indicated by unexpected drop in domestic jobless claims, the euro slumped from 1.1400 to its current level of 1.1298 GBP The cost of hedging against swings in sterling’s exchange rate over the next month soared to its highest in more than seven years on Thursday since worries about Brexit drove the currency down. As there is so much uncertainty over the result and consequence of Brexit, economic data should have less impact than usual. JPY Japan’s machine order dropped 25.0% YOY in May (April: -26.3% YOY) amid extended sluggishness in overseas and domestic demand. Businesses continued to cut capital spending due to gloomy economic outlook. On a second report, producers prices dropped at an unchanged pace of 4.2% YOY in May.
EURUSD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bullish
Technical: Testing symmetry swing resistance sited at 1.140 Below 1.12 suggests false upside break and resets attention on 1.1065
Retail Sentiment: Bullish
Trading Take-away: Short

GBPUSD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bullish
Technical: Volatility pervades GBP trading, avoid positioning mid pre Brexit referendum range of 1.4770/1.4330, play the edges with tight stops
Retail Sentiment: Bullish
Trading Take-away: Sidelines

USDJPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Technical: Downside ratchet now targeting a retest of 105.55 lows with the potential for a daily double bottom pattern to develop. Failure at 105 opens 103 as the next downside objective. 108.50 is the near term pivotal resistance
Retail Sentiment: Bullish
Trading Take-away: Short

EURJPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Technical: While 122.60 contains upside reactions expect a grind lower to breach last weeks lows enroute to a weekly equality objective at 117.36. A close over 122.70 suggests a broader recovery targeting 124.30 as the next upside objective.
Retail Sentiment: Bullish
Trading Take-away: Sidelines

Commodities FX: GOLD price extended its gains for the second straight day despite the broadly stronger US dollar on Thursday as gold investors are betting that the Fed will hold off rate hikes despite the batch on positive US data yesterday. The gold price increased by US$10.40 to US$1270.20 on Thursday Oil prices eased lower of Thursday after hitting new 2016 highs for three straight sessions more likely due to the rebound in the US dollar although the declining US crude inventories and Nigerian potentially lengthy supply disruptions remain supportive of oil prices AUD Reserve Bank of Australia (RBA) wrong-footed doves with the omission of a clear easing bias in its monthly policy review statement CAD weakened against the US dollar as oil prices moved lower and risk appetite diminished.
AUDUSD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish
Technical: Testing symmetry and structure resistance sited at .7480/.7500 where fresh selling is expected to emerge. Failure at .7210 suggest early reversal with bears targeting .7140 lows and stops below
Retail Sentiment: Neutral
Trading Take-away: Neutral

USDCAD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Technical: Close below 1.2740 negates near term bullish pressure and suggests a grind back to test bids at 1.2459 and stops below. A close today over 1.2760 suggest a false break of support.
Retail Sentiment: Bullish
Trading Take-away: Short

XAUUSD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bullish
Technical: Close over 1250 opens pivotal 1280 resistance 1230 support. Failure at 1190 opens 1140/50 symmetry targets.
Retail Sentiment: Neutral
Trading Take-away: Neutral

USOIL
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bullish
Technical: AB=CD swing objective at 51.07 achieved, only a close below 46 threatens bullish bias.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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