London Forex Report: Dollar Holding Up Under Data Weight

London Forex Report: Dollar Holding Up Under Data Weight

London Forex Report: Global risk appetite remained resilient, with the S&P500 climbing above 2,500 for the first time Friday, as traders shrugged off soft US economic data releases and yet another North Korean missile test (note US Secretary of State Tillerson said “we seek a peaceful solution to this”). It will be a busy week ahead with key events like FOMC (starting tomorrow and likely culminating in an announcement to begin unwinding its balance sheet on Wednesday) and the BOJ (also likely to remain accommodative at this juncture, especially amid market speculation of a snap election as early as next month). Polls also suggest the New Zealand election on 23 September could be a close fight between Labour’s Jacinda Ardern and PM Bill English, while German Chancellor Merkel is also entering the final days of campaigning ahead of the 24 September elections against challenger Martin Schulz.

NORTH AMERICA US industrial production fell 0.9% MoM in August, taking a turn from the 0.4% increase previously and bypassing the expected slowdown to 0.1%. The contraction was broad-based amid declines in subsectors. University of Michigan gauge on consumer sentiment fell to 95.3 in September estimate from 96.8, reflecting softer confidence. US retail sales dipped 0.2% MoM in August after rising 0.3% in July, weighed down contraction in sales of automobiles. Discounting the volatile auto figures, sales slowed to 0.2% from 0.5% previously. The New York Fed measure of manufacturing activity in the district dipped to 24.4 in Sept, down from 25.2, indicating slower growth in the sector.

EUROPE In the Eurozone, trade surplus narrowed to €18.6b in July, down from €21.7b previously, driven by decline of 1.1% MoM in exports and 0.7% increase in imports. Rightmove survey showed that house prices in the UK grew at the slowest pace since Feb 2012, rising just 1.1% YoY in Sept from 3.1% in August. In London, house prices fell for the first time in three months, sliding 3.2% from 1.6% in August.

ASIA Chatter about a snap elections have not materially shifted the markets as yet and the continued improvement in global risk appetite levels may continue to undermine the JPY. Note that Japan will celebrate Respect-for-the-Aged Day holiday today. Bank of Japan (BOJ) with a monetary policy decision on Thursday but this is expected to be a nonevent (no change to current policy stance) and there is no update to their economic projections too.

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.

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): Bearish

Technical: 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

1-3 Day View – 132.50 achieved enroute to 133.60, as 131.80/60 supports only below 130 concerns the bullish bias opening a move back to 129 base
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 – 132.50 achieved enroute to 133.60, as 131.80/60 supports only below 130 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

Posted in Forex Analysis, London Forex Report, tagged with on