London Forex Report: Dollar Prints 11 Month Highs

London Forex Report: Dollar Prints 11 Month Highs

London Forex Report: USD Index hit 11-month highs against a basket of major currencies yesterday as traders bet fiscal and trade policies under a Donald Trump administration would stoke inflation. The USD Index hit an intraday high of 100.20 yesterday, which was its highest since December 2015. Chinese President Xi Jinping told US President-elect Donald Trump that cooperation was the only choice for relations between the world’s two largest economies, with Trump saying the two had established a “clear sense of mutual respect”. For clues on further USD prospects, markets will be confronted with a swath of Fed speakers today including Rosengren (1300 GMT), Tarullo (1405 GMT), Fischer (1830 GMT) and Kaplan (1830 GMT).

FX Majors: EUR Eurozone’s industrial output fell 0.80% MOM in September amid drag from sluggish production in Germany, France, Italy and Spain. On a more positive note, September’s figure combined with August and July signalled that the sector will contribute to overall GDP growth in 3Q after a 0.30% contraction in 2Q. Output rose a solid 1.80% MOM after a revision in August. GBP After enjoying a week of advance against the USD dollar last week, sterling witnessed some profit-taking move yesterday and dropped to intraday low at 1.2439 before crawling back to current level at 1.25. UK October’s CPI is due this morning, in which a 1.1% YoY growth is expected. An upbeat CPI data may result in the sterling resuming its advance. JPY A report released by the Ministry of Economy, Trade and Industry affirmed that Japan’s industrial output growth slowed to 1.50% YOY (August: +4.50% YOY), dragged by the decline in factory production while output in the mining sector remained modest in September.

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

Technical: Bears have the ball a breach of 1.07 will shift bearish attention towards 1.05. Near term resistance is sited at 1.0850, medium term 1.1030 is a key upside hurdle which will need to be captured on a closing basis to stabilise the pair
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: The break back below 1.25 challenges the corrective advance and opens a move to retest last weeks lows at 1.2350, over 1.26 opens a retest of last weeks highs at 1.2671.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Equidistant swing resistance sited at 108.03 achieved, prior 106.83 now support as bulls focus on 1.10 as the next upside objective. only below 105.50 concerns bulls
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 116.20 primary upside objective achieved. A top side expansion through 117 opens 121 equidistant swing objective. A close below 114.60 questions bullish thesis
Retail Sentiment: Bearish
Trading Take-away: Long

Commodities FX: GOLD price extended its decline on Monday, falling to a 5- month low again pressured by the stronger US dollar & higher US interest rate expectations. This was the 6th straight session of decline and the gold price decreased by US$2.60 to US$1,221.70. OIL prices continued to be chipped away on Monday (14 Nov) despite a brief boost from US presidential elections as it remains plagued by on-going concerns about persistent over-supply and increasing scepticism that OPEC can coordinate an effective production cut. The US Nymex WTI futures decreased by US$0.09 to US$43.32. AUD The latest RBA minutes posted signs that outlook on the economy had improved. The central bank now see less downside risks from “steadying of economic conditions in China” and “higher commodity prices and expectations that growth in the major advanced economies would exceed potential growth suggested that the risks to global inflation outlook were more balanced than they had been for some time”. However, concerns on the conditions in the housing market remained as price growth picked up noticeably in Sydney and Melbourne. That will put an immediate rate cut out of the picture for now as downside risks to growth diminished while risks around the inflation forecast were broadly balanced. CAD continues to take its hits despite some broad based risk on trade post Trump, with the Loonie clearly more focused on US yield differentials and falling OIL. OIL prices continue to slump and this only adds to the downside pressure on the commodity currency. Looking ahead, we get Canada existing home sales.

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

Technical: Continues to rotates in the contracting range with .7730 capping upside and .7500 containing downside reactions, a breach of the lower end of the range opens .7412 symmetry support. Through .7750 opens .7830 on the upside.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: 1.3573 achieved expect some profit taking to retest 1.3430 support, as this area contains the pullback 1.3620 becomes the next upside objective. Only a close below 1.3250 concerns the bullish bias
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Bears target equidistant swing objective sited at 1203, near term resistance is sited at 1241. Only a close over 1280 stabilises the decline.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: 42.73 achieved as 45.90 contains upside reactions the next downside objective is the symmetry swing objective at 39.78. Only a close over 47.33 stabilises the decent a eases bearish pressure.
Retail Sentiment: Bullish
Trading Take-away: Short

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