London Forex Report: Dovish Read On US Data

London Forex Report: Dovish Read On US Data

London Forex Report: US nonfarm job gains that came in better than expected was overshadowed by weaker wage growth, suggesting pockets of weakness despite continuous recovery in the US job market. A total of 227k of jobs were added in January, with gains from the private sector offsetting decline in the public sector. Nonetheless, other underlying details were not as strong. Net two months revision was down 39k, gain in average hourly earnings moderated to 0.1% from a downward revised 0.2% MOM, and the jobless rate inched up a notch to 4.8% even though it is caused by a 0.2ppt increase in the participation rate to 62.9%. ISM services in the US pulled back to 56.5 in January even though the Markit print was more upbeat showing an uptick to 55.6. USD slipped against 70% of it’s G10 peers as slowing gains in US wages dampened positives from better than expected job increases. The Dollar Index fell into losses post US data but managed to bounce off intraday lows to settle 0.08% higher at 99.86.

FX Majors: EUR Eurozone’s services PMI was unchanged at 53.7 in January and retail sales extended its decline in December (-0.30% MOM) after a revised 0.60% MOM drop in November. GBP UK Markit/CIPS services PMI fell from 56.2 in December to 54.5 in January. JPY BOJ intervened in markets The Japanese Central Bank disappointed, and then surprised bond markets at the end of last week. The BOJ initially offered limited expansion of debt purchases and the market sold off, with 10 year JGB yields rising up to 0.15%. The BOJ responded by offering to buy unlimited amounts of 5-10 year debt with their bids at yields lower than the market rate. The 10 year yield promptly retreated to 0.1%.

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

Technical: Near term support sited at 1.0670 maintains bullish bias and sets 1.0873 as the next upside objective, only a close back below 1.0580 resets near term bearish bias.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Equidistant swing objective at 1.2679 encourages profit taking ahead of 1.2772. Near term support sited at 1.2435 as this survives bullish momentum persists. A close below 1.24 opens 1.2236 symmetry swing support.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 112 achieved profit taking pullback ensues, a breach here will open 110.70 symmetry swing support underpinned by 109.90 50% retracement of the move from August 2016 lows. Near term resistance is sited at 114.50 only over 116.20 reasserts upside targets.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Symmetry swing support at 120.40 defended sets sights on, 124.42 symmetry swing resistance. Near term resistance is sited at 122.76. A failure below 120.40 opens 118.70
Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX: GOLD erased earlier losses as the dollar came under pressure from a US payrolls report that flagged up weak wage growth last month, weakening the case for near-term interest rate hikes. OIL gave up much of their gains after jumping on Friday as the United States imposed sanctions on some Iranian individuals and entities, days after the White House put Tehran “on notice” over a ballistic missile test. AUD The Reserve Bank of Australia (RBA) rate decision is on Tuesday. At the last RBA policy meeting in December, the RBA hinted that it is done easing for now as it balances the pros and cons of easing. That said, the overall tone of this coming statement will be very important. In particular, markets will be looking at the policy bias and whether the RBA will leave open the possibility of cutting interest rates further. Within the statement, comments on the AUD will also be eyed. CAD totally reliant on the broader USD tone post-payrolls, flows and technical factors. Oil remains at the top end of its 2017 range as tensions over possible sanctions on Iran from the US have escalated in recent days.

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

Technical: The next upside objective is sited at .7750. Near term support is sited at symmetry swing level .7600 ahead of pivotal .7449
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1.3150 becomes resistance while this level contains upside reactions bears target a sustained breach of 1.30 targeting a move to 1.2820, over 1.32 opens a move back to test 1.3370.

Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: As 1206 supports intraday 1220 symmetry swing retest developing with the potential for a double top, a break below 1206 opens a move back to 1195. Over 1225 opens 1240.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Rejection from equality objective area at 55.30, a close below symmetry support at 50.68 confirms a medium term high and opens a retest of pivotal 49.00. Near term resistance is sited at 54.50.
Retail Sentiment: Bearish
Trading Take-away: Long

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