London Forex Report: Durable Good(s) Omen For US GDP

London Forex Report: Durable Good(s) Omen For US GDP

London Forex Report: Macro flow was positive yesterday, further reinforcing views that global economic recovery is firmly on track. US data suggest labour market continues to improve steadily while expansions in economic activities across different Fed districts were somewhat uneven. Headline durable goods orders were strong but core orders fell and fortunately the negative impact was mitigated by upward revision in previous gain, lending support to 2Q GDP growth due out later today

USD US durable goods orders rebounded more than expected to increase 6.5% MoM in June, marking its best gain in three years spurred by new orders in aircraft. Excluding this one-off aircraft orders, core orders fell 0.1% MOM pointing to still sluggish business investment, even though May’s gain was revised significantly higher from 0.2% to 0.7% MoM, somewhat cushioning the impact and suggests investment will continue to lend support to 2Q GDP. In separate releases, data pointed to sustained recovery in the labour market and uneven economic activities across different Fed districts. Initial jobless claims climbed more than expected by 10k to 244k in the week ended 22-July, but remaining below the 300k mark for a good two and a half years now while continuing claims slipped to 1964k. Chicago Fed national activity index rebounded albeit at a less than expected pace to 0.13 in June led by production but Kansas City Fed showed slower expansion in its manufacturing activities in the month of July as slower production and fall in shipment offset increases in new orders.

EUR The ECB released the money and credit aggregate for June. Growth in M3 edged up a tenth to 5.0% YoY. On the credit side, after adjusting for sales and securitisation, household borrowing a steady 2.6% YoY rose whilst growth in nonfinancial corporate credit dipped to 2.6% YoY.

GBP PM May has seen another departure from her own team (chief political strategist), reflecting her weakened position following the election. UK’s Home Secretary Rudd says UK will apply its own immigration rules after Brexit.

JPY slew of Japanese data was also positive by and large, reaffirming moderate uptick and sustained inflation in the Japanese economy. Jobless rate improved more than expected to 2.8% in June, matching its lowest since 1994 while participation rate rose to 61.0%. The number of employed rose 120k during the month while the number of unemployed fell 160k. Overall household spending rebounded more than expected by 2.3% YoY in June, its first positive gain in 16 months, driven by spending on housing, transport, medical care and education. In line with this, retail trade maintained a 2.1% YoY growth in June, as sales at departmental store and supermarkets all rebounded MOM. CPI sustained a 0.4% YoY increase in June supported by energy prices, while core CPI ex-food and energy was stagnant for the third straight month, adding to signs of sluggish price pressure that would continue to keep CPI way below the BOJ’s target in the foreseeable future.

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

Technical: 1-3 Day View – Expected retest of offers and stops above the cycle high plays out overnight as 1.1650 supports near term bulls target 1.1860/80 intraday hurdle sited at 1.1715 , only a daily close below 1.1480 concerns the near term bullish bias setting a top for a test of 1.1370

1-3 Week View – While 1.0830 supports the weekly close over 1.1450 sets upside focus on 1.1876. Weekly close below 1.08 neutralises bullish objectives.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – Upside breach of 1.3080 resets focus on pivotal 1.3238, a daily closing breach of 1.2810 concerns the medium term bullish bias. Near term support is sited at 1.3040/20 upside hurdle 1.3125

1-3 Week View – The weekly close above 1.3045 targets the broader symmetry swing objective sited at 1.3238 only a close back below 1.28 would jeopardise the bullish advance
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – Pull back extends and threatens reversal with the breach of 112.10 delaying the bullish target at 115.50 and opening a move back towards 109, 112.40 is the immediate upside hurdle with 110.60 the near term support.

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 magnett
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – 128 provides platform for a move through 130.70/80 en-route to 133.36, below 129.40/20 resets 130/128 range trade

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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