London Forex Report: All Eyes On NFP Print

London Forex Report: All Eyes On NFP Print

London Forex Report: USD slipped in early trade yesterday, outperformed by commodities and other European majors but then rallied on BOE’s decision to ease policy more than expected. The USD Index was lifted by losses in major components GBP, EUR and CHF, climbing 0.2% to 95.56. USD traded in a narrow range aa traders remained cautious ahead of non-farm payrolls report due today, which could offer clues to the timing of the next US rate hike, market consensus according to Reuters suggests a 180k print today.

FX Majors: EUR ECB’s latest macroeconomic projections for the euro area showed that the economy is expected to grow 1.6% in 2016 (previous: 1.4%) and 1.7% in 2017 and 2018. HICP inflation is expected to remain very low in 2016, at 0.2% (previous: 0.1%), strongly dampened by the past fall in energy prices. For 2017, a significant increase in headline inflation to 1.3% is anticipated while declining economic slacks may push up inflation somewhat further to 1.6% in 2018 GBP BoE slashed rates by 25bps to a record low of 0.25% in an unanimous vote while asset purchase targets were raised by £60bn to £435bn with a 6-3 vote. BOE also decided to purchase corporate bonds of up to £10bn at yesterday’s meeting. BOE Governor Carney signaled intention to further cut rates to near zero this year but discounted the case for negative rates at this juncture. While this year’s growth forecast is maintained at 2.0%, next year growth forecast was severely downgraded to just 0.8%, from a previous estimate of 2.3%. JPY BoJ Deputy Governor Kikuo Iwata suggested the central bank had no plans to reduce the amount of assets it buys or change the composition of assets in purchases in a way that would tighten monetary policy. Japan’s foreign reserves fell to $1.26 trillion at the end of July and the Japanese government did not conduct any intervention between 29 June and 27 July, according to the Ministry of Finance said today

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

Technical: Advance stalls at symmetry swing resistance 1.1230, breach of 1.1180 support (which now acts as near term resistance) opens 1.1090 as the next downside objective
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Breach of 1.32 near term support (which now acts as resistance) reaffirms potential triangle trade below 1.3150 opens opens 1.2950 equidistant swing objective.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: The close below 103 will see bears target a retest of cycle lows below 100. Near term resistance is sited at 102
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Below 113 opens 110.80 as the next downside objective. Near term resistance is sited at 113.80
Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX: GOLD moved higher after the BoE cut interest rates for the first time since 2009. Gains were however muted by strength in the dollar after the previous day’s upbeat US jobs data. Oil prices had seesawed before moving decisively higher on short-covering and after a modest stockpile drop at the delivery hub for US crude futures. AUD retail sales climbed less than expected in June amid drag in the food sales category. Retail sales grew 0.1% MOM in June, softer pace than the 0.2% MOM in May as the drop in food sales and restaurants revenue offset the increase in sales of apparel and household goods. CAD continues to trade in tandem with crude. Markets await the US non-farm payrolls report, Canada’s international trade data for June and Canadian employment report for July.

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

Technical: Range resistance at .7676 under pressure with near term support now at .7570, a colse over .77 will shift attention to broader range resistance sited at .7830
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Breach of 1.3060 opens 1.2965 symmetry swing support as this level attracts bids expect a further higher to target equidistant swing target of 1.3380, failure at 1.2950 opens equidistant swing objective sited at 1.2898.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Anticipated breach 1360 sets bulls sites on 1391 as the next upside objective, near term support is sited at 1335. Below 1300 opens 1270.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Breach of bids at 41.87 opens 38.19 as the next downside objective, expect 41.87 prior support to act as resistance, a close over 44.40 is required to ease bearish pressure.
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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