London Forex Report: FED Sidelined Dollar Slides

London Forex Report: FED Sidelined Dollar Slides

London Forex Report: The Fed stood pat as expected at the FOMC meeting last night as expected. The accompanying FOMC statement indicated that the central bank was more convinced that “inflation will rise to 2.00%”. Economic growth will likely remain moderate but consumer and business sentiments have improved, signalling potential upside bias to future assessment. The focus will now turn to Yellen’s Congressional testimony on 14 and 15 February, which may take on added interest if we see strong upside data surprises in the interim. US data remained upbeat, ADP employment surged more than expected to 246k in January while ISM manufacturing accelerated to its best level in over two years. USD recovered from recent sell-off to beat 70% of its G10 counterparts following firmer US data. The Dollar Index closed 0.13% higher at 99.64, initially jumped post US data but pared gains after FOMC statement indicated a lack of urgency to raise interest rates.

FX Majors: EUR The final Eurozone PMI manufacturing reading for January edged higher to 55.2 from the flash reading of 55.1. This was marginally above expectations and the strongest reading for 69 months. Amongst the core four economies, Germany led the way with a reading of 56.4, whilst Italy lagged at 53.0. Greece’s manufacturing PMI fell to 46.6 in January. GBP The January UK PMI manufacturing index was in line with consensus forecast with a slight decline to 55.9 from 56.1 recorded the previous month as it remained close to 30- month highs. JPY Chief Cabinet Secretary Suga pushed back on Trump’s allegations of devaluation, calling them ‘totally inaccurate’. Suga also stated that he was ‘watching currency market moves with vigilance’ and stated a willingness to ‘take firm action’

EURUSD
Outlook: Short Term (1-3 Days): Bullish – 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): Bullish – 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: Bearish
Trading Take-away: Long

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 prices moved in tandem to the US dollar, rising sharply on the Fed’s announcement, reversing to the downside, then rebounding to test the high established in the minutes after the news hit the wires. OIL prices were little changed on Wednesday by news that weekly US supply data suggested a crude glut may persist despite Russia and other OPEC producers reaffirming their pledge to deliver on supply cuts. AUD Australia’s trade surplus rose to AUD 3.511 billion in December (November: revised to AUD 2.040 billion) thanks to the 5.40% MOM increase in exports. Exports growth overshadowed the 0.70% MOM climb in imports. Separately, building approvals declined 1.20% MOM in December followed a 7.00% MOM increase in November. CAD Gov. Poloz had some dovish undertones in his speech, saying that the Bank is “well aware that the lingering aftermath of the crisis has left the Canadian economy with persistent excess capacity”, and that “a large shock or, perhaps, an accumulation of smaller shocks” can prompt monetary easing. He followed that up by pointing out that the level of the loonie is a headwind to exports and that there should be no expectations that the BOC will follow the Fed’s monetary policy.

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

Technical: Bullish attention on range highs towards .7800. The next upside objective is equidistant swing sited at .7631 Near term support is sited at symmetry swing level .7490 ahead of pivotal .7440
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Close below 1.3140 reestablishes a more bearish tone in erratic trade, 1.3150 now becomes resistance while this level contains upside reactions bears target a test of 1.30
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.
Retail Sentiment: Neutral
Trading Take-away: Neutral

USOIL
Outlook: Short Term (1-3 Days): Neutral – 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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