London Forex Report: FOMC Fail To Fuel Buck Bulls

London Forex Report: FOMC Fail To Fuel Buck Bulls

London Forex Report: July’s FOMC meeting minutes provide little indication of the timing of the next rate hike as members remained divided over whether to raise interest rates soon. Rates was unchanged in July and minutes stated that near term risks have diminished, leaving doors ajar for a hike this year if economic data continued to point to a resilient US economy. On labor market conditions, most committee members “saw relatively low risk that a further gradual strengthening of the labor market would generate an unwanted increase in inflationary pressures,” but they still prefer to “defer another increase until they were more confident that inflation was moving closer to 2% on a sustained basis”. Some fed officials raised concerns on Brexit as it “creates uncertainty about medium to longer run outlook for foreign economies that could affect economic and financial conditions in the United States”. Market’s expectation after the release of the minutes was mostly unchanged, with participants putting 50- 50 odds of a hike this year. USD Index dipped 0.08% to 94.71 after sliding post-FOMC minutes that provided no real boost to rate hike outlook.

FX Majors: EUR strengthened against the USD after minutes of the Federal Reserve’s policy meeting showed officials were split last month on whether the jobs market would continue to strengthen and saw little risk of a marked pickup in inflation. “The commission is not going to engage in any preparatory discussions with the UK at this time before any notification is made to the European Council notifying the activation of Article 50”, Natasha Bertaud, spokeswoman for the European Commission told reporters in Brussels. GBP UK’s unemployment rate remained at decade low in June despite Brexit jitters. Companies added 172k employees to workforce in the three months through June (three months through May: +176k) and unemployment rate stayed pat at 4.9%. The number of people claiming unemployment benefits tumbled 8.6k, leaving the claimant count rate unchanged at 2.2% in July. Job market data suggests that Britain’s vote to leave the Euro zone may not have significant impact on the job market in the short run although impact on the longer run remains a lingering concern. JPY Japan’s trade surplus narrowed to 513.5 billion yen in July (June: 693.1 billion) amid the steeper decline in exports. On annual terms, exports dropped for 10 straight months and indicate that it may continue to drag overall GDP growth in the third quarter.

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

Technical: Offers at symmetry swing objective at 1.1330 stall advance, as this resistance is removed bulls target 1.1430 next. Near term support is sited at 1.1230, only a failure below 1.11 would concern the near term bullish bias
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Sharp reversal ahead of the anticipated retest of the 1.2770 lows appears to be a short squeeze, only a close over 1.31 alerts to the potential of more meaningful correction, with a test of pivotal 1.3165 as the next upside objective.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: As 101.50 caps profit taking expect further downside pressure with 97.30 the next downside objective. Only a move over 102.80 will ease near term bearish bias.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: The breach of 113 opens 110.80 as the next downside objective. Near term resistance is sited at 114
Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX: GOLD pared earlier losses and edged higher for the second day on the back of the lack of clear signs for the Fed next move in the latest July FOMC minutes. The gold price increased by US$2.49 to US$1,348.73 on Wednesday (17 Aug). Oil report of a bigger than expected fall in US crude inventories helped reflate crude oil prices on Wednesday (17 Aug). The US EIA reported the US crude inventories fell by 2.5 million barrles (versus the expected decline of 500,000) while gasoline inventories also fell by 2.7 million barrels, although there was yet another uptick in the latest week of US oil production. AUD has rallied two cents since the Reserve Bank of Australia (RBA) cut interest rates to record lows early this month but failed to break through the level of 0.7750. CAD is on track to register a two-week winning streak against the USD, after the release of minutes from the Federal Reserve’s July meeting and oil prices turned higher.

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

Technical: The close over .77 shifts attention to broader range resistance sited at .7830, near term support is now sited at .7640.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: With the breach of 1.2843, attention shifts to 1.2718 symmetry swing support. Near term resistance is sited at 1.30.

Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Bulls target 1391 as the next upside objective, near term support is sited at 1330. Below 1300 opens 1270.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: While 44.22 supports expect a test of symmetry swing resistance sited at 48.13, only below 43.60 concerns the near term bullish bias.
Retail Sentiment: Bearish
Trading Take-away: Long

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