London Forex Report: FOMC On Hold, Attention Shifts To BoE

London Forex Report: FOMC On Hold, Attention Shifts To BoE

London Forex Report: Fed refrained from raising rates ahead of the upcoming US Presidential Election on 8-November, and left the door open for a December rate hike. The Fed commented that “near-term risks to the economic outlook appear roughly balanced”, and that the US economy has gathered traction and job gains remained solid. The Fed also showed increased optimism that inflation is moving closer to the 2.0% target, signalling that policy makers are prepared to raise rates in December should there be no interruptions to the current economic momentum. Odds of a December rate hike rose to 80% post-FOMC. The more optimistic rate outlook came despite disappointment in ADP job gains. The US private companies added only 147K jobs vs consensus for a 165K gain in October, marking its lowest in five months although this was partially offset by an upwardly revised gains of 202K for September. In any case, markets still expect this Friday’s nonfarm payroll to show a steady trajectory in the job market. USD fell against all G10FX peers following softer than expected US data as well as risk aversion ahead of US elections. The USD Index extended its decline through all sessions but bounced slightly higher on improved outlook for Dec rate hike, narrowing losses to 0.31% to 97.39.

FX Majors: EUR German unemployment declined by 13,000, beating the forecast of zero. In addition, manufacturing PMI reports were mixed, as the German reading of 55.0 almost matched the forecast, but the Eurozone reading of 53.5 missed expectations. GBP UK’s house prices climbed 4.60% YOY to £ 205.9k in October, according to report by Nationwide. Affirming that the property market continued to show signs of underlying weakness, house price growth moderated from the 5.30% YOY increase in September and was the slowest pace of increase since January. Construction however, remained on solid footing. October’s reading of construction PMI climbed to 52.6 in October (September: 52.3), the highest in seven months. JPY Japan’s gauge of consumer confidence fell from a three-year high reading of 43.0 in September but settled at a healthy print of 42.3 in October. The employment sub-index led the decline in optimism, indicating that more households were more concerned about job market conditions in the near term.

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

Technical: Expect advance to find offers on initial test of 1.1120/30, expect former 1.1030 resistance to act as support, only over 1.1230 eases bearish bias.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Medium term resistance is sited at 1.2380. Only a close over 1.25 eases bearish pressure. Interim support is sited at 1.2260/80
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: 105 is attained bulls target 107.40 symmetry swing objective next, 103. is near term support subsides below 102.80 eases bullish bias
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Upside attention on 116.20 as the primary upside objective with in in the broader 112-116 range. A tops side expansion through 116 opens 121 equidistant swing objective. Back below 114 opens 112 again.
Retail Sentiment: Bearish
Trading Take-away: Long

Commodities FX: GOLD rose above the key 1,300 mark to as high as 1,308.02, as prices are supported by U.S elections worries and the Fed keeping rates unchanged yet for another month on Wednesday. OIL settled down $1.33, or 2.9%, to $45.34 after EIA said crude inventories rose by a record 14.4 million barrels, vs estimates of 1 million barrels, for the week ended Oct. 28. AUD Australia’s services sector rebounded in October, signaling broader economic recovery last month. Services sector PMI rose to 50.5 in October (September: 48.9), the highest in three months. An earlier release showed that the manufacturing sector was back on expansionary phase last month, painting the picture of quicker growth in the final quarter of the year. Trade deficits narrowed to AUD 1.23 billion in September (August: AUD 1.89 billion) due to the increase in exports (+2.0%) and the decline in imports (-1.0%). CAD taking hits on a pullback in OIL and broad based risk off flow that is not supportive of the more risk correlated commodity currencies. Still, the CAD did get a bit of relief on Tuesday with US ADP employment disappointing and the US Dollar under pressure as US election tension heated up.

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

Technical: AUD continues to rotates in a contracting range with .7730 capping upside and .7500 containing downside reactions, a breach of the lower end of the range opens .7412 symmetry support. Through .7750 opens .7830 on the upside.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1.3360 equidistant AB=CD upside objective achieved as 1.3230 supports bulls target a move to 1.35, only below 1.2960 threatens this objective and suggests a test of pivotal 1.2820.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Anticipate test of 1229 symmetry swing support failure here lets bears target 1200 as the next downside objective, near term resistance is sited 1290 ahead of pivotal 1300.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Equidistant swing objective sited at 52.40 is the primary upside objective. The failure at 49.50 has opened symmetry swing support at 46.03 a breach here opens 42.73 as the next downside objective
Retail Sentiment: Bullish
Trading Take-away: Short

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