London Forex Report: FOMC Minutes In Focus

London Forex Report: FOMC Minutes In Focus

London Forex Report: Although recent economic data has remained uneven and prices continued to hover below the Fed target, comments from two top Fed officials suggest that interest rates may be raised as soon as September. New York Fed chief William Dudley said “we’re edging closer towards the point in time where it will be appropriate, I think, to raise interest rate further” in anticipation of stronger growth and labour market in the second half of the year. Echoing his stance, Atlanta Fed President Dennis Lockhart said that he wouldn’t rule out a hike in September and current data flow sets the stage for at least one increase this year. US data failed to excite and significantly change the Fed outlook. Although industrial production picked up to grow at a faster pace of 0.7% MOM in July boosted by output of business equipment and consumer goods, the gain in housing starts moderated to 2.1% MOM while building permits fell 0.1% MOM in July. CPI came in flat in July MOM as a result of cheaper gas, airfares, and groceries

FX Majors: EUR Both components of the ZEW survey suggested that confidence levels rebounded in August. The index came in at 4.6 this month (July: -14.7) amid the resilience in Germany’s stock market despite Brexit concerns. On a separate report, trade surplus narrowed to € 23.4 billion in June (May: 24.6 billion) due to quicker imports gains. GBP UK’s consumer prices quickened to 0.6% YOY in July (June: +0.5% YOY) due to rising prices for motor fuels, alcoholic beverages and accommodation services. Producers prices climbed 0.3% YOY in July after dropping 0.2% YOY in June while retail prices surged 1.9% YOY in July (June: +1.6% YOY). The slew of price pressure gauge suggests that inflation may meet the targeted 2.0% quicker than anticipated, compounded by impact of a weaker Sterling. JPY USD extended its losses against the safe-haven JPY and the pair dropped to the lowest level since Brexit result at 99.53 yesterday. Japan finance ministry official said yesterday that the authorities were closely watching the currency market with a sense of urgency to see if any speculative factors were behind market moves, according to Japanese Jiji press. Japan’s top currency diplomat, Masatsugu Asakawa, warned investors Japan’s top currency diplomat, Masatsugu Asakawa, warned investors excessive market moves and Japanese authorities were exchanging views on the currency market with Group of Seven partners.

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

Technical: Offers just ahead of symmetry swing objective at 1.1330 stall advance. 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 over 1.31 alerts to the potential of more meaningful correction.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Breach of previous cycle lows achieved, 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 posted a strong gain as the weaker dollar was also met with some selling in equity markets. Holdings in gold ETFs rose slightly to 2027.6 tonnes on Monday, according to Bloomberg data. Oil continued its rise as voices of support for a production freeze grew louder. Russian Energy Minister Alexander Novak said the country was open to cooperating to stabilise markets. AUD RBA August meeting minutes cited low inflation and easing housing credit growth as key reasons to reduce interest rates in the policy meeting. Cash rate was effectively lowered by 25 bps to 1.5% on August 3 rd. On the side note, quarterly forecast on inflation, growth and unemployment rate have been little changed since May, suggesting that a back-to-back cut in September’s meeting is not on the table at this juncture. CAD has emerged as one of the strongest currencies over the past week, benefiting from this positive flow. However, the market will need to be careful heading into the Fed Minutes later today, with any signs of a less dovish central bank, more inclined to move on rates sooner than later, to likely inspire a major round of profit taking on Canadian Dollar longs.

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: Bullish
Trading Take-away: Sidelines

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