London Forex Report: GBP Volatility Ahead Of Thursday’s Vote

London Forex Report: GBP Volatility Ahead Of Thursday’s Vote

London Forex Report: Brexit continues to be the main underlying market influence, overshadowing a bag of mixed economic data flow. Contrary to recent firmness seen in the US housing, housing starts reversed course to decline 0.3% MOM in May while forward looking building permits moderated to increase at a slower pace of 0.7% MOM. Weaknesses in multi-family starts exerted a drag on overall performance, raising concerns over fragility in the US housing market. USD resumed its decline on receding hopes of imminent Fed rate hike, USD Index moved lower gradually last Friday and closed 0.38% lower at 94.20.

FX Majors: EUR ECB current account balance rose to €36.2 billion in April (March: €26.3 billion) which reflected a surplus of goods, services and investment. The monthly increase was led mostly by the surge in investment (+ €6.2 billion). ECB President Mario Draghi said in speech in Munich that “Progress today must be different from the past. We have to find a new way to build trust among the member states and the peoples of Europe – a way that builds on existing institutions to better ensure that the common needs of the people are met” GBP posted the biggest increase in three months after campaigning over whether the UK should quit the EU was on hold a second day after the killing of Jo Cox, a Parliament member who supported voting to stay in the referendum. The campaign to keep Britain in the EU regained its lead in two opinion polls published last Saturday, giving a boost to Prime Minister David Cameron who is battling to avoid a historic “Out” vote in this Thursday’s referendum JPY Although the JPY was little changed last Friday, the currency climbed as high as 103.55 on Thursday against the USD, the strongest level in almost two years. Japanese Finance Minister Aso said that he was very concerned about one-sided, abrupt and speculative currency movements, speaking after the Bank of Japan refrained from expanding its record monetary stimulus.

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

Technical: Whipsaw price action within broader 1.11/ 1.14 range while Gap through 1.13 maintains range trade with near term bullish bias while price holds above the Asian Gap.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Expected test of 1.40 next prompts sharp intraday reversal over 1.4350 suggests renewed attempt to test upper range and offers above 1.45 filled without reversal in low liquidity trading conditions, attentions now shifts tot the top side of the current trading range as offers over 1.47 are targeted. Expect volatility in GBP pairs ahead of Thursday’s vote.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Downside ratchet breaks 105.55 lows the failure at 105 opens 103 as the next downside objective. 105.50 becomes the near term pivotal resistance
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Weekly equality objective at 117.36 achieved. 118.50 near term resistance neutralised, only over 121.50 eases bearish pressure, while 119.50 caps upside bears target retest of 115.50 lows.

Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX: GOLD recovered 1.58% to $1,298.65 an ounce on Friday, paring most of the losses sustained on Thursday trade which saw the metal drop $1315.71, the highest since August 2014, to $1,277.31. Oil settled 3.8% higher, or $1.77, at $47.98 a barrel to rise for the first time in a week. On Friday, oil services firm Baker Hughes also reported an increase of 9 rigs in its weekly rig count to a total of 337. AUD Last week, Australia released strong job numbers in May. Employment change jumped higher, with a reading of 17.9 thousand, beating the forecast of 14.9 thousand, while the unemployment rate remained steady, posting a rate of 5.7% for the third straight month. However, most of the new jobs were part-time positions. CAD USDCAD pair broke below the support at 1.2900 handle after Canadian inflation figures had come in on the softer side for the month of May. CPI rose at a monthly pace of 0.4% and 1.5% on a yearly basis, versus estimates at 0.5% and 1.6%, respectively. Core prices gauged by the BoC have risen in line with forecasts 0.3% inter-month and 2.1% over the last twelve months.

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

Technical: Gap higher at the Asian open puts pressure on .7450/70 offers as this level contains expect another leg of downside to target .7250. A close over .7510 targets .7640
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1.3150 is the next upside objective, the failure at 1.29 opens pivotal support at 1.28, a break of 1.28 opens 1.2650 next within broader trading range.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1331 is the next upside objective while 1280 now acts as near term support. Failure below 1275 sets up a bearish double top pattern targeting a rotation back to test 1230 support.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Only a close below 46 threatens medium term bullish bias, as 46.00 survives on a closing basis expect rotation back towards 50.00 where a second wave of selling is likely to emerge.
Retail Sentiment: Bearish
Trading Take-away: Long

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