London Forex Report: Geo Politics Continues To Weigh On Risk Sentiment

London Forex Report: Geo Politics Continues To Weigh On Risk Sentiment

London Forex Report: US financial markets reopen Tuesday after Monday’s Labour Day holiday and geo-political risks relating to North Korea could remain in the spotlight for traders as the rogue nation may be preparing for another intercontinental ballistic missile launch soon (possibly around 9 Sep when North Korea will celebrate DPRK Foundation Day) after its sixth nuclear test on Saturday.

USD In a UN session on Monday following the provocative North Korean nuclear test, US envoy to UN Haley had very strong words for the latest North Korean actions, saying that the North Korean leader is ‘begging for war,’ and while she said that the US does not want war but ‘our county’s patience is not unlimited’. She said that ‘enough is enough’ on North Korea, highlighting that incremental UN Security council approach has not worked

EUR The Eurozone July PPI was flat at 0%MoM (from a downwardly revised -0.2%MoM in June). This translated to a more moderate 2%YoY increase in July (from 2.4% in June). The September Sentix investor confidence survey from Eurozone fared better than expected as it climbed to 28.2 (from 27.7 in August, and coming in above forecast of 27.0).

GBP UK August construction PMI edged lower to 51.1 (from 51.9 in July and well missing the forecast for a slight uptick to 52.0). A Spokeswoman for UK PM May said that UK is ready to intensify Brexit talks with the European Union, but nothing is formally agreed. She also said that the UK would like to move to talks on future relationship with EU now and that the decision on whether will move on to negotiation of future EU relationship by October will be discussed in further talks

JPY The likes of the JPY may remain in favour in view of the prevailing geopolitical concerns with the pair seen heavy overnight. Yields on 10Y JGB’s fell 1.5bps Friday, turning negative for the first time since November as investors continued to purchases safer bonds amid focus on North Korea’s missile tests. Only Switzerland and Japan’s 10Y bonds currently offer negative returns among developed market Fixed Income at the moment.

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

Technical: 1-3 Day View – Breach of 1.1920 opens the anticipated move back 1.1865 as 1.1960/80 caps upside attempts 1.1760 is the next downside objective. Over 1.20 opens the way to to 1.2070 and 1.2130

1-3 Week View – 1.20 achieved bulls look for a test of 1.2130 as the next upside objective. Weekly close below 1.16 neutralises bullish objectives opening a test of 1.14
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – Near term resistance is sited at 1.2910 removed opening a test of 1.3030 a close over 1.3060 reestablishes a more bullish tone, however, failure below 1.2910 opens a move back to 1.2850

1-3 Week View – The weekly close above 1.3045 targets the broader symmetry swing objective sited at 1.3263 only a close back below 1.28 would jeopardise the bullish advance
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – Breach of near term resistance levels stabilises the pair over 110.35 opens pivotal 110.95 near term support sited at 109.30, below 109 suggests reversion to trend and refocuses players on downside objectives below 108

1-3 Week View – As 108.40 equidistant swing support survives on a weekly closing basis bulls will look for a grind higher to retest 115, a close below 108 negates the broader bullish theme and opens the psychological 100 magnet

Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – Daily breach of 128.80 stabilised the pair as anticipated and resets attention on upside objectives at 133 near term support is sited at 130.40/20, only below 129.50 concerns near term bullish bias

1-3 Week View – The weekly close above 118.50 arrested the immediate downside risk, 129.44 upside objective achieves as 128 supports bulls look for a move to test 133.36 as the broader upside objective.
Retail Sentiment: Bearish
Trading Take-away: Long

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