London Forex Report: ‘Goldilocks’ NFP’s Boost Risk Appetite

London Forex Report: ‘Goldilocks’ NFP’s Boost Risk Appetite

London Forex Report: USD US non- farm payroll rose more than expected to 222k in June (May: 138k), reiterating diminishing slacks in the labour market. Unemployment rate was slightly higher at 4.40% after sliding to a sixteen-year low of 4.30% in May as labour force participation rate edged higher to 62.80% (previous: 62.70%). Average hourly earnings rose by 0.20% MoM in June (May: +0.10% MoM)

EUR In what may be the most definitive remarks on when the ECB will take action on its EUR2.3 trillion asset-purchase program, ECB Governing Council member Francois Villeroy de Galhau said in a Bloomberg Television interview on Saturday that the ECB is likely to decide on the next change in its stimulus settings in the fall, when it will continue the process of tweaking its measures to reflect the euro area’s upturn. He said “What we have to do, and what we started to do, is to adapt the intensity of this accommodative monetary policy to the progress toward our inflation target and toward economic recovery…In the future, and this will be our decision next fall, we will go on adapting the intensity of this monetary policy.” This was in sharp comparison to ECB’s Praet who said that Euro zone inflation will take a long time to rise back to target and that the process of reflation is a long one.

GBP The slew of UK data reiterated that Brexit uncertainties were dragging household consumption and investment. Survey by Halifax showed that house prices rose a mere 2.60% YoY in the three months to June (three months through May: +3.30% YoY), the slowest pace on record, while industrial production contracted 0.10% MoM in May. Production contracted in four out of the first five months of the year and May’s number was weighed down by the biggest decline in vehicle production in more than a year coupled with a decline in utilities output. Signs of softer investment also put building activities to a halt as construction output slipped 1.20% MoM in May (April: -1.10% MoM). Trade deficits widened to £11.86 billion in May (April: £10.60 billion) due to quicker jump in imports (+3.80%) compared to exports (+0.90% MoM).

JPY Japan’s leading index climbed higher to 104.7 in May followed a reading of 104.2 in April. On the other hand, the coincident index dropped to 115.5 (April: 117.1), indicating slight deterioration in current working conditions. The Bank of Japan’s commitment to hold (10-year JGB) yields down at around zero percent was tested again last Friday and the central bank faced down the market with its offer to buy an unlimited amount of bonds, sending the 10-year JGB yield from its 5-month high of 0.105%, to eventually settling 1.7bps lower to 0.087%.

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

Technical: 1-3 Day View – 1.1430 containing the advance for now as 1.1300/30 supports bulls target 1.1530 as the next upside objective, a daily close below 1.1290 concerns the near term bullish bias and open a test of 1.11

1-3 Week View – While 1.0830 supports 114.30 becomes the primary upside objective. A weekly close over 1.1450 sets upside focus on 1.1876. Weekly close below 1.08 neutralises bullish objectives.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – 1.3048 is the next upside objective, ahead of the pivotal 1.3238 a daily closing breach of 1.2810 concerns the near term bullish bias.

1-3 Week View – The weekly failure to close above 1.3045 ahead of the broader symmetry swing objective sited at 1.3238 suggest underlying weakness persists 1.2450 becomes pivotal for the medium term perspective
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: 1-3 Day View – Upside objective 114.35 achieved, potential for profit taking pullback to test near term support toward 113.40 as this contains corrections bulls target 115.50 next, only below 112.10 would concern the immediate bullish bias.

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: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – Bullish expansion targets at 129.45 achieved as 129.30 contains corrections bulls target 133.36 as the next upside objective, only below 126.80 concerns near term bullish bias.

1-3 Week View – The weekly close above 118.50 arrested the immediate downside risk, resetting focus on pivotal 124.40 the weekly breach of this level opens 129.44 as the broader upside objective.
Retail Sentiment: Bearish
Trading Take-away: Long

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