London Forex Report: JPY Bid, Oil Offered, Risk Off

London Forex Report: JPY Bid, Oil Offered, Risk Off

London Forex Report: Yesterday’s manufacturing index from the Dallas Fed trended in line with PMI readings that showed improvement in the manufacturing sector. However, market remains skeptical about jumping to a conclusion of a sustainable improvement based on just a single month of data point as the global backdrop remains very fragile and patchy. Relatively positive US data the past weeks will likely prompt the Fed to maintain its rhetoric of very gradual tightening path but not enough to prompt any rate hike in the near term. USD slipped amid risk aversion heading into FOMC meeting and US GDP data. The USD Index trended lower throughout trading and closed 0.19% weaker at 97.28.

FX Majors: EUR dropped to 1.0950 against the USD on Monday, the lowest since 24 June as the USD continued to strengthen amid the market expectations of Fed rate hike. However, EURUSD erased the previous losses at European session due to the strong German July IFO Business Climate. European bank stress tests on Friday will be a focus as investors concerned about potential capital shortfalls at Italian and Portuguese banks GBP After largely disappointing manufacturing and services PMI numbers, the latest report from Confederation of British Industry pointed to darkening outlook in the manufacturing sector. The gauge of orders for factory goods slumped to -4 in July (June: -2) and a quarterly index of sentiment plunged to -47 in July (April: -5) which was the lowest since early 2009. JPY According to Japan’s July monthly economic report, the economy is on a moderate recovery path with flat private consumption and sluggish consumer confidence. Reflecting generally subdued growth environment in the second quarter, final prints of both leading (May: 99.7 vs April: 100.0) and coincident index (May: 109.9 vs April: 112.0) suggested that domestic demand may remain weak this quarter.

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

Technical: Bears look to challenge of 1.09 post Brexit reaction lows. Intraday resistance is sited at 1.10, while 1.1060 caps expect further downside.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: .3260 represents symmetry resistance while this area caps expect a retest of 1.30 base, with an equidistant swing objective sited at 1.2875. Over 1.3330 shifts attention back to 1.3550 symmetry swing objective
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Only a close below pivotal 105.50 threatens near term bullish bias. While this area survives on a closing basis expect another test of 107.50 offers. Below 104.09 symmetry swing support opens 103.50 as the next downside objective
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Technical: Testing symmetry swing support sited at 114.49 as this area support expect retest and breach of cycle highs, below 113.50 opens 110.80 as the next downside objective.
Retail Sentiment: Bullish
Trading Take-away: Sidelines

Commodities FX: GOLD was down for a second day, by 0.5% to $1,315.60 an ounce ahead of the FOMC and BOJ meeting together with the European bank stress test results later in the week. The bullion is likely to be supported near the $1,310 mark. Oil closed lower by 2.4% to $43.13 a barrel and briefly touched below $43 intraday last seen only on 26 April, weighed by returning concerns of a supply glut in crude and refined products. AUD sidelines ahead of inflation figures which could reinforce the occasion for another rate cut as early as next month. Underlying inflation is expected to dip to a fresh trough of 1.4% expected by markets while the figures due tomorrow. The market is pricing in around a 64% chance of a rate cut in August, proposing the biggest move would come if inflation surprised on the high side. CAD hit its weakest level against the USD since March, distressed by a slide in oil prices and the prospect that interest rates will rise faster in the United States than Canada.

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

Technical: .7430 supports, as we continue to rotate in a broader .7660/.7340 range, with .7330 representing symmetry swing support. Intraday resistance is sited at .7550
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1.32 upside objective achieved, as 1.3140 supports bulls target an equidistant swing objective at 1.3381.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: Testing symmetry swing support sited at 1305, while this area attracts buyers will set a potential platform to challenge and breach 1360 highs en-route to 1391. Below 1300 opens 1270 as next downside objective.
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Technical: Break below 44 opens 41.87 as the downside objective, expect 44.50 prior support to act as reisitance, aclose over 47.80 required to ease bearish pressure.
Retail Sentiment: Bullish
Trading Take-away: Short

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