London Forex Report: JPY Firm On Further North Korean Concerns

London Forex Report: JPY Firm On Further North Korean Concerns

London Forex Report: The market attention for the past two days has been focused on the escalating tensions between North Korea and US. Overnight the North Korean military was said to be examining firing missiles at Guam (where US has a large military presence), in response to US President Trump’s warning that if North Korea issued more threats, then the country would face “fire and fury like the world has never seen.” Echoing Trump’s warning, US Defence Secretary Jim Mattis said in a statement Wednesday that North Korea “should cease any consideration of actions that would lead to the end of its regime and the destruction of its people.”

USD Releases from the US were limited to weekly mortgage applications which rebounded to increase 3.0% WoW driven by increases from both new purchases and refinancing. The Atlanta Fed forecasts that the US economy is on track to grow 3.5% on an annualised pace in 3Q while Fed Evans commented that it is quite reasonable to start balance sheet reduction in September. In line with our view, he however cautioned that low inflation could delay the Fed’s plan for further interest rate increases.

EUR Italy reported a 1.1% rise in industrial production for June, well ahead of market estimates (+0.2%). The Banque de France’s industrial sentiment index rose unexpectedly in July, meanwhile, reaching 105, the highest in six years.

GBP UK retail sales rose 0.9% in the July year, the British Retail Consortium’s study of like for like sales showed, in line with expectations but a little slower than Jun (+1.2%)

JPY machine orders contracted more than expected by 5.2% YoY in June. On the contrary, machine tool orders continued to expand albeit at a more moderate pace of 26.3% YoY in July versus a prior print of 31.1%. Housing loans meanwhile held steady with a 3.3% increase in 2Q.

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

Technical: 1-3 Day View – Pivotal 1.17 survives for now, as this level contains downside reactions bulls look for a retest of cycle highs en route to 1.20, intraday upside hurdle sited at 1.1830, only a daily close below 1.1660 concerns the near term bullish bias setting a top for a test of 1.1440.

1-3 Week View – 1.1876 achieved focus shifts to 1.20 . Weekly close below 1.14 neutralises bullish objectives.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – 1.31 daily closing breach concerns the near term bullish bias opening a retest of 1.28, near term resistance is sited at 1.3080, only a close over 1.3160 reestablishes near term bullish tone

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: Bullish
Trading Take-away: Short

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

Technical: 1-3 Day View – As 110.60 contains upside reactions 108.93 is the immediate downside objective. Near term support is sited at 109.50

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: Bullish
Trading Take-away: Short

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

Technical: 1-3 Day View – 133.36 broader upside objective, the break below 129.20 achieved the anticipated 128.50 a close below here sets a top for retest of 125.80, near term resistance sited at 1.30

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: Neutral
Trading Take-away: Neutral

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