London Forex Report: JPY Surges On Sales Tax Delay

London Forex Report: JPY Surges On Sales Tax Delay

London Forex Report: Data from the US continues to bolster hopes for a rate hike, in sync with hawkish comments from top fed officials. US consumer spending rose the most in almost seven years, posting signs that brightening economic outlook were spurring spending appetite again. Personal spending rose 1.0% MoM in April after flat growth in March while income sustained a 0.4% MoM increase in April, suggesting savings declined last month. Core PCE, the Fed’s preferred gauge of inflation, climbed 1.6% YoY in April, and getting closer to the targeted 2.0%. On the flipside, consumer confidence and manufacturing gauges were on a decline, indicating that recovery in factories production remained patchy in 2Q. USD Index extended its gains to close 0.39% higher at 95.84, erasing all its European session losses.

FX Majors: EUR Euro-Zone Consumer Price Index and the unemployment rate came in line with expectations. CPI figure showed an annual decline of 0.1%, marked the fourth consecutive month in which the Euro-Zone has been in negative territory, while the unemployment figures showed the Euro-Zone unemployment rate remained unchanged at a seasonally -adjusted 10.2% in April, the lowest rate since August 2011. GBP dropped against all of its 16 major peers as ICM opinion polls released by the Guardian showed a lead for the ‘Leave’ camp. A phone survey showed 45% of respondents supported leaving, 42% for ‘Remain’ and 13% were undecided, in contrast to a previous survey which put the pro-EU camp ahead. An online poll also put the Brexit camp ahead JPY Japan’s housing starts was up 9.0% YoY in April (March: +8.4% YoY) due to the increase in construction projects of rental properties which cushioned the slowdown in other categories. Japanese prime minister Shinzo Abe essentially gave up on fiscal reform by postponing a sales tax hike for two and a half years, putting Japan’s credibility on the line and raising the risk of sovereign credit downgrade that could lift corporate borrowing costs.

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

Technical: Bears target symmetry support at 1.1065, 1.1180 is intraday resistance while 1.1240 remains pivotal for near term bearish bias.
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Technical: The failure at 1.4530/50 support negates near term bullish bias, while 1.4580/1.46 contains upside reactions expect a retest of 1.4330 bids in a pre Brexit referendum range of 1.4770/1.4330
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Anticipated trend resistance at 111.30 attracts sellers as this area contains expect a rotation back towards 108.40. While 107.40 supports expect a second leg of corrective price action to target 113.30
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Bears now target weekly symmetry objective at 120.60. Intraday resistance at 123.10 only a close above 124.70 eases immediate downside pressure.
Retail Sentiment: Bullish
Trading Take-away: Short

Commodities FX: GOLD traded between gains and losses but eventually etched out a small gain ahead of what may be a data heavy week leading up to the US jobs data. The gold price closed higher by US$1 to US$1214.80 on Tuesday. Oil US and global oil prices initially touched the $50 but eventually drifted lower on Tuesday as analysts warned that the recent rally may have gone too far on transient factors and cannot sustain the high prices with global supply still at very high levels. Importantly, the upcoming OPEC ordinary meeting looms on 2 June although most analysts expect no action to be taken to address the ample global oil supplies situation. The US Nymex WTI futures eased lower by US$0.23 to US$49.10. AUD Australia’s current account deficits narrowed by AUD1.8 billion to AUD20.8 billion in 1Q. According to Australian Bureau of Statistics, net goods and services surplus rose AUD4.7 billion to AUD12.6 billion and is expected to contribute 1.1 ppt to growth in 1Q. A second release of building approvals was also upbeat. Approvals climbed 3.00% MoM in April after increasing 2.90% MoM in March. Separately in New Zealand, business confidence index rose from 6.2 in April to 11.3 in May, the highest level this year CAD weakened to a one-week low against USD after Canada’s economy accelerated less than forecast and oil fell. The losses left the loonie more than 4% lower in May, while it fell around 5% since reaching a 10-month high on 3 May. Canada’s gross domestic product (GDP) grew at a 2.4% annualized rate in the first quarter, less than the expectations for 2.9%

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

Technical: While symmetry swing resistance at .7310 contains the upside reaction bears target .7050 as the next downside objective. Only a close over .7400 eases immediate downside pressure.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: While 1.2940 symmetry swing supports bulls target offers at 1.3210 as the next upside extension target. Only a close below 1.2760 eases immediate bullish pressure.

Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: The medium term bullish bias is under assault While 1230 acts as intraday resistance expect a test of 1190.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Second rejection above 50.00 concerns bulls near term although as 46.70 continues to support expect a test of the larger AB=CD swing objective at 51.07, only a close below 43.00 threatens bullish bias.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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