London Forex Report: Manufacturing Mainly on The Mend

London Forex Report: Manufacturing Mainly on The Mend

London Forex Report: Trading flows will likely be muted this afternoon as the U.S celebrates Independence Day today. US stocks and bond markets will be closed. Data showed that active US rigs declined for the first time in 24 weeks, leading to eight straight days of higher crude oil prices on Monday. Crude oil surged by 1.90% to $49.70/barrel. On the equity front, US stocks hit fresh all-time high, in tandem with the improvement in the ISM manufacturing index. Manufacturing data from UK, Japan, China and Australia affirmed that global manufacturing sector is on the mend.

USD US ISM manufacturing index surged to 57.8 in June, the highest since August 2014. The improvement from the previous month’s reading of 54.9 was driven by quicker production and new orders as demand was fueled by the notable pick up in global trade activities

EUR A Reuters report on ECB stated some ECB policymakers grew cautious about lifting QE easing bias in the July 20 meeting, having spooked by market turbulence of late. ECB might also drop only part of easing bias, leaving in reference either to size or duration of QE.

GBP Britain’s manufacturing indicator edged down to 54.3 in June from 56.3 in May. After hitting a record high of 57.0 in April, demand for British goods had remained resilient as Sterling’s depreciation kept goods competitive in overseas markets.

JPY Japan’s Tankan manufacturing outlook index climbed to 15 in the second quarter (1Q: 11), marking its highest reading in eight quarters. Outlook for the non- manufacturing sector improved as the index ticked up to a six quarter high of 18 in 2Q compared to 16 in 1Q, but the upbeat data was somewhat overshadowed by PM Abe’s Liberal Democrat Party performing very poorly in Tokyo Assembly elections, ahead of next year’s national elections

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

Technical: 1-3 Day View – 1.1430 containing the advance for now as 1.1350 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): Neutral – Medium Term (1-3 Weeks): Bearish

Technical: 1-3 Day View – As 1.2960/40 supports on an intraday basis 1.3048 is the next upside objective, ahead of the pivotal 1.3238 Only a 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: Long

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

Technical: 1-3 Day View – The daily closing breach of 111.80 level resets focus on upside objectives principally 114.35, near term support is now sited at 112.80/60, only below 111.80 would arrest the near term advance and return to 110/112 range.

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 from consolidation targets 129.44 as the primary upside objective, support moves to 127.40/20, 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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