London Forex Report: Markets Await May

London Forex Report: Markets Await May

London Forex Report: IMF, in its January update to world economic outlook, turns more optimistic that the world economy will pick up this and next year, amid signs of improvement in the US, China, Europe, and Japan. It said its world growth forecast for 2016 and 2017 at 3.1% and 3.4% respectively “looks increasingly likely to be realised”. That said, IMF cautioned that uncertainties have risen. US growth outlook was revised up to 2.30% this year (previous: 2.20%) and 2.50% in 2018 (previous: 2.10%). According to the fund, UK may expand 1.50% (previous: 1.10%) while the euro area will likely grow 1.60% this year (previous: 1.50%). China is expected to grow 6.50% and Japan, on the other hand, may expand 0.80% in 2017 (previous: 0.60%). US markets were out for Martin Luther King Day, the Dollar Index turned firmer in European trade and climbed 0.42% to close 101.60 but has reversed overnight in thin trade to retest 100.67 monthly lows.

FX Majors: EUR Euro zone’s trade surplus rose €1.9 billion to €22.7 billion in November thanks to quicker increase in exports. Exports grew 3.20% MOM in November, overshadowing the 1.80% MOM increase in imports. GBP UK’s Prime Minster Theresa May set the stage for a completely new trading relationship with the European Union, affirming that she has no interest in a “partial” or “associate” membership of the EU or “anything that leaves us half in, half-out”. On the data front, house prices grew at a softer pace of 3.20% YOY in January, softening from the 3.40% YOY increase in December. According to report by Rightmove, uncertainty caused by Brexit coupled with the increase in stamp duty had put the brakes on property prices acceleration and was more prominently so in London than other areas. JPY Japan’s tertiary industry index edged up 0.20% MOM in November. The rise in wholesale trade and business related services contributed the most to the increase in the headline figure. Equally upbeat, machine tool orders increased 4.40% YOY in December and snapped sixteen straight contractions amid higher local and overseas demand.

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

Technical: Eroding symmetry swing resistance sited at 1.0640 suggesting a test of pivotal 1.0708 larger symmetry resistance. Anticipate sellers to emerge at these levels, as this band of resistance caps upside bears target retest of 1.0338 lows. Near term support sited at 1.0550 failure here suggests early reversal to trend
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: New monthly lows printed with opening gap lower at the Asian open sub 1.20 before profit taking prompts sharp reversal, near term resistance sited at 1.2110 as bears target 1.1878 as the next downside objective. A close above 1.2265 symmetry swing resistance would help stabilise selling pressure.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Price erodes pivotal 114.70 trend support the close below this level concerns near term bullish thesis and suggests broader corrective phase to test 112 is now underway, near term resistance is sited at 115.10 only over 116.20 reasserts upside
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Close below 121.60 concerns bullish bias, expect test of symmetry swing support at 120.40 bulls will look to defend this level to set sights on, 124.42 symmetry swing resistance. A failure below 120.40 opens 118.70
Retail Sentiment: Bullish
Trading Take-away: Short

Commodities FX: GOLD edged higher for a sixth straight day, with the yellow metal closing above $1,200 per ounce for the first time since 22-Nov as concerns over hard Brexit spurred safe haven demand. OIL rose 27 cents to $52.64 a barrel on holiday shortened Monday after Saudi Minister of Energy and Industry Khalid Al-Falih said that OPEC probably won’t need to extend its output cuts past June as the current six month term should suffice to balance the market. AUD RBA’s Harper said that Australia will avoid recession but economy not out of the woods. He would like to see the AUD lower but does not expect a sudden decline in the currency on the horizon. He added that Australia could benefit from trade tensions between US and China. CAD has a key risk on Wednesday with the BOC’s rate decision and MPR. While the market is expected no change in rates, the projections for the upcoming year will be key

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

Technical: Price erodes symmetry swing resistance sited at .7494 a close above .7525 resets bullish attention on range highs towards .7800 Near term support is sited at symmetry swing level .7340
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: Breach of corrective channel below 1.3160 increases bearish pressure, failure to recapture channel opens a tests of psychological 1.30
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Close above 1190 opens 1220 symmetry swing trend resistance. Near tern support is sited at 1190, failure here opens 1153
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Sharp rejection from equality objective area at 55.30, a close below symmetry support at 50.68 confirms a medium term high and opens a retest of pivotal 49.00. Near term resistance is sited at 53.50
Retail Sentiment: Bearish
Trading Take-away: Long

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