London Forex Report: Markets Await NFP’s

London Forex Report: Markets Await NFP’s

London Forex Report: PMI services indices tracked softness in PMI manufacturing prints released earlier in the week, reinforcing moderating growth outlook globally. Rebounds in factory orders and durable goods orders in the US offered a less downbeat picture, raising optimism the US economy is on the mend as business spending gathered steam. Factory orders 1.6% MoM in Jan after a 2.9% MoM fall in Dec, the quickest gain since June 2015 due to a whopping 20.0% MoM increase in capital goods orders. Durable goods orders were also upbeat registering a 4.7% MoM increase. Separately, despite the 6K increase in initial jobless claims to 278k last week, it nevertheless remained at levels pointing to continuous recovery in the job market. Recent healthy job data has buoyed hopes today’s nonfarm payroll will also be good. USD tumbled amid continued pick-up in risk appetite in US session on top of a relatively weaker set of US data. The USD Index fell 0.61% to 97.59, sliding post-US data.

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

Fundamental: EUR surged to an intraday high of 1.0972 after data showing a decline in US service sector employment, adding to worries over today’s nonfarm data. Apart from worse-than-expected US data, the uncertainty over next week’s ECB move boosts euro. Markets await nonfarm payrolls data due today while economists polled by Reuters expect the change of nonfarm payrolls will be 195k in February.

Technical: While prior support at 1.0950/70 acts as intra day resistance bears target prior range support at 1.08. Only a close over 1.1080 eases immediate downside pressure.

Interbank Flows: Bids 1.08 stops below. Offers 1.10 stops above.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Fundamental: GBP rose to its strongest against USD in almost two weeks yesterday, recovering the previous loss in the aftermath of the Brexit speech delivered by London’s mayor. The UK Markit Services PMI dropped to a three-year low of 52.7 as Brexit doubts remain on the table. This has showed that Britain’s recovery from the financial crisis is losing momentum and why policymakers from BoE have said they stand ready to boost the economy if needed.

Technical: While 1.4030 acts as intraday support expect a continued grind higher to test pivotal 1.4235 only a close over 1.4250 eases bearish bias.

Interbank Flows: Bids 1.40 stops below. Offers 1.4230 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Fundamental: Despite risk appetite ticking up due to upbeat US stock markets and rebound in oil prices, USDJPY dropped to a daily low of 113.28 overnight. JPY is currently trading within a 113.30 to 114.25 range. Unless there is a big discrepancy between the actual and expected nonfarm data due today, the pair is expected to trade in this range before the BoJ meeting.

Technical: Bulls will be looking for 112.50 to continues to support expect a further leg of corrective gains, to retest the broken neckline support at 115/116. Failure at 112 open 11 again.

Interbank Flows: Bids 112.50 offers below. Offers 114.50 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Fundamental: In Japan services PMI tumbled from 52.4 in Jan to 51.2 in Feb. Business activities in the sector lost steam last month albeit to a lesser extend compared to the manufacturing sector. Japan’s reading was the lowest since July 2015, dragged by the weakest increase in new business since last Nov.

Technical: While 123 offers intraday support expect a continued grind higher to test offers above 125. A failure at 123 refocuses bearish sights on the psychological 120 en route to a weekly downside objective at 118/117, only a close over 125.10 eases bearish bias.

Interbank Flows: Bids 123 stops below. Offers 125 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Fundamental: AUD held near three-month highs against the USD, as a rally in commodities and supportive domestic figures provoked investors to pare back the chance of a future interest rate cut. The AUDUSD closed at 0.7349 after an upbeat GDP report. The Aussie lifted after figures showing the economy grew at the fastest pace in almost two years, a hopeful sign the worst of the global commodity rout may be over.

Technical: While .7250 supports intraday expect further upside pressure targeting .7385 next a close over .7400 sets up a .7500 test next. Only a failure at.7100 pivotal support threatens bullish bias.

Interbank Flows: Bids .7250 stops below. Offers .7400 stops above
Retail Sentiment: Bearish
Trading Take-away: Long

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

Fundamental: CAD strengthened to a twelve-week high against the USD as base and precious metal prices rallied. The currency extended its recovery from a twelve-year low in January at 1.4689 as weaker US figures weighed on the USD ahead of today’s US jobs report. The implied probability of a rate cut this year fell when Canada’s Finance Minister Bill Morneau said the government would stick to plan to stimulate the economy in a 22 March federal budget.

Technical: While USDCAD trades sub 1.3510 downside pressure remains the driver with bears focusing on a AB=CD ultimate downside objective at 1.2966, the next interim support level to watch is is 1.3350.

Interbank Flows: Bids 1.3350 stops below. Offers 1.3550 stops above
Retail Sentiment: Bullish
Trading Take-away: Short

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