London Forex Report: Markets Muted Ahead of G7 Meetings

London Forex Report: Markets Muted Ahead of G7 Meetings

London Forex Report: New York Fed Chair William Dudley said that “JuneJuly time frame, is a reasonable expectation”. Echoing Dudley’s comment, Richmond Fed President Jeffrey Lacker said that “the case would be very strong for raising rates in June”. Upbeat retail sales and IPI number last week coupled with continuous improvement in the job market further strengthen the case for a hike in June. USD advanced again, the USD Index climbed 0.22% to 95.28 as the greenback was supported by revived Fed rate hike expectations that subsequently led to risk-off in equities.

FX Majors: EUR Construction output in the euro zone fell 0.9% MOM in March, steeper than the 0.60% MOM decline in Feb due to drag from weaker building activities observed in Germany and Italy. Governing Council members “strongly reiterated the need for other policy areas to contribute much more decisively, both at the national and European levels,” according to an account of the April 20-21 meeting published on Thursday GBP UK retail sales surprised on the upside, staging at 1.3% MoM increase in April. Snapping two months of declines, the rebound marks a great start to Q2 and may help to avert too much of a slowdown in growth as concerns on EU referendum intensifies. March print has been revised to a smaller negative of 0.5% MoM according to the Office for National Statistics. JPY Global economic uncertainties and measures to deal with tax evasion will be among the key topics that finance leaders of the G7 advanced economies will discuss at a weekend meeting, Japanese Finance Minister Taro Aso said on Thursday

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

Technical: Prior support at 1.1280 now becomes resistance while this area contains upside reactions, expect a test of 1.12 as interim support as bears now target symmetry support at 1.1065, only over 1.1450 eases immediate downside bias.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1.4660 achieved as anticipated, while 1.4560 supports expect another push higher to test symmetry resistance at 1.4730 as the next upside objective, only a close below 1.45 eases upside pressure
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: As 109.50 supports intraday expect a retest of offers at 110.60/90, a close over 111.90 eases immediate bearish bias.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: Bears now target weekly symmetry objective at 120.60. Intraday resistance at 124.20 only a close above 126.80 eases immediate downside pressure.
Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX: GOLD prices took the brunt of the selling, as traders look to lock in profits after this year’s strong rally. Another strong rise in holdings in ETFs earlier this week (now at 1827.3 tonnes) is likely to reverse as traders contemplate another rate hike in the US as early as next month. Oil prices held up relatively well as worries about supply disruptions limited the sell-off. AUD fell to a two-and-a-half month low after mixed jobs figures sparked some speculative selling though the investors believed the numbers were unlikely to invoke an imminent rate cut by the Reserve Bank of Australia (RBA). A total of 10,800 net new jobs were created in April, slightly undershooting forecasts of 12,500, with the unemployment rate staying at its lowest in more than two years. CAD weakened to a fresh six-week low against the USD as Federal Reserve interest rate hike speculation and weighed on commodities. The loonie dropped 5% from a 10-month high after soft domestic figures and production cuts in Alberta’s oil sands region upset Canada’s economic outlook. Oil prices dipped, pressured by a stronger USD and a surprise increase in US crude inventories.

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

Technical: .7240/60 support erased now becomes intraday resistance as bears target .7050 as the next downside objective. Only a close over .7400 eases immediate downside pressure.
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Technical: While 1.2960 supports bulls target 1.3140 and 1.32 as the next upside extension targets. Only a close below 1.2760 eases immediate bullish pressure
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1288 is now resistance. The anticipated second leg of corrective price action is underway to test of the pivotal 1240. Price is currently sitting on trend line support at 1250.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Oil as 46.70 supports 50.00 becomes the material upside objective, with a symmetry swing target sited at 50.51 ahead of the larger AB=CD swing objective at 51.09, only a close below 43.00 threatens bullish bias.
Retail Sentiment: Bearish
Trading Take-away: Long

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