London Forex Report: Markets Reprice Political Risk

London Forex Report: Markets Reprice Political Risk

London Forex Report: Strengthening the case for a December rate hike, the US economy expanded 2.90% annualized pace in 3Q, marking its quickest acceleration in two years. Despite slower household spending, the rebound in private investment coupled with quicker growth in net exports provided a boost to headline GDP last quarter. USD fell against a basket of major currencies on Friday as US political uncertainty increased after the FBI said it would review more emails related to Democratic presidential candidate Hillary Clinton’s private email use. The reports added a new twist to the US presidential campaign with just 10 days to go before Election Day on 8 November. Traders believe the USD’s losses against major currencies were largely on renewed uncertainty over the outcome of the election, since markets were largely expecting a Clinton victory.

FX Majors: EUR The gauge of economic sentiment in the euro zone rose to 106.3 in October (September: 104.9), the highest reading since December 2015. Equally upbeat, business climate indicator surged to 0.55 in October, the highest reading in more than five years. GBP has been locked in a holding pattern and is waiting for the next bit of substance that will knock it in either direction. That could easily come later this week, with both the Fed and Bank of England policy decisions due. JPY USD advanced to a three-month high against the JPY on Friday after the better than expected US GDP figures before giving back gains into the close as the details of further FBI investigations into candidate Clinton were released.Focus this week will be on the BoJ meeting.

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

Technical: Bears seek a retest of last weeks lows at 1.0849. Near term resistance is sited at 1.1030 only over 1.1230 eases bearish bias.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: As 1.2250 rejects near term corrective advances bears now target pivotal 1.20. Medium term resistance is sited at 1.2330. Only a close over 1.25 eases bearish pressure.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: 105 is attained bulls target 107.40 symmetry swing objective next, support is at 104.20 only a close below 103.80 eases bullish pressure.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Upside attention on 116.20 as the primary upside objective with in in the broader 112-116 range. A tops side expansion through 116 opens 121 equidistant swing objective. Back below 114 opens 112 again.
Retail Sentiment: Bearish
Trading Take-away: Long

Commodities FX: GOLD rose over $7 per ounce (+0.55%) to $1,275.47, highest closing levels since 3-Oct. OIL settled down 2.05%, at $48.70 a barrel after an OPEC technical meeting that started on Friday to limit supplies appeared to have reached a deadlock. For the week, WTI fell 4.2%, for its biggest weekly loss since mid September AUD Australia’s new home sales climbed 2.70% MOM in September, moderating from the 6.10% MOM increase in August. Home sales in Queensland and Western Australia dropped from August to July, overshadowing the increase in home sales in Victoria. On a second report, PPI growth slowed to 0.50% YOY in 3Q, half the pace in 2Q. CAD continues to broadly underperform against its peers, perhaps weighed down a little more on softness in the price of OIL. Of course, proximity with the US is another major factor, as a December Fed rate hike would make the yield differential theme feel very close to home for Canadians.

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

Technical: AUD continues to rotates in a contracting range with .7730 capping upside and .7500 containing downside reactions, a breach of the lower end of the range opens .7412 symmetry support. Through .7750 opens .7830 on the upside.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1.3360 equidistant AB=CD upside objective achieved as 1.3230 supports bulls target a move to 1.35, only below 1.2960 threatens this objective and suggests a test of pivotal 1.2820.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Anticipate test of 1229 symmetry swing support failure here lets bears target 1200 as the next downside objective, near term resistance is sited 1290 ahead of pivotal 1300.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Equidistant swing objective sited at 52.40 is the primary upside objective. The failure at 49.50 has opened symmetry swing support at 47.20
Retail Sentiment: Neutral
Trading Take-away: Neutral

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