London Forex Report: Mixed Data Keeps Dollar Bid

London Forex Report: Mixed Data Keeps Dollar Bid

London Forex Report: Global growth weighed on global equities again, underscoring concern on dampening demand as investors turned risk off. Crude oil prices dipped to USD 44.6 per barrel and other commodities prices were equally lackluster yesterday. Data from the US was mixed, suggesting that growth maybe stalling again by global development this quarter and strengthening the case for a gradual tightening path this year. The services sector expanded at quicker pace in April as growth in new orders drove services providers to hire more employees. Factory orders rebounded more than expected in March, signalling a pickup in business spending. On the flipside, job report showed that the private sector added only 156k jobs to payroll in April (March: 194k), possibly an early indicator of modest non- farm payroll figure. Trade gap narrowed to the smallest since Feb 2015, dragged by the decline in imports. USD extended its rebound on a further retreat in risk appetite coupled with an overall firmer US dataflow. The USD Index was initially dampened by soft US employment figures but climbed higher thereafter on sliding equities and commodities as well as other firmer US data to close 0.25% higher at 93.17.

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

Fundamental: EUR advanced to a day high of 1.1528 from 1.1500s against the USD following the release of lower-than-forecast US ADP report, but failed to sustain and rapidly returned to the 1.1500 level. The release of the final Services and Composite readings for the month of April in the EU, showed that activity grew at a slower pace than initially estimated, indicating a tepid start of the second quarter.

Technical: EUR bulls now target a weekly AB=CD target of of 1.1766, intraday support is now sited back at prior resistance which should now act as support 1.1460/80 area, while this holds expects a grind higher to test previous reaction highs at the 1.1710 level. A failure at 1.1450 suggest a a return to retest 1.1240 support.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Fundamental: GBP fell to its lowest level in more than a week versus the USD while construction became the latest sector to signal Britain’s economy is losing momentum with the nation heading for a referendum that may push it out of the world’s largest trading bloc • The currency also weakened against the euro after Markit Economics said its construction gauge fell to 52 last month, compared with the 54 expected.

Technical: 1.4670 achieved bulls now set their sites on the psychological 1.50 levels. Near term support is sited at 1.45. While this area contains downside reactions expect continued upside pressure. A failure at 1.44470 opens a deeper correction to 1.4280 next.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Fundamental: USDJPY recovered to above 107.00 level, after it touched a 19-month low of 105.52 on Tuesday. Some traders square their positions under the backdrop of potential intervention from Bank of Japan on Friday as the Japanese markets resume after the long holiday.

Technical: 105.50 weekly swing objective achieved, 107.50 now becomes resistance a move through here opens a retest of 110 from below.
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Fundamental: Japanese markets offline for Golden week national holiday. Modest growth climate in 1Q weighed down on euro area’s household consumption. Retail sales fell 0.5% MoM in March (Feb: +0.3% MOM) which was the first in five months, underscoring sluggish domestic demand in spite of ECB’s stimulus program. A second report showed that the services sector expanded at a similar pace in April and March, suggesting that downside risks will continue to undermine growth this quarter.

Technical: Bears now target weekly symmetry objective at 120.60. Only a close over 126.80 eases immediate downside pressure. Intraday resistance now sited at 123.30.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Fundamental: AUD fell to a seven-week low yesterday after the central bank’s first rate cut in a year and sliding commodity prices further clipped long positions in the currency. Traders are worried that the RBA’s concerns on embedded low inflation and deflation risks may lead to another rate cut. Also undermining the Aussie were sliding commodity prices with iron ore, Australia’s top export earner.

Technical: Price is probing pivotal .7470/50 support. While this level holds expect a recovery and grind higher to retest .7830 resistance. Failure at .7450 opens .7380 as the next downside objective.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Fundamental: CAD weakened to a two-week low against the USD after disappointing domestic trade data and as a wildfire threatened production in the country’s oil sands region. Canada’s trade deficit in March unexpectedly widened to a record C$3.41 billion ($2.66 billion) as exports dropped for a second month on widespread weakness. Fire continued to rage through the western city of Fort McMurray, the heart of Canada’s oil sands region.

Technical: The close above 1.2750 negates near term bearish pressure and open a move to 1.30 as the next upside objective. 1.2740/60 should now act as support for further upside corrective action.
Retail Sentiment: Bearish
Trading Take-away: Long

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