London Forex Report: OECD Optimistic On Trumpflation Trade

London Forex Report: OECD Optimistic On Trumpflation Trade

London Forex Report: OECD’s growth upgrade was ignored by markets which appeared to be engulfed in profit-taking after the recent rally. The OECD turned more optimistic over the world economy on expectations planned tax cuts and fiscal stimulus under the Trump administration will spur growth in the US economy.Growth forecast for the US was revised up by 0.2ppt to 2.3% in 2017 (previous: 2.1%) and 3.0% in 2018. UK growth forecast was also revised higher to 2.0% (previous +1.8%) this year but growth is expected to ease to 1.2% in 2017. Projection for China was upgraded to 6.4% (previous: 6.2%) for next year. The world was expected to expand 0,1ppt higher at 3.3% in 2017 (previous: 3.2%) and 3.6% in 2018. On the data front, releases out of the US were positive. US Dallas Fed manufacturing rebounded to positive territory for the first time since Dec-2014, thanks to higher factory production and capacity utilisation. USD fell against 90% of its G10FX peers, pulling back from recent gains even as risk sentiment ebbed in Europe and the US. The USD Index overturned early losses going into US trade but upside fizzled thereafter and closed 0.16% lower at 101.33

FX Majors: EUR remained pressured on Monday as the French presidential elections and approaching Italian referendum over the coming weekend pose increased uncertainty and political risk in Europe. On the European data front, the Eurozone reported the weakest growth in M3 since early 2015 while Italian manufacturing dipped slightly this month as consumer sentiment perked up slightly. GBP dropped against the greenback after the doubts about the possibility of the UK leaving the European single market have emerged. The news of the UK government facing legal battle over whether the UK stays inside the single market after it has left the European Union was reported by BBC. The Bank of England Monetary Policy Committee member Vlieghe said that the inflation boost from the fall in the sterling will fade and that there is no appetite in Monetary Policy Committee for higher interest rates at the moment. JPY closed below 112 handle at 111.92 yesterday. The seasonally adjusted unemployment rate of Japan in October was 3% and household spending dipped 0.4% in October from a year earlier. The data suggested Japanese domestic demand could stabilise, which could ease policymakers’ concerns and reduce the need to stimulate the economy and encourage inflation.

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

Technical: Bearish attention remains towards 2015 lows at 1.0463. Near term resistance sited at 1.0650 under pressure a break here targets a retest of 1.0740 , medium term 1.0850 is a key upside hurdle which will need to be captured on a closing basis to stabilise the pair.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Bears target symmetry swing objective at 1.2270 as 1.2510 contains upside reactions, over 1.2520 opens an equidistant swing objective of 1.2570 as this level stalls correction there is a window for a resumption of downside pressure. Medium term hurdle at 1.2670
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 115.59 is the next upside objective representing the 61.8% retracement of the 2015/16 decline. A breach of 111.07 would suggest a broader correction to the advance opening a move back to test symmetry swing support at 109.60
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: While symmetry swing support at 118.80 survives, the advance looks set to test 121 equidistant swing objective. A break back below 118.45 opens 116.20 failure here would concern the bullish thesis
Retail Sentiment: Bearish
Trading Take-away: Long

Commodities FX: GOLD closed up 0.88% to 1,194.00 per ounce, recovering from their lowest levels since February, helped by a softer dollar and lower Treasury yields. OIL settled up $1.02, or 2.2%, at $47.08 per barrel in choppy trade, with prices largely driven by OPEC headlines. After falling as much as 2% in early Asia, prices recovered as the day progressed, after Iraq’s oil minister said the country would cooperate with the group to reach an agreement “acceptable to all.” AUD higher to reach yesterday’s high at 0.7494 as USD weakened by profit-taking ahead of event risks, including Hillary Clinton’s push for an election recount and Sunday’s referendum in Italy. In the absence of domestic data, traders will turn to today’s US Q3 GDP and US Consumer Confidence reports for catalysts. CAD strengthened to a nearly one-week high against the USD as oil rallied ahead of the meeting of major oil producers. The growing service sector provides high-quality jobs and helps to bolster the Canadian economy at a time when it is still struggling with the fallout of the drop in commodity prices, according to the head of the Bank of Canada.

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

Technical: .7092 AB=CD remains the downside objective. Near term resistance sited at .7440 has been eroded the correction should now challenge pivotal 7530 as this levels contains the upside reaction there is potential for resumption of downside pressure.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Price continues to consolidate in a bullish pattern, the profit taking pullback tests and holds symmetry support at 1.3407, as this area contains the pullback 1.3620 becomes the next upside objective. Only a close below 1.3250 concerns the bullish bias
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: As equidistant swing objective sited at 1202 contains upside reactions bears target 1149 as the next downside objective. A close over 1220 suggest broader correction to the recent decline.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Offers emerged at 48.92 equidistant swing resistance as this level contains upside reaction opportunity for a move to the downside targeting symmetry swing objective at 39.78. A breach of 49.20 opens a quick test of offers above 50.00
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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