London Forex Report: Position Squaring & Flight To Safety

London Forex Report: Position Squaring & Flight To Safety

London Forex Report: Risk assets took a hit and safe haven assets including UST and gold gained on a flight to safety as markets were cautious ahead of UK snap election and ECB meeting tomorrow. A narrower win by the ruling party led by Theresa May could complicate the Brexit negotiations and progress, adding more anxieties and uncertainties in the process. Meanwhile, markets do not expect any surprises from ECB, who will likely signal no urgency in unwinding its stimulus in the near future

USD US job openings surged to a record high in April, according to the Labor Department’s monthly Job Openings and Labor Turnover Survey, or JOLTS. Job opening increased 259k to a seasonally adjusted 6.0mn in April, the highest since the government started tracking the series in 2000. The monthly increase was the largest in just over a year and pushed the jobs openings rate to 4.0%, the highest since last July, from 3.8% in March. Hiring, however, decreased by 253k jobs to 5.1mn. That lowered the hiring rate to a one-year low of 3.5% from 3.6% in March.

EUR Sentix Investor Sentiment Index rose another 1pt to 28.4 in June, which is the highest reading since July 2007. Meanwhile, retail sales in the Eeuro area rose 0.1% MoM in April to be up 2.5% YoY. The markets are keeping a close eye on the ECB, as policymakers meet on Thursday. The central bank is expected to hold the benchmark interest rate at a flat 0% with no change at the upcoming meeting. With that being said, the markets would still want to see the ECB acknowledge a stronger Eurozone economy and will be looking for a more hawkish tone from the rate statement with presser comments from ECB head Mario Draghi. The ECB rhetoric remains cautious and it is not expected to taper its stimulus program that will end in December.

GBP The UK’s BRC retail monitor pointed to like-for-like sales falling 0.4% YoY in May. Total store sales rose 0.2% YoY, with the three-month average growth rate edging down to 1.9% YoY. Polling shows the UK election remains very tight; a Survation survey reported the Conservative lead over Labour was just 1% (unchanged from Sunday) and a YouGov survey today indicated the risk that the Tory party could emerge short of an overall majority from the vote.

JPY The broader tone remains key, however stronger domestic labor cash earnings data and narrowing interest rate differentials are also delivering JPY support. Options markets are suggestive of a broad, albeit mild, uptick in measures of implied volatility. Risk reversals are steady, pricing a premium for protection against JPY strength

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

Technical: 1-3 Day View – Breach of 1.12 refocuses bulls on equidistant swing objective of 1.1291 en-route to a test of broader symmetry swing objective at 114.30. Only below 1.11 concerns near term bullish bias opening a move back to test 1.1020.

1-3 Week View – While 1.0830 supports 114.30 becomes the primary upside objective. A weekly close over 1.1450 sets upside focus on 1.1876. Weekly close below 1.08 neutralises bullish objectives
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – Symmetry swing objectives at 1.3060 & 1.3118 are targeted a close below 1.2750 concerns near term bullish bias and opens a move back to test the 1.26 pivot, the near term upside hurdle is sited at 1.2920

1-3 Week View – The weekly closing breach of 1.2880 opens 1.30 as the next upside objective ahead of the broader symmetry swing objective sited at 1.3238.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – 110.20 breach negates near term upside prospects opening a retest of 1.0940, near term as 110.30 contains upside reactions 108 will be a key downside objective.

1-3 Week View – As 108.40 equidistant swing support survives on a weekly closing basis bulls will look for a grind higher to retest 115, a close below 108 negates the broader bullish theme and opens the psychological 100 magnet
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: 1-3 Day View – 129.44 is the medium term upside objective, near term support is sited at 123.10 being eroded, near term upside objective of 126.84 equidistant swing objective, only below 122 concerns near term bullish bias.

1-3 Week View – The weekly close above 118.50 arrested the immediate downside risk, resetting focus on pivotal 124.40 a weekly breach of this level opens 129.44 as the broader upside objective
Retail Sentiment: Neutral
Trading Take-away: Neutral