London Forex Report: RBA Rate Cut Priced, AUD Higher

London Forex Report: RBA Rate Cut Priced, AUD Higher

London Forex Report: Data dump on PMI manufacturing confirmed manufacturing activities remained very uneven and soft globally, suggesting little improvement in growth outlook as we enter 3Q. Official prints out of the US and China, as well as Markit PMI readings for EU and the UK all showed slower traction in the manufacturing sector in July. US ISM manufacturing index moderated to 52.6 in July (June: 53.2) due to stagnant employment conditions amid economic uncertainties. However, new orders and production pointed to more promising outlook and was more in line with the final report from Markit indicating quicker pace of expansion in July (52.9 vs June: 51.3). USD recovered moderately as demand for refuge offset weaker US data. The USD Index inched higher throughout trading to close 0.19% higher at 95.71.

FX Majors: EUR July euro area manufacturing PMI improved fractionally over the latter part of July to come in at 52.0 vs the flash 51.9 reading. GBP sharp downward adjustment to the July manufacturing PMI in the UK. It fell to 48.2 vs the flash 49.1 reading and 52.4 in June. Expectations are that the BoE will announce a package of policy easing measures on Thursday, including a 25bps cut in the bank rate to 0.25% . JPY remains strong as the anticipated fiscal announcement from PM Abe is given this morning.

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

Technical: Retesting range resistance, a close above 1.12 opens 1.14 next. Near term support is sited at 1.1120.

Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: Over 1.3330 shifts attention back to 1.3550 symmetry swing objective.Near term support is sited at 1.3150.

Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: The close below 103 will see bears target a retest of cycle lows below 100. Near term resistance is sited at 103.90.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Below 113 opens 110.80 as the next downside objective. Near term resistance is sited at 115.50
Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX: GOLD prices retreated from a near three-week high hit in the previous session, as the dollar recovered from its lows, but uncertainty over the Fed’s interest rates path limited losses. Oil prices were under pressure Monday, settling sharply lower after briefly breaking below $40/bbl for the first time since April, weighed by a survey showing output in OPEC reached record highs last month amid the biggest addition of US oil rigs in two years. AUD RBA delivered the much anticipated rate cut trimming its policy rate by 0.25% to 1.5% on cash deposits. CAD still very much driven off the direction in OIL, which has come under intense pressure in recent days. We also saw some broader risk off flow and upbeat Fed comments on Monday which added to the downside pressure in the Canadian Dollar. Looking ahead, Canada RBC manufacturing PMIs and US core PCE are the key standouts on Tuesday.

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

Technical: Offers above resistance sited at .7570 continues to cap upside attempts. Range resistance is sited at .7676 with range support now at .7400
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Breach of 1.3060 opens 1.2965 symmetry swing support as this level attracts bids expect a further higher to target equidistant swing target of 1.3380

Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1305 provides a platform to challenge and breach 1360 highs en-route to 1391. Below 1300 opens 1270
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Breach of bids at 41.87 opens 38.19 as the next downside objective, expect 41.87 prior support to act as resistance, a close over 44.40 is required to ease bearish pressure.
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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