London Forex Report: Risk Rattled, Dollar Down

London Forex Report: Risk Rattled, Dollar Down

London Forex Report: Risk off as recent optimism over oil prices were dented by IEA’s trimming of demand forecasts for 2018 and ahead of the anticipated GOP vote on its tax bill. Meanwhile, Fed’s Bostic argued that the FOMC is “An institution that has consistently and historically been very evidence-based” and “I’m comfortable with the notion of us continuing to go on our pace towards a more balanced monetary policy” despite governor changes, whereas Bullard argued the current Fed Funds rate “is likely to remain appropriate over the near term”.

NORTH AMERICA Data from the US was mixed. The NFIB survey found that small business optimism improved slightly in October, pushing the index up to 103.8 from 103.0. Producer prices steadied at 0.4% MoM in October, beating expectations of a soft 0.1% rise. Annually, producer prices rose quicker, up 2.8% YoY compared to 2.6% in September.

EUROPE Economic outlook in the Eurozone continues to improve, backed by a set of positive data though not without a few misses. GDP was estimated to have risen by 0.6% QoQ in 3Q, a tad softer than the 0.7% in 2Q, but annually, the figure ticked higher to 2.5% YoY from 2.3% in 2Q. More importantly, Germany’s GDP, a major driver of the region’s economic activity, grew 2.3% YoY in 3Q estimates and up from 1.0% in 2Q. Industrial output increased 3.3% YoY in September, easing from 3.9% previously. Meanwhile, ZEW survey on economic sentiment returned improved responses, lifting the index to 30.9 in November from 26.7 previously. UK inflation gauges mostly disappointed in October and gave no incentive for BOE to consider further tightening. Consumer prices steadied at 3.0% YoY when it was expected to tick higher as slower increases in transport, communication, clothing & footwear and household items offset acceleration in food and housing. Retail prices accelerated, but still missed the expected 4.1%; retail prices rose 4.0% from 3.9% in October. Producer prices slowed to 2.8% in October, down from 3.3% previously, weighed down by slower prices of manufactured and petroleum products.

ASIA Japan’s economy expanded 0.3% QoQ according to early 3Q estimates, moderating from a 0.6% increase in 2Q and raising doubts over the sustainability of recent upsides in economic activity. Consumption remains weak, registering a 0.5% decline after gaining 0.8% in 2Q, a sign that marginal wage growth remains a bane. Meanwhile, business spending also lost momentum, gaining just 0.2% in 3Q after rising 0.5% in 2Q

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

Technical: 1-3 Day View – The daily close north of 1.1750 reasserts upside objectives opening 1.1880, 1.1750 now becomes support a daily close over 1.19 leaves 1.2092 cycle high vulnerable to retest

1-3 Week View – 1.2130 the next upside objective. Weekly close below 1.16 neutralises bullish objectives opening a test of 1.14
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – Retest of 1.3330 sees a sharp reversal and price now testing broader range support at 1.3030 a failure here opens 1.2750 as the next downside objective, near term resistance is sited at 1.3185 ahead of pivotal 1.3230

1-3 Week View – 1.3263 achieved as this acts as support 1.3836 is the next upside objective only a close back below 1.30 would jeopardise the bullish advance.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – A closing breach of 113 concerns the bullish bias and opens 111.65 ahead of pivotal 110.85, near term resistance sited at 113.30

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: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – As 133 now acts as support bulls target a retest of prior cycle highs and offers above 134.50, only a close below 132.48 would suggest a false upside break and suggest a retest and break of range lows

1-3 Week View – 136.10 is the principle upside objective as this area caps the current advance expect a retest of 131.50 to set a base for the next leg higher, a closing breach of 131 concerns the bullish basis.
Retail Sentiment: Bearish
Trading Take-away: Long

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