London Forex Report: Sterling Holds Its Shine Into Month End

London Forex Report: Sterling Holds Its Shine Into Month End

London Forex Report: Global investor sentiments remained fairly sanguine, with the Dow ploughing to fresh record highs as investors rotated from tech to financial stocks, amid upbeat comments Fed chair Yellen coupled with hopes of the US Senate vote on the tax reform bill and healthy economic data. Yellen opined that “with gradual adjustments in the stance of monetary policy, the economy will continue to expand and the job market will strengthen somewhat further, supporting faster growth in wages and incomes” and “overall vulnerabilities in the financial sector appear moderate”.Markets expect some positivity to be attached to a possible Senate vote on the tax reform bill today, after it voted to begin formal debate on the bill late Wednesday, however, it is month end and we may see some near term volatility.

NORTH AMERICA The Fed Beige Book and second estimate of 3Q GDP growth reinforced expectations that recovery in the US economy remains firm. The Beige Book revealed that there is a slight improvement in the outlook and that all 12 districts have maintained modest to moderate growth pace. What’s eye-catching is suggestion that inflationary pressures, a longstanding bane on the Fed monetary policy decision, are strengthening in the past month. The US economy expanded at a faster than initially estimated pace of 3.3% QoQ in 3Q (first estimate +3.0%), picking up from the 3.1% QoQ increase in 2Q, thanks to quicker gain in private investment and slightly higher contribution from net exports which offset slower increase in private consumption.

EUROPE Eurozone, sentiments continued to improve along with the brighter macroeconomic landscape. Overall economic confidence rose to 114.6 in November as expected, its highest in 17 years while consumer confidence turned positive for the first time since 2001, bouncing up to 0.1 in November. Sentiments surrounding business climate also improved to its best level in a decade, at 1.49 in November. UK net consumer credit increased £1.5b in Oct, maintaining the same rise in Sept. Meanwhile, housing sector remains under pressure as mortgage approvals fell to 64.6k in Oct, lowest since Sept 2016 and down from 66.2k in Sept.

ASIA Japan industrial production rebounded albeit at a slower than expected pace of 0.5% MoM in October, as increases in capital and construction goods offset declines in consumer goods. Recent comments from BoJ Deputy Governor Nakaso have focused on the costs of the BoJ’s accommodation, specifically its impact on bank profits. Nakaso also touched upon the importance of communication with regards to the BoJ’s exit strategy. The comments have built upon the recent shift in tone from both Gov. Kuroda and board member Suzuki. Messaging has generally centred on a cost-benefit analysis of the current policy stance and the need to recalibrate on the back of progress toward the BoJ’s inflation target

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

Technical: 1-3 Day View – 1.2092 cycle high vulnerable to retest, near term upside hurdle sited at 1.2010/30, near term support moves to 1.1820, below 1.18 suggests a false upside break an opens a retest of 1.17

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: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – 1.3460 achieved, through here opens prior cycle highs at 1.3650 near term support sited at 1.3390 only below 1.3230 concerns bullish bias

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): Bullish – Medium Term (1-3 Weeks): Bearish

Technical: 1-3 Day View – Initial 110.85 test prompts profit taking , near term resistance moves to 112.50 and bears have the ball while below 113, a breach of 110.60 opens 109.30/10 as the next downside objectives

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): Neutral – Medium Term (1-3 Weeks): Neutral

Technical: 1-3 Day View – Retest of range support once again attracts bids below 131, as this level survives on a daily closing basis expect a retest of 132.60/80 over here opens 134 range resistance. Failure below 131 opens 130.66 ahead of pivotal 127.50.

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: Neutral
Trading Take-away: Neutral

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