London Forex Report: Sterling Soaring

London Forex Report: Sterling Soaring

London Forex Report: Markets seemed to shrug off recent threats from North Korea, with Pyongyang’s ambassador rejecting the “illegal and unlawful” sanctions and the country is “ready to use a form of ultimate means… to make the U.S. suffer the greatest pain it ever experienced in its history”. The threat comes after the U.N. Security Council resolution imposed the toughest sanctions against Pyongyang which limited N. Korea’s imports of fuel and textiles. Despite the continued pernicious choice of words made on the geopolitical front, risk appetite recovered with US major stock indices climbing higher while safe havens like USTs (2y- and 10y- yields rose 1.6bp and 3.7bp respectively) and gold fell.

NORTH AMERICA The US JOLTS job openings data for July showed jobs opening surged to a record high of 6.17 million (up from a revised 6.116 million in June). This data release highlighted the rising US job vacancies and hints at stronger jobs growth in the coming months for US, helping to allay concerns about the weaker-than-expected August jobs numbers was an aberration. Meanwhile Bloomberg reported that US President Donald Trump plans an aggressive travel schedule, taking him to as many as 13 states over the next seven weeks, to sell the idea of the US tax reform as the White House administration tries to avoid repeating the communications failures of its attempt to repeal Obamacare.

EUROPE Italy’s unemployment rate fell to 11.2% in Q2, below forecasts for a steady 11.3% rate, while French private sector payrolls rose 0.4% in the same period; both data points reflect the strong growth momentum evident in the Eurozone in Q2. Retail prices in the UK accelerated to 3.9% YoY in August, rising from 3.6% previously. The quickest growth matching January 2012. Meanwhile, producer prices gained 3.4% in Aug compared to 3.1% increase in July, led by strong increase in prices of petroleum products (Aug: +6.9% vs Jul: +3.8%) and slightly quicker growth of manufactured products (Aug: +3.4% vs Jul: +3.2%). Multiple inflation measures in the UK bested expectations in August, fuelling speculation that rising prices will keep the BOE on its toes towards policy normalisation. Consumer prices rose 2.9% YoY, picking up from 2.6%.

ASIA Japan affirmed recent data upsides. BSI gauges on business conditions in large industries and large manufacturers improved in 3Q. The all industry index climbed to 5.1 in 3Q, rebounding from -2.0 in 2Q, while manufacturing index jumped to 9.4 in 3Q, rebounding from -2.9 in 2Q. Producer prices increased the most since Sept 2014, rising 2.9% YoY in August after gaining 2.6%. National Australia Bank’s business indicators showed slightly improved business conditions in August, but confidence declined. The business conditions index inched to 15 from 14 in July, however, business confidence index tumbled to 5 from 12 in July.

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

Technical: 1-3 Day View – As 1.19 acts as near term support 1.2165 becomes the next upside objective ahead of 1.2260 only below 1.1810 concerns the near term bullish bias

1-3 Week View – 1.20 achieved bulls look for a test of 1.2130 as 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 – 1.3260’s former cycle highs achieved at 1.3220 acts as support bulls target a test of 1.3545, a breach of 13130 concerns the bullish bias opening 1.2910.

1-3 Week View – The weekly close above 1.3045 targets the broader symmetry swing objective sited at 1.3263 only a close back below 1.28 would jeopardise the bullish advance.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – As offers above 110 contain corrections bears target a retest of current cycle lows en route to the primary downside objective at 103. Only a close over 111 stabilises the pair near term support is sited at 109.30

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: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – Next upside objective is 132.50 as 131 supports only below 130 concerns the bullish bias opening a move back to 129 base

1-3 Week View – The weekly close above 118.50 arrested the immediate downside risk, 129.44 upside objective achieves as 128 supports bulls look for a move to test 133.36 as the broader upside objective.
Retail Sentiment: Bearish
Trading Take-away: Long

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