London Forex Report: Super Thursday Sterling

London Forex Report: Super Thursday Sterling

London Forex Report: UK looks to have most potential for price action with the service PMI due ahead of the BoE policy decision and Inflation report this morning. Whilst the manufacturing PMI was better than expected on Tuesday, Wednesday’s construction PMI came in weaker. That said, the services number involves a much bigger chunk of the UK economy, hence anything much lower than the previous reading of 53.4 will not offer any encouragement to the minority looking for the BoE to tighten rates

USD US data releases on Wednesday were a tad weaker than forecasted. ADP showed hiring activities moderated in July with 178K gains, which was lower than consensus and prior level of 191K (revised). However ADP Research Institute commented that the hiring gains for the month is consistent with moderate growth in the US. In a separate release, mortgage applications for the period ended Jul 28 declined 2.8% versus a prior level of +0.4%.

EUR Euro area’s PPI fell an as expected 0.1% MoM in June, lowering through-year inflation to 2.5%YoY. Separately, Spain’s unemployment fell 27k in July, which was a smaller decline than seen in recent July months.

GBP UK construction PMI grew at its weakest in a year with a weaker than excepted reading of 51.9 versus a prior month’s level of 54.8. Recall, construction sector was a drag to growth in the second quarter, and the economy as a whole experienced “notable slowdown” in the first half of the year, according to the Department of National Statistics last week.

JPY dovish public appearance from BoJ board member Funo. The speech highlighted insufficient price momentum and underscored a need to maintain exceptional levels of ‘powerful’ accommodation. Yield spreads have widened modestly, in a JPY-negative manner. Japan consumer confidence rose more than expected to 43.8 in July. The index showed improvement in consumer confidence on willingness to buy durable goods.

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

Technical: 1-3 Day View – 1.1860/80 achieved as 1.1790/70 supports bulls set sites on 1.20 only a daily close below 1.16 concerns the near term bullish bias setting a top for a test of 1.1440

1-3 Week View – 1.1876 achieved focus shifts to 1.20 . Weekly close below 1.13 neutralises bullish objectives.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – Bulls target test of pivotal 1.3263 near term support is sited at 1.3150/30. a daily closing breach of 1.30 concerns the medium term bullish bias opening a retest of 1.28.

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

Technical: 1-3 Day View – As 111.20 contains upside reactions 108.93 is the immediate downside objective. Near term support is sited at 110.30

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: Bullish
Trading Take-away: Short

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

Technical: 1-3 Day View – Expected move through 130.70/80 plays out focus shifts to 133.36 upside objective as 130.60 supports, below 129.40/20 suggests false break.

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