London Forex Report: Trump Team Under Scrutiny

London Forex Report: Trump Team Under Scrutiny

London Forex Report: The USD Index slid to its lowest level in 13 months this week, hit by a broadly stronger euro and by mounting political worries associated with the Trump-Russia investigation. Broadly, the lack of major U.S. economic news, the slightly more cautious tone to Fed Chair Janet Yellen’s commentary last week, the disappointing data on inflation and retail sales and the steady stream of concerning political headlines in the U.S have left the dollar on the defensive.

USD US data continued to come in on a more upbeat note, save for the pullback in Philly Fed business outlook to an eight month low dragged by lower new orders, shipment, and employment. Initial jobless claims fell more than expected by 15k to 233k in the week ended July15 reaffirming steady recovery in the labour market. Forward looking leading index picked up to increase 0.6% MoM in June, its best in five months adding to signs of quicker growth in the US economy in 2Q

EUR soared to its highest level 23-months against the dollar after the ECB left monetary policy unchanged but signalled that policymakers would revisit the topic of monthly asset purchases in the fall. That was largely interpreted by traders as a signal that the bank is inching closer to announcing a taper of its asset purchases next year. Euro zone and German CPI, the flash reading of euro zone PMI’s and the Ifo survey of German business confidence will all headline the 19-member bloc’s economic calendar . The market will also be closely watching for any comments from policymakers following the previous week’s ECB meeting.

GBP The latest data showed that net borrowings of the UK government in Jun eased to £6.3b, dipping from £6.4b in May. Nonetheless, the additional debt is still more than what was expected to be just £4.2b, and likely to further weigh on UK’s budget deficit. U.K. GDP for the second quarter will be closely watched for signs that the environment of stagflation (slowing growth and rising inflation) continues.

JPY Data from Japan ticked higher as spending expanded at quicker pace. Nationwide survey found that sales at departmental stores rose 1.4% YoY in June after stagnating in May, one of the few signs of an improving domestic sector after recent dips in data. Manufacturing sector grew at a slightly slower pace as shown by the slight moderation in Nikkei PMI reading to 52.2 in July.

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

Technical: 1-3 Day View – As 1.1580 acts as support bulls target 1.1713 only a daily close below 1.1480 concerns the near term bullish bias setting a top for a test of 1.1370

1-3 Week View – While 1.0830 supports 114.30 becomes the primary upside objective. The weekly close over 1.1450 sets upside focus on 1.1876. Weekly close below 1.08 neutralises bullish objectives.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – As 1.3030 former support now acts as resistance 1.2810 becomes the downside objective over 1.3050 resets focus on pivotal 1.3238, a daily closing breach of 1.2810 concerns the medium term bullish bias.

1-3 Week View – The weekly close above 1.3045 targets the broader symmetry swing objective sited at 1.3238 only a close back below 1.28 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): Bearish

Technical: 1-3 Day View – Pull back extends and threatens reversal with the breach of 112.10 delaying the bullish target at 115.50 and opening a move back towards 109, 111.66 is the immediate upside hurdle.

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

Technical: 1-3 Day View – 128 provides platform for a move through 130.70/80 en-route to 133.36, below 129.40/20 resets 130/128 range trade

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: Neutral
Trading Take-away: Neutral