London Forex Report: Trump Tips Taylor

London Forex Report: Trump Tips Taylor

London Forex Report: With growing market optimism that the Fed would hike interest rates a third time this year, bank shares lifted the S&P500 to fresh records, while US Treasury bonds retreated. In contrast, lingering Catalonian concerns still weighed on the IBEX35 and the Euro for now. Meanwhile, US-Japan dialogue talks will focus on a common strategy on trade and investment rules and issues to ensure a free and fair trade relationship according to US VP Pence. Separately, US president Trump and Senate Majority Leader McConnell also affirmed their aim to deliver a tax bill by December. USD rose in late trade on Monday after a report that President Trump was favouring Stanford economist John Taylor to head the Federal Reserve next year.

NORTH AMERICA US Empire manufacturing staged a surprised pick-up to 30.2 in October, its highest in three years in another sign that US manufacturing activities are still gaining momentum going into 4Q and auguring well with prospects of further Fed policy normalisation

EUROPE EU trade balance registered a bigger than expected surplus of €21.6bn in August as advances in exports (+2.5% MoM) riding on continuous recovery in global demand far outweighed the increase in imports (+0.4%). Continuous hefty trade surpluses will help underpin further economic recovery in the Euro region going forward. UK PM Theresa May travelled to Brussels on Monday for talks over dinner with EC Jean-Claude Juncker after deadlock in Brexit appeared to dash her hopes a summit this week could launch negotiations on future trade ties. Sources say that Brexit negotiations are heading for a catastrophic breakdown unless the EU signals this week that it will allow talks to move on to trade.

ASIA China CPI moderated to 1.6% YoY as expected while PPI picked up more than expected to 6.9% YoY in September. The softer increase in consumer prices was dragged by steeper fall in food prices (-1.4% vs – 0.2%), which offset faster increase in non-food prices (+2.4% vs +2.3%). CPI ex-food and energy grew at a faster pace of 2.3% YoY in September (August: +2.2%). Benign consumer prices and rebounding factory prices as a result of continuous capacity cuts in steel and cement suggest domestic demand remains resilient and shall remain supportive of economic growth going forward. Japan showed signs of strength in its manufacturing sector. Final print showed industrial production grew at a 2.0% MoM pace in August, rebounding from a 0.8% MoM decline in July. The turnaround was driven by manufacturing (+2.0% vs -0.7%) as well as mining and utilities (+1.7% vs -0.5%).

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

Technical: 1-3 Day View – Anticipated rejection from 1.18360/80 resistance plays out, as this area caps the correction expect a move back to test bids towards 1.17. Over 1.1920 opens a retest of current cycle highs. A close below 1.17 suggest second leg of broader correction underway targeting 1.1471

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: Bullish
Trading Take-away: Short

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

Technical: 1-3 Day View – The daily close over 1.3220 opens the anticipated test of 1.3320 and now on towards 1.3360 as 1.3220 supports. Failure below 1.3190/70 opens 1.3030

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

Technical: 1-3 Day View – The sustained break of 112 opens a move to test 110.85 base break out level, 112 should now act as ear term resistance, only over 112.60 reasserts bullish objective over 113.50

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

Technical: 1-3 Day View – The snapback close below 132 neutralises upside momentum opening a move back to 130.80, as this area supports there is potential for to regain upside bias, failure below 130 opens 129.30 next

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, only a closing breach of 127 concerns the bullish basis.
Retail Sentiment: Neutral
Trading Take-away: Neutral

Posted in Forex Analysis, London Forex Report, tagged with on