London Forex Report: US Retail Sales Reignites Rate Sentiments

London Forex Report: US Retail Sales Reignites Rate Sentiments

London Forex Report: USD Data from the US saw improved traction. The manufacturing sector in New York Fed district grew at its quickest pace since Sept 2014, as the index surged to 25.2 in August, climbing from 9.8 in July and blasting markets expectations of an increase to 10.0. Retail sales picked up pace in July with a 0.6% MoM gain, rising from an upwardly revised 0.3% increase a month ago. Discounting the effect of volatile automobile sales, retail sales accelerated from 0.1% to 0.5% MoM in July

EUR Germany reported a 0.6% gain in GDP growth for Q2, a little below median expectations for a 0.7% gain. Q1 growth was revised up modestly to +0.7% (+0.6% prelim) and growth rose an adjusted 2.1% in the Q2 year (vs 1.9% expected). The broader Eurozone economy performed well in H1 and supports the impression that the ECB will roll back some monetary accommodation next month.

GBP UK CPI held steady at 2.6% for the month of July, while PPI moderated a tad to 3.2% YoY in July, and may delay prospects of BoE interest rate hike as inflation failed to climb higher even though RPI was the only price gauge that reported a slight uptick to 3.6% YoY. We expect BoE to keep its key policy rate at current level, staying pat as inflation seems to be lacking momentum to chart higher gains.

JPY Japan released another set of better than expected numbers following the recent GDP acceleration. Industrial production increased 2.2% MoM in June, upwardly revised from 1.6% initial estimate, while annual pace of growth was revised to 5.5% from 4.9% in preliminary report. Comparatively, MoM figure represents a rebound from that recorded in May, when output fell 3.6%.

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

Technical: 1-3 Day View – Retest of bids just below 1.17 , as this level contains downside reactions bulls look for a retest of cycle highs en route to 1.20, intraday upside hurdle sited at 1.1850, only a daily close below 1.1620 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 1.14 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 – Expect a retest of 1.28, near term resistance is sited at 1.2950, only a close over 1.3030 reestablishes near term bullish tone

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: Bullish
Trading Take-away: Short

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

Technical: 1-3 Day View – 108.93 downside objective achieved anticipated profit taking pull back on the initial test of this level playing out, near term resistance sited 111, a daily close over 111.65 neutralises downside pressure.

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

Technical: 1-3 Day View – Support at 128.00 survives as this holds there is potential for a retest and breach of cycle high at 131.39, however failure to recapture 1.30 sets up a retest of 128 and failure here sets a top for retest of 125.80.

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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