London Forex Report: USD Up, Up & Away

London Forex Report: USD Up, Up & Away

London Forex Report: ECB took center stage and as expected, in addition to keeping all benchmark interest rate unchanged, ECB squashed speculations on any QE taper. This raised market speculations that its asset buying programme due to expire in Mar-2017 will be extended, reaffirmed by President Draghi’s comment that any policy decision would be left until December, a timing too close to Mar-2017 to begin tapering that would lead to an eventual end to the asset purchase programme. On the US data front, the faster than expected rebound in existing home sales overshadowed the rise in initial jobless claims and slight easing in Philly Fed business outlook. US existing home sales rose more than expected by 3.20% MOM to annualized pace of 5.47 million in September, with sales grew in all four regions. USD rallied to beat all G10FX following stronger demand amid renewed weakness in European majors. The USD Index jumped during ECB press conference and stayed elevated to close 0.4% higher at 98.31.

FX Majors: EUR ECB maintained its policy stance as widely expected. Main refinancing rate, deposit rate and lending rate were held at 0.00%, -0.40% and 0.25% respectively. Asset purchase target also stayed pat at €80 billion per month. President Mario Draghi signaled that bond tapering may occur before the QE program stops, indicating that an extension to the maturity of the stimulus program is on the table. On the data front, current account surplus rose to €29.7 billion in August (July: revised to €27.7 billion). GBP UK retail sales grew at a slower pace of 4.10% YOY in September after a climb of 6.60% YOY in August. The headline print was dragged by slower sales in food stores and petrol stations and compounded by steeper drop in textile, clothing & footwear sales. JPY Japan’s Nationwide department sales dropped 5.00% YOY in September and extended the streak of negative growth since March this year. Adding to signs of weak domestic demand, machine tool orders tumbled 6.30% YOY in September (August: -8.40% YOY).

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

Technical: 1.1035 caps correction bears seek the next downside objective sited at 1.0845. Near term resistance is sited at 1.0950, medium term resistance is sited at 1.1120 only over 1.1220 eases bearish bias.

Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: As 1.23 rejects near term corrective advances bears target a retest of 1.20. Medium term resistance is sited at 1.2330. Only a close over 1.25 eases bearish pressure.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Bullish attention on the upside equidistant swing corrective objective at 104.86 near term support is at 103.30 only a close below 102.80 eases bullish pressure.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: As 114.50 caps upside expect s test of 113.30 a breach of which suggests an early reversal to trend opening 112 next.
Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX: GOLD price declined on Thursday after 3 straight sessions of gains due to a rebounding US dollar. The gold price fell by US$2.30 to US$1,265.60 on Thursday. OIL prices ended markedly lower on Thursday (19 Oct) as investors took profit after US crude oil price settling at a 15-month high on the previous session. The US Nymex WTI futures decreased by US$1.17 to close at US$50.43. AUD Australia’s unemployment rate ticked down 0.1 ppt to 5.60% in September after a revision to August reading. The headline print improved despite the 9.8k drop in number of jobs filled amid lower labor force participation rate (September: 64.50% vs August: 64.70%). On a separate report, business confidence index climbed to 5 in 3Q (2Q: 3), rising to the highest level in the past three quarters. CAD pressure remains on the downside, with yield differentials favouring the USD. More recently, Thursday’s solid US existing home sales and Philly Fed and a reversal in the price of OIL have been seen as the primary drivers of Canadian Dollar weakness.

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

Technical: Sharp rejection from pivotal 7730 near term support is sited .7600. A close over .7730 reverses bearish bias and focus shifts to .7830.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1.3360 equidistant AB=CD is the next upside objective, only below 1.2960 threatens this objective and suggests a test of pivotal 1.2820
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Anticipate test of 1229 symmetry swing support failure here lets bears target 1200 as the next downside objective, near term resistance is sited 1276 ahead of pivotal 1300.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Equidistant swing objective sited at 52.40 is the primary upside objective as 49.90 supports the advance ,only below 48.00 would suggest false upside break a continuation of a more complex corrective pattern
Retail Sentiment: Bearish
Trading Take-away: Long

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