London Forex Report: USD Long Positioning Highest Since February

London Forex Report: USD Long Positioning Highest Since February

London Forex Report: Fed Chair Yellen’s comments late Friday suggested more aggressive steps may be needed in lieu of “slipping potential” in the US economy somewhat unnerved markets. This was fortunately negated by upbeat retail sales data that staged a 0.6% rebound as expected. Quicker gains in PPI also bolstered expectations that the Fed would be able to raise rates in December as anticipated. Odds of a December Fed rate hike remained at 66% according to Bloomberg’s future implied probability. USD gained against 80% of G10FX spurred by upbeat US data that reinforced December Fed rate hike outlook. The USD Index advanced 0.52% to 98.02, with CFTC data suggesting USD long positioning at highest levels since February.

FX Majors: EUR The euro area’s August trade balance rose to EUR18.4bn as exports rose 8% y/y. The euro area’s trade surplus for January-August amounted to EUR178.7bn vs EUR151.9bn a year earlier. However, EU exports to China fell 3.0% over the same time frame. GBP While obviously grappling with quite different issues at present, in many ways earlier comments from BoE Governor Carney touched on similar themes to Yellen’s. While emphasising that the BoE is not “indifferent” to the level of Sterling, he reinforced that the Bank is willing to “tolerate a bit of overshoot in inflation” in order to support growth. In other words, taking an ultra-flexible approach to its mandate. JPY according to CFTC IMM data USD net long positioning increased by $3.3bn; JPY net longs fell by $2.8bn, the largest one-week JPY move in four months, suggesting JPY bulls are starting to cover, take profit on positions

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

Technical: Bears target 1.0957 as the next downside objective ahead of 1.0845. Near term resistance is sited at 1.1035, medium term resistance is sited at 1.1120 only over 1.1220 eases bearish bias.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: As 1.2260 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): Neutral – Medium Term (1-3 Weeks): Bullish

Technical: Bullish attention on the upside equidistant swing corrective objective at 104.86 near term support is sited 103.80, with the medium term pivot at 103, only a close below 102.80 eases bullish pressure.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 116.11 symmetry swing resistance stalls advance, a close over 116.50 opens the larger scale AB=CD objective at 121.00 Near term support is sited at 114 below 113.60 suggests an early reversal to trend
Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX:

GOLD struggled to hold its ground under the weight of the stronger USD. However, investor appetite remains strong. Gold held in ETFs pushed to their highest level since 2013, despite the weakness in futures prices Holdings are now at 65.9 million ounces according to Bloomberg data. OIL prices did well to weather the USD strength, with the market still focused on the tentative agreement to cut production. With Russia expressing an interest to join the agreement, investors are reluctant to get too bearish. This came amid some weak data, with the oil rig count rising another four to 432 last week, while US production declined by only 17,000b/d to 8.45mb/d. AUD China’s price growth finally picked up after four straight months of deceleration. In September, CPI rose 1.90% YOY after a modest 1.30% YOY growth in August. Adding to the signs of easing downside pressure, producers’ prices increase 0.10% YOY last month, marking its first positive growth since January 2012. Quicker momentum in both price gauges suggested that domestic demand remained on solid footing, giving PBOC a breather from further easing measures for the rest of the year. CAD BoC unlikely to hurt CAD. A dovish surprise from the Bank of Canada (BoC) meeting this week (Wednesday) as unlikely; Canadian economic data and oil prices are holding up relatively well so the market is unlikely to price in more BoC easing soon. Canadian inflation data for September will be released at the end of the week

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

Technical: Symmetry swing resistance sited at .7685 stalls advance as .7650 caps corrections bears target .7412 symmetry swing support. Only over .7730 reverses bearish bias and focus shifts to .7830
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: As 1.3080 supports 1.3372 is the equidistant AB=CD corrective objective, only below 1.2960 threatens this objective and suggests a test of pivotal 1.2820
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Equidistant swing objective sited at 52.40 is the primary upside objective as 49.00 supports the advance , only below 45.00 would suggest false upside break a continuation of a more complex corrective pattern
Retail Sentiment: Bullish
Trading Take-away: Short

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