London Forex Report: USD Pausing On Profit Taking

London Forex Report: USD Pausing On Profit Taking

London Forex Report: Key US data continued to reaffirm that recovery in the US economy is on track. In line with uptick in ISM indices, industrial production rebounded to increase 0.1% MOM in September, spurred by expansion in the mining and manufacturing sectors which offset deeper contraction in utilities production. This came despite a sub-par reading from New York Fed that showed a bigger contraction in manufacturing activities. Industrial production in Japan also staged a rebound, adding to signs of improvement in global manufacturing. USD slipped against 90% G10FX, pulling back from recent gains as bets on an upcoming Fed rate hike saturates. The USD Index fell through all sessions to close 0.13% lower at 97.88.

FX Majors: EUR With consumer prices barely rising and the recovery still fragile, most economists predict the European Central Bank (ECB) president will prolong bond-buying. That decision is more likely to be taken in December than at this week’s policy meeting, while most analysts believe the program won’t start to be wound down until the second half of 2017. Even then, the ECB is only expected to act if euro-area inflation is holding above 1.5% GBP The Bank of England’s deputy governor Ben Broadbent said that the plummeting price of the pound has been an important “shock absorber” for the British economy in the aftermath of the EU referendum. JPY Final report from Japan’s Ministry of Economy, Trade and Industry showed that industrial production rose 1.30% from July to August. Although slightly slower than earlier projection of 1.50% growth, August figure took a directional turn from the 0.40% MOM decline from June to July as underlying details showed that manufacturing and mining gathered steam in August.

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

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

Technical: As 1.2260/80 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): Bearish

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 edged lower on Monday (14 Oct) as there was increasing skepticism among investors that OPEC can coordinate an effective production cut and even if there is, that move is already priced in. The US Nymex WTI futures decreased by US$0.41 to close below US$50 at US$49.94. AUD Tone of RBA October meeting minutes were less dovish, suggesting that the central bank is in no hurry to cut rates soon. Downside pressure from China had eased and increase in commodity prices had supported a rise in Australia’s terms of trade. Risks in the housing market had diminished and recovery of the domestic economy on track, the minutes said. CAD has been trading with a firmer tone into this week, with most of the price action attributed to US Dollar selling on the back of Monday’s softer round of US data. Yield differentials remain the key driver right now, and these differentials are favouring the Buck as the Fed draws closer to another rate hike. Tomorrow, we get an important Bank of Canada policy decision, where the central bank is expected to remain on hold, while maintaining and easing bias

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

Technical: Symmetry swing resistance sited at .7685 under pressure over .7730 reverses bearish bias and focus shifts to .7830. Only over .7730 reverses bearish bias and focus shifts to .7830
Retail Sentiment: Bearish
Trading Take-away: Long

USDCAD
Outlook: Short Term (1-3 Days): Bearish – 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: Bullish
Trading Take-away: Short

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: Bearish
Trading Take-away: Long

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