London Forex Report: USD Supported Ahead of NFP Release

London Forex Report: USD Supported Ahead of NFP Release

London Forex Report: June’s FOMC meeting minutes cited global risks and disappointing May’s job number for leaving rates unchanged last month. With UK voting to leave the EU, increasing volatility continued to push back expectation of a rate hike as the already ailing growth prospect deteriorates. On the data front, US private sector added 172k jobs to payroll in June after an increase of 168k jobs in May. The ADP survey was better than expectation, raising hopes that weak jobs gain in May could be temporary and job market momentum remains firm. USD climbed as refuge demand regained foothold in the US session on top of support from firmer US data. The USD Index overturned early losses as it jumped in US morning to close 0.29% at 96.32.

FX Majors: EUR was capped by 1.1100 barrier and supported by 1.1050 handle during the day on Thursday ahead of today’s US non-farm payrolls release. German industrial production fell 1.3% MoM in May, well below the forecast of a 0.1% gain while the deterioration was mostly driven by a decline in the production of capital goods. The sector is poised to weigh on GDP growth in 2Q after output soared in 1Q. Production may be returning to rates of growth seen over the past few years. The slowdown in Germany and Spain, suggests the figure for the euro area is likely to weaken. GBP remained below 1.3000 against the dollar, a level not seen since 1985, with most market participants forecasting further weakness. UK consumer confidence slumped the most in 21 years, the latest sign that Britons’ vote to leave the European Union is harming the nation’s outlook. Gfk’s core index slid to -9 in a special post-referendum survey conducted from 30 June to 5 July, from -1 earlier in June. That’s the biggest slide since December 1994 when increases in tax, interest rates and job insecurity weighed on spending. JPY posted strong gains for three consecutive days and the pair hit an intraday low of 100.57 yesterday, but still holding above its trough of 99 yen hit on 24 June, the day after the UK vote. The Bank of Japan cut its assessment for two of Japan’s nine regions and suggested the market turmoil triggered by the Brexit vote could hurt consumer sentiment, signalling concerns over a strong yen and weak spending could derail the economic economy.

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

Technical: Market appears to be trading in a range 1.12 resistance 1.10 support, over 1.12 sets target at symmetry swing resistance sited at 1.13, below 1.10 opens 1.09 reaction lows.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: Bears have the ball while 1.3120 near term resistance rejects upside reactions. Next downside objective is equality swing objective sited at 1.2720
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Bears will look to test 99.90 a failure here opens 98.99 reaction lows. A sustained move through 103.50 is required to ease immediate downside pressure, intraday resistance sited at 101.40
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Next downside level to watch is 107 with 115.50 near term resistance now. A close over 116 would ease near term bearish bias. Near term support is sited at 110.60, with symmetry swing resistance sited at 113.30
Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX: GOLD rally was halted on Thursday as investors took profit ahead of the US June NFP data. The gold price eased lower by US$3.33 to US$1,360.45 on Thursday. Oil ended markedly lower on Thursday (7 Jul) after the US Department of Energy reported US commercial crude inventories fell by 2.2 million barrels in the week ending 1Jul, missing the market projections for a 2.5 million barrels decline. The US Department of Energy also reported a much smaller 100,000 barrels decline of Gasoline stockpiles, missing the projected 350,000 barrels decline despite strong summer driving demand. The US Nymex WTI futures fell by US$2.29 to US$45.14. AUD quickly bounced back above 0.7500 level after initially dropping on news that Standard & Poor’s had cut its outlook on the country’s top-notch AAA credit rating to negative from stable. Australian bonds barely budged as 10-year yields of 1.88 percent make the debt highly attractive compared to the negative yields of some of its peers which supported the Australian dollar. CAD weakened against the USD as oil prices sunk to a two-month low and ahead of jobs statistics due today. The currency initially strengthened but reversed course after the report shown a drop in weekly crude stockpiles close to analysts’ forecasts, but far less than the decline expected. Canadian jobs figures for June is due out tonight while investors should be alerted that the federal statistics agency has not collected jobs data for Fort McMurray since the Alberta city was overwhelmed by wildfire in May.

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

Technical: Breach of .7480 the midpoint of the broader .7660/.7300 range places renewed emphasis on a test of upper end of the range. Intraday support is sited at .7430, below here opens move back to .7300 range support.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Range trade persists 1.30/1.28. While above 1.28 expect breach of 1.31 resistance below 1.28 opens broader 1.2660 support
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1361 achieved bulls now target 1391 with 1315 near term support now. Only below 1300 concerns near term bullish bias.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: Only a close below 46 threatens medium term bullish bias, below .46 opens a test of 44 as next downside objective. As 46.70 supports expect a retest of 51.60’s highs.
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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