London Forex Report: Whipsaw Reactions Within Ranges

London Forex Report: Whipsaw Reactions Within Ranges

London Forex Report: US data supported a Fed rate hike. CPI missed expectation but sustained a 1.0% YOY growth in May while core inflation firmed up to 2.2%, suggesting that price pressure remained on the uptrend. Other data were mostly positive, with Philadelphia fed business outlook index turning positive and housing market index increasing by 2 points to 60 in June. Both indicated that manufacturing and housing market were adding momentum before the turn of the second quarter. USD clawed back gains from losses triggered by a less hawkish Fed.The USD Index rallied strongly in European trade before overturning gains US mid-day, closing 0.04% lower at 94.56 amid losses incurred against the index’s major component JPY.

FX Majors: EUR made a dramatic U-turn and took back most of its intraday losses as sentiment switched during the New York session. The pair had risen more than a hundred pips after bouncing from a low of 1.1129, reaching the barrier of 1.1240s overnight. IMF said “Growing political divisions and Euroscepticism have weakened prospects for collective action, leaving the euro area increasingly vulnerable to a number of risks at a time when there is little policy space” GBP Members of BOE’s MPC meeting voted unanimously to keep interest rate unchanged at 0.5% and maintained the stock of purchased assets at £375 billion. The central bank strengthened its caution against Brexit risks, predicting that Sterling may fall sharply and there could be “worsening terms of trade, lower productivity, and higher risk premia” domestically while causing deterioration in global risks sentiment. Data wise, UK’s retail sales rose 6.0% YOY in May (April: +5.2% YOY). Accelerating at quicker pace for two straight months, we saw sales of clothing & footwear, non- store retailing and auto fuel picking up last month. JPY BOJ made no change to its existing monetary policy, increasing its annual monetary base at the pace of about 80 trillion yen. Interest rate will be maintained at -0.1% and the central bank offered a slightly weaker view on consumer inflation than in April which is projected to stay slightly negative or about zero percent in the short term

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

Technical: Whipsaw price action within broader 1.11/ 1.14 range while 1.13 caps upside reactions bears have the ball and pressure a break of the range lows
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: Expected test of 1.40 next prompts sharp intraday reversal over 1.4350 suggests renewed attempt to test upper range and offers above 1.45. Failure at 1.4340 opens retest of yesterday’s lows.
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Technical: Downside ratchet breaks 105.55 lows the failure at 105 opens 103 as the next downside objective. 105.50 becomes the near term pivotal resistance.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Weekly equality objective at 117.36 achieved. 118.50 becomes near term resistance only over 120.50 eases bearish pressure, while 118.50 caps upside bears target retest of 115.50 lows.
Retail Sentiment: Bullish
Trading Take-away: Short

Commodities FX: GOLD touched USD1315/oz as investors sort safe haven assets. However, the tragic death of a UK politician saw the suspension campaigning for the EU referendum and the GBP move higher, lessening the appeal of the precious metal Oil moved lower as supply restarts in Canada added to worries about global economic growth. However, reports that Nigerian crude output dropped even further while US gasoline demand climbed to a record in May highlights the glass half empty approach the market is taking at the moment. AUD rebounded in tandem with the GPB since a British member of parliament was shot dead in the street, markets rekindled sentiments supporting Britain to stay. The Australia’s May jobs data showed an economy in fairly good health. However, the external risks to growth were not lost on policy makers CAD dropped on Thursday amid the potential risk from Brexit and the slumped oil prices. Oil prices slumped about 4% and hit one-month lows on Thursday, setting down for a sixth straight day over the fear of global economic turmoil if Britain exits the European Union.

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

Technical: 7450 rejects upside reactions expect rotation to test .7230 support next as .7340 caps upside reactions.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: 1.3150 is the next upside objective as 1.29 supports downside reactions. Failure at 1.29 opens pivotal support at 1.28.
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Technical: 1331 is the next upside objective while 1280 now acts as near term support. Failure below 1275 sets up a bearish double top pattern targeting a rotation back to test 1230 support.
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, as 46.00 survives on a closing basis expect rotation back towards 50.00 where second wave of selling is likely to emerge.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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