London Forex Report: USDCAD At Eleven Year Highs

London Forex Report: USDCAD At Eleven Year Highs

Markets are becoming increasingly cautious as the two-day FOMC meeting approaches, no US data on the deck yesterday. Data elsewhere were mostly positive, but did little to soothe nervousness among traders with whipsaw price action in many asset markets. Industrial production prints out of both Eurozone and Japan were better. Markets turned risk-on in US trade USD Index stalled while bids retreated amid paring of positions going into FOMC meeting. The USD Index tumbled from its intraday high paring gains to close at 97.60, up a mere 0.04% on the day. Crude printed seven year lows with USDCAD at eleven year highs.

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

Fundamental: Supported by the speech from ECB’s Draghi and Costa Krugman, EUR climbed to an intraday high of 1.1048 against USD. Later on, EURUSD recovered part of its gain and returned to around 1.1000 to start Tuesday’s session. ECB chairman Draghi said Euro Zone will reach the inflation target without delay after its easing policy this month while no limits will be added on price stimulation if growth is necessary.

Technical: While 1.09 caps intraday downside corrections expect a grind higher to retest last weeks high and onwards towards the pivotal 1.11. A failure at 1.0850 opens a retest of 1.0790 next

Interbank Flows: Bids 1.09 stops below. Offers 1.11 Stops above.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Fundamental: GBP opened at around 1.5160 levels yesterday against the USD and traded weaker across the board before finding its feet in late New York trading. Support for GBPUSD was again weakened ahead of today’s CPI data and Thursday’s US Fed rate decision meeting, which are starting to weigh on GBP. Against a strong euro, the sterling fell to a seven-week low following BoE Deputy Governor Minouche Shafik’s speech, in which she stated there was no great hurry to raise interest rates.

Technical:  While 1.5150 supports intraday downside corrections expect a move to test symmetry resistance at 1.5297. A failure at 1.51 opens a retest of pivotal 1.5050.

Interbank Flows: Bids 1.51 stops below. Offers 1.5250 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Fundamental: USD edged higher yesterday, helped by a recovery in oil while markets are staying cautious about what the Fed will say in its post-meeting statement after the rate decision meeting. JPY earlier benefited from risk off market sentiment. Traders who had carry positions brought them back which supported the JPY.

Technical: While 120.05 supports downside reactions, expect a retest of 122.50. A failure at 120 opens a test of 119 support.

Interbank Flows: Bids 120 stops below. Offers 122 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Fundamental: Decent EURJPY selling pressure in Asia before the Tankan data yesterday but the pair still holds in the broad range that we have been in for well over a week now with resistance into 134.15 on the topside  and support into the 131.00 region where we based early last week.

Technical:  While 132.50 caps intraday downside reactions, expect a grind higher to test upside symmetry objective at 134.86, a failure at 132 opens a test of pivotal 131 next.

Interbank Flows: Bids 132 stops below. Offers 133.50 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Fundamental: AUD rebounded after testing near a one-month low against USD. Australia’s central bank reiterated that there was “some scope” to ease monetary policy if needed, but highlighted recent positive economic trends that suggested there was no need to offer additional stimulus any time soon in the minutes of its 1 December policy review.

Technical: While .7150 supports intraday downside expect a test of .7230/50 ahead of .7320, while this area caps upside attempts pressure remains to the downside

Interbank Flows: Bids .7150 stops below. Offers .7250 stops above
Retail Sentiment: Neutral to bearish
Trading Take-away: Sidelines

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

Fundamental: USDCAD at eleven year highs as oil prices stumbled further. Brent crude settled at $37.92 after falling as low as $36.33 a barrel, its weakest since December 2008, while US crude settled up 1.9 percent at $36.31 after earlier falling to $34.53. Canada’s finance minister said the weaker Loonie will probably face more pressure from persistently low commodity prices that also complicate the fiscal situation.

Technical: Bulls have the ball while 1.3450 supports intraday downside expect a grind higher to test stops above 1.3780. A close below 1.3389 would ease the near term bullish bias.

Interbank Flows: Bids 1.3450 stops below. Offers 1.3780 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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