London Forex Report: We Have Lift Off

London Forex Report: We Have Lift Off

London Forex Report: In line with expectation, the Fed increased fed fund target range from 0.00 – 0.25% to 0.25 – 0.50% and signal that the following pace of increase will be gradual. Based on the median estimate, there may be four more quarter point increases to 1.375% by the end of next year.  US economic data came in mixed. Housing market data remained robust but IPI and manufacturing PMI continue to point to modest recovery in factories output growth. Separately in the UK, slower increase in wage growth leave rooms for BOE to maintain accommodative policy for a longer period of time.

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

Fundamental: The USD gained against the EUR yesterday after the Federal Reserve’s decision to hike rate for the first time since 2006 Fed leader Janet Yellen emphasized that further tighten would be data dependent and gradual. Today we will have German IFO Business Climate and Economic Bulletin published by ECB.

Technical: While 1.09 caps intraday upside corrections expect a grind lower to retest last weeks high and onwards towards the pivotal 1.o8 support. A failure at 1.08 opens a retest of 1.0725 next.

Interbank Flows: Bids 1.08 stops below. Offers 1.0950 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 fell to 1.4962, the lowest since 8 December after trading a high at 1.5097.  Sterling slid to a weekly low against the dollar on Wednesday after figures showed UK earnings grew at their slowest pace since early this year in the three months to October, despite the fact that strong job creation pushed down the unemployment rate.

Technical:  While 1.5050 caps intraday upside expect a drift lower to test bids at 1.4890, a  breach of 1.5050 opens 1.5120 again.

Interbank Flows: Bids 1.49 stops below. Offers 1.51 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Fundamental: The USD edged up 0.2 percent to 122.30 JPY after the rate hike decision. Afterward, JPY was further weakened to 122.45 to start its Thursday session due to the improved risk appetite. USDJPY rose above 122.30 handle and it may again re-enter its previous trading range 122.30 to 123.75 if USD remains bullish. Markets are waiting for BOJ meeting which will be held tomorrow.

Technical: As expected a retest of 122.50 finds offers on the first test. While 121.60caps intraday downside attempts expect a sustained break of 122.50

Interbank Flows: Bids 121.50 stops below. Offers 122.70 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Fundamental:  The range in focus continues to be  resistance into 134.15 on the topside  and support into the 131.00 region where we based early last week. Post FOMC the cross has been slightly pressured due to negative cross flows from the EUR trade. Market now waits for BOJ on Friday, from which the market is expecting no monetary policy changes.

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: The AUD trading a bit weaker following Fed’s decision to raise interest rates by 0.25%. In the accompanying statement, the Fed signaled faith that the US economy had largely recovered from the 2008 financial crisis. The USD only traded slightly stronger across the board, limiting the AUDUSD fall. Under the lack of domestic figures, markets will look to today’s US unemployment claims data to further assess the recovery of the US jobs market.

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: CAD  weakened to a new 11-1/2-year low against USD as oil prices fell, before trimming some losses in volatile trade after the US Federal Reserve raised rates for the first time in more than nine years. Oil prices headed back toward 11-year lows, pressured by US figures showing a huge build in crude inventories, while the greenback was slightly stronger after the Fed news.

Technical: Bulls have the ball while 1.3450 supports intraday downside expect a grind higher to test stops above 1.3840 while 1.3730 caps intraday downside. 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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