London Forex Report: PBOC Steps In To Calm Markets, NFP’s Eyed

London Forex Report: PBOC Steps In To Calm Markets, NFP’s Eyed

London Forex Report: Reuters is reporting that the PBOC intervened in Asian trade to support the Yuan overnight via state owned banks. The PBOC sets Yuan midpoint at 6.5636 v the close 6.5929 the lower fix has helped calm markets overnight. The shanghai Composite had a volatile session up three percent then down two percent before moving into positive territory again, overnight crude has recovered from 12 year lows to rebound by 2% to $34 per barrel. Attention now shifts to today’s headline event with US Non Farm payrolls, markets are expecting a slightly slower but still firm 200k increase with an unchanged unemployment rate of 5.0%, and average hourly earnings at 0.2%.

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

Fundamental: Markets saw a negative risk sentiment yesterday. EUR climbed more than 1% on Thursday at 1.0940 as massive sell-off in China accelerated fears of a global economic slowdown. Chicago Federal Reserve president Charles Evans said the Fed should take a cautious path in raising rates by approving two rate hikes in 2016. Markets await US employment figures due today.

Technical: While offers at 1.0950 contain upside attempts expect rotation south to test bids at 1.08while this area supports expect a second corrective leg to target 1.1050, a breach of 1.0750 resets bearish momentum and targets 1.0650 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): Bearish – Medium Term (1-3 Weeks): Bearish

Fundamental: GBP sank to an a six-month low at 1.4530 against USD on Thursday. Sterling also dropped to its weakest in three months against the Euro yesterday. A poll on Thursday revealed that a majority of British people who have made up their mind would vote to leave the European Union. The markets widely expect that BoE will delay their rate hike mission to late 2016.

Technical:  While 1.4660 caps intraday upside expect a drift lower to retest bids at 1.4590 as this area finds support expect a second leg of corrective action to test 1.47, failure at 1.4560 opens 1.45 next.

Interbank Flows: Bids 1.4550 stops below. Offers 1.47 stops above
Retail Sentiment: Bullish
Trading Take-away: Short from 1.48 for 1.45, risk free position.

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

Fundamental: USDJPY dropped sharply to 117.30 in Asian session, which was the lowest level since August 2015, as risk appetite soared with weaker Yuan fixing rate. Traders believe that the sharp upward pressure on the JPY, the further monetary easing would therefore be added by the BoJ’s to stem JPY appreciation.

Technical:  While 119 caps intraday upside attempts expect a sustained breach of 117.50 en route to test 116.35 as the next downside objective.

Interbank Flows: Bids 117.50 stops below. Offers 119 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: Renewed risk aversion emanating from China, along with more sharp falls in global equity markets propelled the safe-haven JPY to below 127 on Thursday. The pair dropped as low as 126.78 before rebounding over 128.60 as positive cross flows from the EUR supported the bid.

Technical:  While 129.50 caps intraday upside reactions, expect a grind lower to retest Thursdays lows at 126.70’s a failure here opens a test of bids at 126.

Interbank Flows: Bids 126.50 stops below. Offers 129.50 stops above
Retail Sentiment: Neutral
Trading Take-away: Sidelines

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

Fundamental: AUD broke below the 0.70 handle against the USD and fell to an over 3-month low of 0.6978 weighed by concerns over China, but managed to trim losses later. The pair managed to recover ground against the greenback at the beginning of the New York session, post the release of news that China would suspend the stock circuit breaker rule, lifting markets sentiment. Australian retail sales as expected at +0.4$ m/m and AUDUSD drifted up to 0.7030.

Technical: While .71 caps intraday upside expect a retest of yesterdays lows failure here opens .6930 next. Only a breach of .72 eases immediate downside pressure.

Interbank Flows: Bids .6950 stops below. Offers .71 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Fundamental: CAD slipped against USD as oil prices fell for a fourth day, though it was helped off a fresh 12-year low after a speech by Bank of Canada Governor Stephen Poloz left doubt about further rate cuts. Weakness in the Canadian dollar helped Canada to adjust to low commodity prices, Poloz said in a speech on economic and financial divergence, promising to steer monetary policy independently of the US Federal Reserve.

Technical: Bulls have the ball while 1.38 supports, expect a grind higher to test stops above 1.42 while 1.40 caps intraday downside.

Interbank Flows: Bids 1.40 stops below. Offers 1.42 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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