London Forex Report: Crude & CAD At 12 Year Lows

London Forex Report: Crude & CAD At 12 Year Lows

London Forex Report: Markets remain jittery, seeing another round of selloff in Chinese equities and another big leg down in crude oil prices. Crude oil prices plunged 6% and are now pushing lower towards $30/ barrel. Fed’s Lockhart sounded cautious, saying there may not be enough fresh data on inflation to support a second Fed rate hike in 1Q16. The President, who is a non-voter this year, said he remains “mildly optimistic” on US growth prospects this year although a slowing China economy and persistently low oil prices are key risks to US growth. USD advanced, supported by under performing European majors despite a slight revival in equities. The USD Index climbed higher through European and US trade to end the day 0.18% firmer at 98.72

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

Fundamental: EUR dropped gradually from 1.0930 at Asian session to 1.0850 at NY close yesterday. The EUR is acting as risk aversion currency in the past week while it is traded in tandem with JPY. Risk appetite of the markets will be closely watched since it may directly affect the movement of EURUSD.

Technical: While offers at 1.0930 contain upside reactions expect rotation to retest bids at 1.08, a breach of 1.0930 opens a retest of 1.0990 trend resistance.

Interbank Flows: Bids 1.08 stops below. Offers 1.0950 Stops above.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

eu121

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

Fundamental: GBP climbed to an intraday high of 1.4603 at late European session while it retreated to around 1.4550 to start its Tuesday session. Markets are waiting for the BOE meeting due this Thursday to see if they can get any hits of the rate hike schedule. No changes are expected from BOE as the domestic inflation rate has stayed low due to depressed oil prices.

Technical:  While 1.4630 caps upside reactions expect a grind lower to retest Friday’s lows en route to 1.4470 and ultimately the weekly symmetry objective of 1.4379.

Interbank Flows: Bids 1.4450 stops below. Offers 1.46 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines

gu121

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

Fundamental: The USDJPY touched a fresh-low of 116.68 in early Asian session. PBoC set a stronger CNY fixing rate, the USDJPY recovered, reducing the concerns that China would weaken its currency to boost its competitiveness in export market. Japanese markets were closed yesterday for the Coming-of-Age day Holiday, resulting in  thinner trade.

Technical:  While 118.20 caps intraday upside attempts expect a grind lower en route to test 116.35 as the next downside objective. Only above 119.30 eases immediate downside pressure.

Interbank Flows: Bids 116.50 stops below. Offers 118.50 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: Japan’s current account surplus shrank from JPY1.46tn in October to JPY1.14tn a month later, coming in stronger than expectations of a JPY895bn surplus in November. Exports dropped 6.3% y/y in November to JPY5.92tn, whilst imports grew from JPY6.13tn in October to JPY6.19tn in November.

Technical:  While 129.10 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. Only over 130 eases immediate downside pressure

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

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

Fundamental: AUD rebounded yesterday after slid to the day low of 0.6924 during the Australasia session, then turned higher on the PBoC fixing. Traders believe much of the recent weakness of the Aussie came after Beijing set erratic yuan guidance, leading markets to question China’s policy intentions. The Aussie, which is often used as a proxy for China Yuan, slipped around 4.5 percent last week in its largest decline in four years.

Technical: While .7050 caps intraday upside expect a grind lower to test 2015 lows. Only a breach of .72 eases immediate downside pressure.

Interbank Flows: Bids .69 stops below. Offers .7050 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines

au121

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

Fundamental: CAD dropped to a fresh 12-year low against USD, pressured by a fall in crude oil prices and evidence that Canadian business sentiment deteriorated. The combination of negative factors may add pressure on the Bank of Canada to take further action after cut interest rates twice in 2015. The Bank of Canada’s quarterly Business Outlook Survey reported that the negative effects of lower oil and commodity prices caused business sentiment to deteriorate over the last three months.

Technical: Bulls have the ball while 1.4160 supports, expect a grind higher to test stops above 1.43. Only below 1.40 eases immediate bullish pressure

Interbank Flows: Bids 1.41 stops below. Offers 1.43 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines

uc121

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