London Forex Report: BOE To Provide The FX Fireworks

Fed Chair Yellen appears to be setting the stage for a possible December rate hike, citing strong US fundamentals but cautioned that the decision will be dependent on upcoming data. Renewed expectation of a rate hike was further backed by solid employment growth in the private sector and rebound in exports. ADP employment print rose 182,000 in Oct, marginally lower than the revised 190,000 increase in Sept and trade deficits narrowed to a seven month low of $ 40.81 billion. USD extended its rebound printing three month highs, the USD Index climbed 0.82% to 97.95

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

Fundamental: USD hit three-month highs against the EUR after Yellen’s hawkish speech. Euro, the highest proportion in USD Index basket, dropped 90pips to around 1.0850. Markets are waiting for important data to be released today such as  Germany Markit Construction PMI and Euro Zone Retail Sales .

Technical: 1.0860 symmetry target achieved, bears have the ball below 1.10 with bids at 1.08 the next downside objective, only a close above 1.10 eases immediate downside pressure.

Interbank Flows: Bids 1.08 stops below. Offers 1.1o Stops above.
Retail Sentiment: Bullish
Trading Take-away: Sidelines for now

eu2015-11-05 07_39_58-NetDania - NetStation

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

Fundamental: UK Services PMI for October posted a reading of 54.9, slightly higher than market expected. The Cable was buoyed after the release of upbeat UK Services PMI, reaching intra-night highs above 1.5440. But having suffered from broad US dollar strength, it is trading much lower at 1.5380. Ahead of Friday’s US nonfarm payrolls report, markets await Super Thursday in which the BoE will announce its rate decision, accompanying meeting minutes and inflation report.

Technical:  The upside rotation back through 1.5330 resets bullish expectations for a test of the 1.56 symmetry objective. Another failure at 1.53 targets stops sub 1.52 next.

Interbank Flows: Bids 1.53 stops below. Offers 1.55 stops above
Retail Sentiment: Neutral to bullish
Trading Take-away: Long from 1.5330 targeting 1.56

gu2015-11-05 07_40_34-NetDania - NetStation

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

Fundamental: Due to the hawkish speech from Yellen, USDJPY broke through its 120-121.6 range to reach a two-month high of 121.72. With the Bank of Japan scheduled to release its policy meeting minutes, greater reluctance to further expand the easing program may heighten the appeal of the Yen.

Technical: Break of 121.30 sets bulls sights on range highs at 121.85 next an intraday failure at 120.50 would suggest return to range.

Interbank Flows: Bids 119.50/30 stops below. Offers 122 stops above
Retail Sentiment: Bearish
Trading Take-away: Longs from 120.50 targeting upside range break

uj2015-11-05 07_41_13-NetDania - NetStation

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

Fundamental: Cross drifted lower, with the slew of healthy US data and Yellen’s comments pushing EUR south. The pair has since moved down heading towards last weeks lows, with risk sentiment improving in the region, the Japan Post IPO which has resulted in some decent gains in the Nikkei in the last few days. Shares of Japan Post along with its banking and insurance units soared at its stock market debut in Tokyo after the triple IPO raised $12bn.

Technical:  Bears now target equality corrective objective at 131.20, only a close above 133.50 eases immediate bearish pressure.

Interbank Flows: Bids 131.00 stops below. Offers 133.50 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines for now

ey2015-11-05 07_41_57-NetDania - NetStation

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

Fundamental: Despite satisfactory retail sales figures and shrinking trade deficit, the Australian dollar traded softer overnight as comments from Fed Chair Yellen, coupled with recent upbeat US economic data, have sparked market speculations of an even more likely December Fed rate hike AUDUSD was little changed at around 0.7140 levels after comments from RBA Governor Stevens. In the speech, he reiterated his dovish bias towards the next policy change while noted the ongoing progress in transition away from depending on mining sector

Technical: Sellers at .7230 are targeting a retest of last weeks .7070 lows en route to retest the year to date lows next. Only a break and close above .7230 eases immediate bearsih bias

Interbank Flows: Bids .7100 stops below. Offers .7230 stops above
Retail Sentiment: Neutral
Trading Take-away: Short against .7230 targeting .7030

au2015-11-05 08_12_37-NetDania - NetStation

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

Fundamental: CAD slipped in tandem with oil prices that turned lower sharply on news US stockpiles surged for a sixth week in a row. USDCAD jumped considerably overnight and reached the top of 1.3190s retesting last Friday’s highs.

Technical:1.3260 is the pivotal resistance, as this area contains upside potential for another leg of corrective downside. A close above 1.3280 eases bearish pressure and resets focus on the 2015 highs and stops above.

Interbank Flows: Bids 1.3030 stops below. Offers 1.32 stops above
Retail Sentiment: Bearish
Trading Take-away: If short from failed retest of 1.3260, move positions to risk free

uc2015-11-05 08_13_05-NetDania - NetStation