London Forex Report: BOJ On Hold, Policy Divergence Developing Again

The US economy slowed more than anticipated, expanding 1.50% QOQ in the third quarter from a strong 3.90% QOQ growth in 2Q. Subdued growth was due to decline in private domestic investment, which was cushioned by resilient household consumption. Application for unemployment benefits hovered around 42 year low, posting evidence of a strong labor market. With the BOJ on hold the global central bank policy divergence theme is beginning to re-emerge again. USD closed lower, the USD Index fell to 97.28, sliding on retracement from sharp gains a day earlier and was also impacted to the downside by disappointing US data.

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

Fundamental: EUR has been recovering from the sell-off, reaching 1.0990 handle. The FOMC has left the door open for the rate hike in December, while investors have eyes on the Nonfarm Payrolls next month and consistent monitoring of inflation. EZ will have data out about Economic Confidence, Business Climate Indicator, Industrial, Services and Consumer Confidence today.

Technical: Today while 1.10 caps intraday upside reactions anticipate a retest of the post FOMC lows, with a daily symmetry objective at 1.086 as the next downside objective. A sustained move over 1.10 would suggest a broader corrective pattern is underway targeting 1.1130.

Interbank Flows: Bids 1.0850 stops below. Offers 1.10 Stops above.
Retail Sentiment: Neutral
Trading Take-away: 1.09 target achieved, sidelines for now

eu2015-10-30 07_36_43-NetDania - NetStation

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

Fundamental: GBP  remained below the level they had before the release of the FOMC statement and bounced back to a high of 1.5322 during the American session. Most participants were suggesting the Fed has not much choice but to make a move in December while the pair has been reacting to the decision of greenback .

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

Interbank Flows: Bids 1.52 stops below. Offers 1.5350 stops above
Retail Sentiment: Neutral to bearish
Trading Take-away: Venture long back through 1.5330 targeting 1.56

gu2015-10-30 07_38_15-NetDania - NetStation

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

Fundamental: The central bank left monetary policy unchanged. However, they decided to postpone the deadline to reach a two percent inflation target to the latter half of fiscal 2016. At the same time growth forecasts were lowered meaningfully. This in turn suggests that QE will remain in place for longer.

Technical: Bulls target a sustained break of 121 to target range highs at 121.85 an intraday failure at 120.00 would suggest return to range.

Interbank Flows: Bids 119.50/30 stops below. Offers 121.50 stops above
Retail Sentiment: Bearish
Trading Take-away: Buy pullbacks against 120.50 targeting upside range break

uj2015-10-30 07_39_10-NetDania - NetStation

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

Fundamental: Japan’s September year over year CPI was released as 0%, worse than the previous one 0.2%. However, this did not put much pressure on Yen. Japan government officials said CPI remained on upward trend excluding effect of falling energy price.

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: Bullish
Trading Take-away: Sell pullback against 134,50 targeting 131.20

uj2015-10-30 07_39_10-NetDania - NetStation

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

Fundamental: AUD  fell to three week lows partly due to a plunge in the gold price after the FOMC meeting. Another factor weighing on the pair is the poor domestic CPI data which has kept the markets speculating a rate cut by the RBA before the end of the year.

Technical: The breach of .7140 concerns near term bullish bias and suggests a retest of pivotal .7030/50 next, failure here firmly re-establishes the bearish tone and opens a retest of 2015 lows and potential broader bearish trend continuation move.

Interbank Flows: Bids .7050 stops below. Offers .7210 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines for now

ey2015-10-30 07_40_06-NetDania - NetStation

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

Fundamental: CAD strengthened against US dollar as oil prices supported the commodity-linked currency and the USD pulled back after a hawkish U.S. Federal Reserve statement. US crude prices settled slightly higher after its biggest rally in two months.

Technical:1.3260 provides decent resistance as anticipated 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 1.3090 stops below. Offers 1.3260 stops above
Retail Sentiment: Bearish
Trading Take-away: Sell a double top test and hold against 1.3280 for another leg lower

uc2015-10-30 08_28_05-NetDania - NetStation