London Forex Report: FOMC Minutes Dovish, USD Down

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

Fundamental: FOMC minutes overnight reflected a cautious Fed as global growth and USD strength dominated the minutes. So while many Fed members expect a rate hike before year ends, downside risks to inflation and growth linger.  ECB minutes contained no surprises, recent appreciation and somewhat lower than expected economic growth and commodity prices had increased the downside risk to inflation; ready to do more if need arises, but did not contain any concrete plans apart from talk (which has upheld ECB credibility thus far).

Technical: price is pressuring the upper end of the contracting range, testing offers above 1.13. While 1.1250 supports intraday downside reactions expect a sustained breach of 1.1330 which targets 1.1460 as the next upside objective

Interbank Flows: Bids 1.12 stops below. Offers 1.1350 Stops above.
Retail Sentiment: Neutral to bearish
Trading Take-away: Sidelines for now

eu2015-10-09 07_40_36-NetDania - NetStation

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

Fundamental: BoE MPC voted 8 – 1 to keep policy rate on hold at 0.5%; and the MPC remained unanimous in keeping asset purchase program at GBP375bn, as expected. There was not much surprise from the decision and minutes. Comments that economic conditions have softened since August which has seen GBP under performing.  BoE Carney later commented that timing of a move by BoE is not dependable on when Fed tightens,and emphasized again that BoE rate decision should be in sharper focus around year end. GBP reversed initial losses post-BOE decision.

Technical: Testing 1.54 offers. While intraday downside reactions are support towards .153 near term upside remains in tact, with 1.55 targeted as the next upside objective.

Interbank Flows: Bids 1.5260/80 stops below. Offers 1.54 stops above
Retail Sentiment: Bearish to neutral
Trading Take-away: Stay long for 1.55

gu2015-10-09 07_41_13-NetDania - NetStation

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

Fundamental: USDJPY is inching higher this morning towards the 120-handle after the FOMC minutes failed to damp speculation of a rate hike delay till 2016. Although Bank of Japan refrained from any easing hints, the markets still expect QQE would be expanded on 30 October this expectation has continued to provide support to USDJPY

Technical: Continues to coil in contracting range, play range 121.50 the offer and 118.50 the bid until broken.

Interbank Flows: Bids 118.50/30 stops below. Offers 121.50 stops above
Retail Sentiment: Neutral to bullish
Trading Take-away: Sidelines for now

uj2015-10-09 07_42_12-NetDania - NetStation

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

Fundamental: Cross flows continue to underpin the EURJPY despite a slew of Japanese data which showed weaker prints for August machine and BoP current account balance.

Technical:  While 134.50 supports on an intraday basis expect continued upside pressure targeting stops above 135.60 interim resistance. A close above 136 opens a retest of upper end of the recent range and a retest of offers at 137 next.

Interbank Flows: Bids 134.50 stops below. Offers 136 stops above
Retail Sentiment: Neutral to bullish
Trading Take-away: Sidelines for now

ey2015-10-09 07_42_44-NetDania - NetStation

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

Fundamental: The Australian dollar reached a three week high at 0.7299 overnight supported by firmer commodity prices and doveish FOMC minutes. In the minutes, the Federal Reserve re-affirmed that downside risks, especially from China, had added to concerns for their local inflation targets and other economic data, thus putting September rate hike off the table.

Technical: Offers at equality corrective objective at .73 being tested. Near term bullish bias remain intact while .72 supports intraday downside reactions. Bulls now target .7400 as the next upside objective

Interbank Flows: Bids .7200 stops below. Offers .7310 stops above
Retail Sentiment: Bearish
Trading Take-away: Buy pull backs against .7200 targeting .7400

au2015-10-09 07_51_11-NetDania - NetStation

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

Fundamental: CAD strengthened against the US dollar, driven by oil prices that rushed to three-month highs, as oil forecasters turn bullish and see gains for black gold over the next two years. The loonie was also helped by a softer US dollar, which eased after Federal Reserve meeting minutes for September revealed the growing view that the US central bank is unlikely to raise interest rates this year

Technical: Near term bearish tend remains intact as intraday resistance at 1.3020/40 contains intraday upside reactions bears target 1.2850 bids as the next downside objective

Interbank Flows: Bids 1.29 stops below. Offers 1.3030 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines for now

uc2015-10-09 07_56_05-NetDania - NetStation