London Forex Report: Markets Marking Time Ahead Of FOMC

Market sentiments stagnated for a second straight day after disappointing data flow not only from the US but other regions as well. The fall in US durable goods orders suggests continuous weakness in business spending and the PMI reading showed slower expansion in services. Consumer confidence also dipped reflecting less optimism in growth outlook. The only bright spot was housing, S&P CaseShiller house prices picked up to increase at a faster pace of 5.1% in August, which doesn’t seem sufficient to justify a October hike. UK 3Q GDP print also disappointed, moderating more than expected to 0.5% QOQ as contraction in manufacturing and construction offset gains in services. China industrial profits continued to fall, albeit at a slower pace, reaffirming slowdown trajectory in the world factory.

USD strengthened, better bid from general retreat in market sentiment going into FOMC rate announcement. The USD Index advanced even as US data disappointed throughout before plateauing at 96.90, up a soft 0.04% for the day.

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

Fundamental: EUR moved in a range of less than 50 pips, peaked at 1.1078 and bottomed at 1.1029, despite the strength of USD across the board. While the economic data from US did not generate much volatility in the pair, traders’ attention remains on today’s FOMC statement for clues about when the central bank may raise rates.

Technical: Breaches 1.10 support, while 1.1080/1.11 caps intraday upside reactions expect bearish pressure to be maintained targeting 1.09 bids next. A close above 1.1150, targets 1.1250 next.

Interbank Flows: Bids 1.0950 stops below. Offers 1.1120 Stops above.
Retail Sentiment: Bullish
Trading Take-away: Sell pullbacks against 1.1120 targeting 1.09

eu2015-10-28 07_41_04-NetDania - NetStation

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

Fundamental: GBP fell below the 1.53 handle with pressure from broad USD strength, hitting a low of 1.5280. The surprisingly weak UK GDP figures left the pound vulnerable against the dollar, and markets are waiting for the FOMC’s meeting while the currency pair is currently testing the pivotal 1.53 at writing

Technical:  While 1.5300 supports downside reactions expect a grind higher to test 1.56 symmetry objective. A breach of 1.5280 targets a retest of pivotal 1.52 support.

Interbank Flows: Bids 1.5250 stops below. Offers 1.54 stops above
Retail Sentiment: Neutral to bearish
Trading Take-away: Venture long back through 1.5330 targeting 1.56

gu2015-10-28 07_41_41-NetDania - NetStation

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

Fundamental: Japan’s year over year Retail Trade was announced as -0.2%, worse than the market forecast 0.4%, showing that headwinds are being seen by the Japan economy. Such poor data will probably grant the reason for BoJ to exercise more easing policies at the end of this month. JPY has entered the trading range of 119 to 121 again. Range-bounded price action in JPY may persist until more clues will be given out by BoJ meeting.

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

uj2015-10-28 07_42_14-NetDania - NetStation

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

Fundamental: Japanese retail sales suffering a weak bout in September, highlighting the difficulty policymakers in Japan are having in boosting demand. Sales rose 0.7% m/m, coming in weaker than the forecast rise of 1.1%. The y/y change in sales went from 0.8% in August to -0.2% last month, the weakest pace since March. Negative cross flows and equity market weakness continue to weigh on the pair

Technical:  Breach of 133.40 means bears now target equality corrective objective at 131.20 while 134.20 caps upside reactions, only a close above 134.20 eases immediate bearish pressure.

Interbank Flows: Bids 133.00 stops below. Offers 134.50 stops above
Retail Sentiment: Bullish
Trading Take-away: Sell pullback against 134,50 targeting 131.20

ey2015-10-28 07_42_59-NetDania - NetStation

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

Fundamental: AUD lost ground against the USD due to AUDNZD cross flow sales. As markets expect an on-hold decision from RBNZ and a rate cut from RBA next week, the cross broke through four month lows. Australia’s Q3 CPI QoQ posted a reading of 0.5%, against expectations of 0.6%. AUDUSD slumped to 0.7119 level in the aftermath of data release.

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 open a retest of 2015 lows and potential broader bearish trend continuation move.

Interbank Flows: Bids .7100 stops below. Offers .7250 stops above
Retail Sentiment: Neutral to bullish
Trading Take-away: Sidelines for now

au2015-10-28 08_11_53-NetDania - NetStation

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

Fundamental: CAD weakened against the USD, hitting its lowest level in more than three weeks as the commodity-sensitive currency was hurt by a further fall in oil prices. Some weak US economic figures released yesterday also weakened the loonie as United States is Canada’s biggest trading partner which would help to support Canada’s economy

Technical: Near term bearish tend remains intact as intraday resistance at 1.3260 contains intraday upside reactions bears target a retest of bids below 1.2850. A breach of 1.3260 opens test of 1.3450 offers and potential broader bullish trend continuation

Interbank Flows: Bids 1.3090 stops below. Offers 1.3260 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines for now

uc2015-10-28 08_17_14-NetDania - NetStation