London Forex Report: PMI Disappointment Dents Dollar

London Forex Report: PMI Disappointment Dents Dollar

London Forex Report: Global PMI manufacturing readings were mixed, softer in the US and EU but firmer in the UK and China. mixed manufacturing readings continued to signal lacklustre global manufacturing amid still subdued global demand that would continue to pressure global growth. US ISM manufacturing report indicated a broad based retrenchment in factory activities in August. The index dropped from 52.6 in July to 49.4 in August, in contraction territory for the first time in six months. Underlying details pointed to a sharp pullback in new orders and production, underscoring weak demand. In line with this, IMF Chief Christine Lagarde warned that IMF would likely downgrade its 2016 global growth forecast again amid softening demand, flagging trade and investment, as well as growing inequality. USD Index fell sharply post US data and settled at 95.65, losing 0.38%

FX Majors: EUR surged from 1.1140 to highs of 1.1205 on Thursday as US manufacturing activity unexpectedly declined in August, casting some doubts on the strength of US economic growth. The Fed’s Loretta said the US labor markets are at full employment and the Fed should on a path of gradual interest rate increases. Despite this hawkish speech, the USD still went down due to the disappointing manufacturing data. GBP gained more than 1% to trade above 1.33 against the dollar for the first time in four weeks on Thursday, after data showed the British manufacturing sector staged one of its sharpest rebounds on record in August. GBP extended gains in New York session after a similar survey on the US manufacturing sector unexpectedly showed a contraction in activity, leading to a sell-off in the USD and a trimming of expectations of a near term rate hike by the Federal Reserve. JPY Standard & Poor’s Ratings Services yesterday confirmed Japan’s A+/A-1 sovereign debt rating and maintained a stable outlook despite its heavy debt burden, saying political stability and stable financial system offset fiscal woes.

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

Technical: EUR tests and holds symmetry swing support sited at 1.1125. Over 1.1250 brings last weeks highs back into play at 1.1366. Failure below 1.1120 opens 1.1050 next
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Anticipated move back to 1.3278 highs achieved as 1.32 supports expect pivotal test of 1.3372 next
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Anticipated test of offers over 104 reject the initial foray above the figure, as 102.80 supports 105.50 is the next upside objective
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: The close over 114.70 symmetry swing resistance opens a move to test 116.10 as the next meaningful upside hurdle. As 114.70 supports bulls target 116.40
Retail Sentiment: Bearish
Trading Take-away: Sidelines

Commodities FX: GOLD stabilised after it dropped to its lowest in more than two months on Thursday as markets await US jobs figures which could determine the Fed’s monetary policy direction. Oil fell more than 2%, heading for their sharpest weekly loss since January, as markets brushed aside talk that OPEC might freeze production and focused on a growing glut from US crude stockpiles. Government data on Wednesday showed a 2.3 million-barrel build in US crude stocks in the last week, more than double what the market had expected. Inventories of distillates, which include diesel and heating oil, rose nearly 10 times as much as forecast. AUD Australia’s retail sales was flat in July, after climbing 0.1% MOM in June. Sales figure registered no growth for the first time in five months, signalling that consumer spending may have lost momentum at the turn of the third quarter. CAD made small gains against a broadly weaker USD as oil prices slumped and an unexpected decline in US manufacturing figures arouse some doubts on economic growth.

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

Technical: Support at symmetry swing .7501 to caps downside correction and set a base to target offers over .7600. A close below .7500 would concern the near term bullish bias.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Resistance sited at 1.30 has been removed as 1.2960 supports near term expect a further grind higher to test 1.32 as the next upside objective
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1301 represents AB=CD equidistant swing support. Below 1300 opens 1270. As 1300 supports expect a test of 1330 to suggest a base.

Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Technical: Breach below 43.60 concerns the near term bullish bias, near term Resistance is now sited at 45.00 as this area reject 41.00 become the next downside objective
Retail Sentiment: Bullish
Trading Take-away: Short

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