London Forex Report: Focus Turns To The BOE

Market Commentary

US wholesale inventories unexpectedly shrank in October on declines in both durable and non durable goods, pointing to a potential drag on 4Q growth. USD  Dollar Index plunged 1.15% to more than 5- week low at 97.30. Attention today will be on the Bank Of England’s December meeting where traders will be keen to see if there is any softening in the Bank’s recent Dovishness.

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

Fundamental: EUR  held on solid gain yesterday and stayed above 1.10 handle after a central banker suggested that markets had been expecting too much expansionary measures from ECB. EUR/USD peaked at 1.1041 and it is then returned to around 1.1020 to start its Asian session. The move extended last week’s 2.8% rally after ECB failed to deliver their dovish messages. Governing Council member Ewald Nowotny said investors should pay more attention to fundamentals

Technical: While 1.0790 caps intraday downside corrections expect a grind higher to retest last weeks high. A failure at 1.0790 opens a retest of 1.0725 next

Interbank Flows: Bids 1.08 stops below. Offers 1.0950 Stops above.
Retail Sentiment: Neutral
Trading Take-away: Sidelines

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

Fundamental: GBP closed at 1.5180 yesterday, gaining for the first time in four trading sessions before a central bank rate-setting meeting tonight. The BoE’s Monetary Policy Committee is widely expected to keep rates unchanged but investors expected the minutes may take a more hawkish approach

Technical: While 1.5050 caps intraday upside attempts expect renewed downside pressure to retest of last weeks 1.4890’s lows

Interbank Flows: Bids 1.4950 stops below. Offers 1.5050 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Fundamental: USDJPY slid 1.2 percent and it was last at 121.53  Traders s believe that the Yen benefited from its safe-haven status since the weakening commodity prices prompted a sell-off across risky currencies

Technical: While 121 supports downside reactions, market structure remains bullish to test 2015 highs next. A failure at 121 opens a test of 120 support next ahead of pivotal 120.

Interbank Flows: Bids 120 stops below. Offers 124 stops above
Retail Sentiment: Bearish
Trading Take-away: Sideline

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

Fundamental: Japanese economy avoided technical recession, which might deter the BoJ from easing monetary policy further. After all, the number of supporters for quantitative and qualitative easing (QQE) on the BoJ’s board is gradually declining.

Technical:  While 134.80  caps upside reactions expect a retest of 132.50 from above to set the platform for another corrective leg higher.A breach of 134.80 opens a test of 135.70 next.

Interbank Flows: Bids 132.50 stops below. Offers 134.50 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Fundamental: The Reserve Bank of New Zealand further reduced rates last night down to 2.5% seeing a surge in AUD buying.

Technical: Rebound higher from 72 has taken price back above interim resistance at .7260 area. Offers into .7380s eyes whilst .7260 holds as support

Interbank Flows: Bids .7200 stops below. Offers .7380/ .74 stops above
Retail Sentiment: Neutral
Trading Take-away: Sidelines

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

Fundamental: The slide in Oil price continued again overnight with Crude making its way down into the $36 per barrel area. USDCAD still remains range bound below recent highs.

Technical: Bulls have the ball while 1.3450 supports intraday downside expect a grind higher to test stops above 1.3600. A close below 1.3389 would ease the near term bullish bias and suggest a correction is underway.

Interbank Flows: Bids 1.34 stops below. Offers 1.36 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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