New York Forex Report: BOE Delivers Dovish Statement As Rates Remain Unchanged

New York Forex Report: The continuous slide in oil prices, raising global growth concerns, continues to unnerve markets, shrugging off a much slower contraction in China exports. In the US yesterday, the Fed Beige Book maintained that most districts expanded at a moderate pace but wage growth remained flat in spite of a resilient job market. In line with weakness seen in recent manufacturing data, the Beige Book said most manufacturing sectors weakened with some citing negative drag from a strong dollar.

Risk sentiment was impaired once again over early European trading as Equity markets sold off on reports from Reuters that many in the ECB are sceptical of further policy action.

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

Fundamental: EUR traded higher over the early European session as its inverse correlation with risk saw the currency supported amidst equity market declines.. Looking ahead, today the ECB will release the minutes of its most recent rate decision meeting.

Technical: While offers at 1.0930 contain upside reactions expect rotation to retest bids at 1.08, a breach of 1.0930 opens a retest of 1.0990 trend resistance.

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

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

Fundamental: BOE kept rates unchanged at their January meeting. Statement was Dovish as expected noting low inflation outlook due to continued Oil price declines. Credit growth and productivity were also noted to be disappointing though domestic spending and investment remain healthy.

Technical:  While 1.45 caps upside reactions expect a grind lower to retest yesterday’s lows en route to 1.43. Only over 1.46 eases immediate downside pressure.

Interbank Flows: Bids 1.4350 stops below. Offers 1.45 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Fundamental: JPY strengthened against the US Dollar amid risk aversion during the early European session.

Technical:  While 118.30 caps intraday upside attempts expect a grind lower en route to test 116.35 as the next downside objective. Only above 119.30 eases immediate downside pressure.

Interbank Flows: Bids 116.50 stops below. Offers 118.50 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Fundamental: Early EUR strength, driven by it inverse correlation with risk saw the single currency gaining against the safe-haven Japanese Yen over the European morning.

Technical:  While 129.10 caps intraday upside reactions, expect a grind lower to retest Thursdays lows at 126.70’s a failure here opens a test of bids at 126. Only over 130 eases immediate downside pressure.

Interbank Flows: Bids 126.50 stops below. Offers 128.50 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Fundamental:  Although the latest Australian Unemployment Rate was 5.8%, beating the market forecast of 5.9% the Aussie has continued to weaken over early European trading today as global risk sentiment darkens once again.

Technical: While .7050 caps intraday upside expect a grind lower to test 2015 lows. Only a breach of .7150 eases immediate downside pressure.

Interbank Flows: Bids .69 stops below. Offers .7050 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Fundamental:CAD fell to a fresh 12-year low against USD as a sell-off in stocks weighed on the risk-sensitive commodity currency and crude oil prices remained weak. USDCAD closed above the psychological 1.43s threshold for the first time since April 2003 while speculation intensified that the Bank of Canada will cut interest rates as early as next week.

Technical: Bulls have the ball while 1.4315 supports, expect a grind higher to test stops above 1.44. Only below 1.42 eases immediate bullish pressure

Interbank Flows: Bids 1.4250 stops below. Offers 1.44 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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