New York Forex Report: ADP & FOMC In Focus

New York Forex Report: ADP & FOMC In Focus

New York Forex Report: The USD is mixed versus its G10 counter-parts. Month-end and some apparent verbal intervention against the USD buffeted markets yesterday but relatively quiet trade prevails ahead of the FOMC meeting’s conclusion later today. With no press conference scheduled, the chances of a rate move today are virtually zero; the USD will take its cue from the policy statement and how the Fed characterises the economic outlook. European stocks are trading higher on the session, depressing developed market bonds somewhat. US Treasuries are outperforming slightly on the day but the primary supports for the USD, wide yield differentials across the curve and more solid growth prospects, remain intact, regardless of current uncertainties surrounding the new administration’s short-term policy priorities. Aside from the Fed, the US releases ADP jobs, ISM manufacturing and construction spending data this morning. ADP data is expected to show a 168k gain in private sector jobs last month while PMI data is expected to reflect stable or slightly stronger expansion.

FX Majors: EUR A much higher than expected inflation outcome in Europe raised questions about whether the ECB might taper QE earlier than expected. The HICP inflation rate in the Euro area jumped to 1.8% y/y in January from 1.1% y/y in December. This was much stronger than expectations and in headline terms is consistent with the ECB’s inflation mandate. However, all of the surprise this month can be attributed to non-core elements, especially energy prices which are now up 8.1% y/y. Core inflation was actually steady at 0.9% y/y, in line with expectations The Eurozone flash GDP estimate for 4Q16 recorded growth of 0.5% from a revised 0.4% in the third quarter and a consensus forecast of 0.4%. Meanwhile, the euro area unemployment rate fell to 9.6% in December, which was a better than expected and the lowest level recorded since mid-2009. GBP In the UK, the Gfk consumer confidence index nudged higher in January, but the Lloyds business barometer fell 10pts to 29 to its lowest level since September. JPY The BoJ voted to keep monetary policy steady on Tuesday in a decision that was widely expected by markets. In a 7-2 decision, the Japanese central bank voted to keep interest rates at -0.1%, where they have stood since the beginning of 2016.

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

Technical: Near term support sited at 1.0670 maintains bullish bias and sets 1.0873 as the next upside objective, only a close back below 1.0580 resets near term bearish bias.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Equidistant swing objective at 1.2679 encourages profit taking ahead of 1.2772. Near term support sited at 1.2435 as this survives bullish momentum persists. A close below 1.24 opens 1.2236 symmetry swing support.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 112 achieved profit taking pullback ensues, a breach here will open 110.70 symmetry swing support underpinned by 109.90 50% retracement of the move from August 2016 lows. Near term resistance is sited at 114.50 only over 116.20 reasserts upside targets.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Symmetry swing support at 120.40 defended sets sights on, 124.42 symmetry swing resistance. Near term resistance is sited at 122.76. A failure below 120.40 opens 118.70
Retail Sentiment: Bearish
Trading Take-away: Long

Commodities FX: GOLD reached its highest level in a week on Tuesday as unnerved market participants bought the precious metal after the dollar was hit by Trump’s comments on currency devaluation by other countries. OIL prices rose after news that the world’s top producers cut production this month more than forecasters had expected and as the dollar sank. Prices pared gains though after Iraqi Prime Minister Haider al-Abadi said oil prices will not reach “levels desired” by Iraq before the end of 2018 or 2019. AUD Australia’s NAB business confidence, business conditions and private sector credit readings were all better than expected early Tuesday. CAD better than expected GDP growth for November caused additional strength for the loonie. GDP printed at 0.4% m/m growth for November, better than the expected 0.3%, with the gains coming mainly from manufacturing and resource extraction.

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

Technical: Bullish attention on range highs towards .7800. The next upside objective is equidistant swing sited at .7631 Near term support is sited at symmetry swing level .7490 ahead of pivotal .7440
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Close below 1.3140 reestablishes a more bearish tone in erratic trade, 1.3150 now becomes resistance while this level contains upside reactions bears target a test of 1.30
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: As 1206 supports intraday 1220 symmetry swing retest developing with the potential for a double top, a break below 1206 opens a move back to 1195.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Rejection from equality objective area at 55.30, a close below symmetry support at 50.68 confirms a medium term high and opens a retest of pivotal 49.00. Near term resistance is sited at 54.50.
Retail Sentiment: Bearish
Trading Take-away: Long

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