New York Forex Report: ADP Miss Dollar Remains Mixed

New York Forex Report: ADP Miss Dollar Remains Mixed

London Forex Report: The USD is mixed on the session, with traders marking time and keeping currencies in tight ranges for the most part ahead of the US NFP and Fed policy makers’ speaking engagements today. The USD is weaker against the European currencies, however, and that is driving the negative performance of the DXY on the session. The EUR is out-performing but is off earlier highs, as markets continue to probe key, long-term resistance in the 1.18/1.20 range and shun the USD. The NZD is under-performing on the session, however, after a surprise fall in Q2 employment (-0.2% versus +0.7% expected). Gold is slightly softer and crude is more or less flat, rounding out a rather morose snapshot of markets. ADP came in at 178 k versus an expected 190k while important for markets it is really the curtain-raiser for the main event of NFP data Friday.

USD US data releases were somewhat mixed and skewed to the downside. ISM manufacturing dipped lower to 56.3 versus a prior reading of 57.8, although still on expansionary mode. The readings released yesterday suggest that factory expansion is expected to extend into the second half. Meanwhile the PMI manufacturing reading came in little changed, with a 53.3 print versus a prior level of 53.2. Core PCE steadied at 1.5% YoY in June, unchanged from an upwardly revised May figure which we opine will provide some comfort to the Fed who had always been believing that recent easing in price pressure maybe transitory. Consumer-related data were soft, with personal spending tapered off to a 0.1% MoM increase as income stagnated in June, raising concerns the main pillar of the US economy is moderating. The data calendar is light Wednesday, limited to ADP employment. The market is expecting a strong 190k employment gain which, combined with the solid employment component of the manufacturing ISM released Tuesday, should support expectations for a strong payroll print on Friday.

EUR the European economy grew at a faster pace of 2.1% YoY in 2Q (1Q: +1.9% YoY). This, coupled with recent positive data flow and recovery in the labour market, are expected to reinforce market expectations that ECB is on track to discuss tapering plans. Meanwhile PMI manufacturing for the European region, moderated to 56.6 versus initial estimate of 56.8 and was lower than the record high reading of 57.4 in June.

GBP In the UK, PMI readings expanded more than forecast, at 55.1, picking up from 54.2 in June. Nationwide house price grew at a softer pace of 2.9% YoY in July, above estimates but was a tad lower compared to prior print of 3.1%. Pace of growth remains on a downtrend since September last year as demand is dampened by UK’s economic outlook and already high prices

JPY steady retreat driven by domestic political developments with Prime Minister Abe is set to reshuffle his cabinet on Thursday. The broader tone remains dominant and spreads remain crucial. There are no major domestic releases scheduled ahead of labor cash earnings later this week

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

Technical: 1-3 Day View – As 1.1780/60 supports near term bulls target 1.1860/80 , only a daily close below 1.16 concerns the near term bullish bias setting a top for a test of 1.1440

1-3 Week View – While 1.0830 supports the weekly close over 1.1450 sets upside focus on 1.1876. Weekly close below 1.08 neutralises bullish objectives.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – Bulls target test of pivotal 1.3263 near term support is sited at 1.3150/30. a daily closing breach of 1.30 concerns the medium term bullish bias opening a retest of 1.28.

1-3 Week View – The weekly close above 1.3045 targets the broader symmetry swing objective sited at 1.3263 only a close back below 1.28 would jeopardise the bullish advance.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – As 111.20 contains upside reactions 108.93 is the immediate downside objective. Near term support is sited at 110.30

1-3 Week View – As 108.40 equidistant swing support survives on a weekly closing basis bulls will look for a grind higher to retest 115, a close below 108 negates the broader bullish theme and opens the psychological 100 magnet
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: 1-3 Day View – Expected move through 130.70/80 plays out focus shifts to 133.36 upside objective as 130.60 supports, below 129.40/20 suggests false break.

1-3 Week View – The weekly close above 118.50 arrested the immediate downside risk, 129.44 upside objective achieves as 128 supports bulls look for a move to test 133.36 as the broader upside objective.
Retail Sentiment: Bearish
Trading Take-away: Long