New York Forex Report: BOE Cuts Bank Buffer Rates In Bid To Boost Lending

New York Forex Report: BOE Cuts Bank Buffer Rates In Bid To Boost Lending

New York Forex Report: In Its financial stability report released today the Bank of England warned that Brexit risks “have begun to crystallise” leading to them to cut the amount of capital that banks need to keep on their books. This reduction in counter-cyclical capital buffer should free up to £105bln for lending. The BOE also refenced the decline in Sterling post-Brexit saying that “A sudden shift in the supply of foreign capital and in the current account deficit would be associated with a sharp increase in risk premia and adjustment in sterling.” The BOE labelled the current UK deficit “high by historical and international standards”.

FX Majors: Sterling under pressure as UK service sector growth falls to 38 month lows in June printing 52.3 vs 52.8 expected. EuroZone Retail Sales print weaker than expected in May at 1.6% vs 1.7% . Quiet data session ahead today for the US with Factory Goods and Durable Goods the only noteworthy releases.

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

Technical: While 1.1170 caps upside reactions expect a grind south to retest post referendum lows, a close over 1.1250 is required to ease near term bearish bias. Intraday support is sited at 1.1090
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: Bears now targeting a test of psychological 1.30 level. Bears have the ball while 1.3698 symmetry resistance remains in place. Inraday support is sited at 1.3120.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: A sustained move through 103.50 is required to ease immediate downside pressure, as this area caps upside reactions expect a test of near term support sited at 101.40.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Next downside level to watch is 107 with 115.50 near term resistance now. A close over 116 would ease near term bearish bias. Near term support is sited at 113.40, with pivotal corrective support at 111.90
Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX: GOLD rallied strongly on Monday as investors digested BOE Governor Mark Carney’s comment last week as signaling more BOE monetary stimulus could be on the way this summer while Bank of Japan will also add more monetary easing soon. The gold price increased by US$9.44 to US$1,350.79. Oil futures fell 0.5% to $48.76 after comments by Saudi Energy Minister Khaled Al-Faleh that the market was heading toward balance were counterbalance by signs of decelerating demand in Asia. AUD RBA taking account of the available information, the Board judged that holding monetary policy steady would be prudent at this meeting. Over the period ahead, further information should allow the Board to refine its assessment of the outlook for growth and inflation and to make any adjustment to the stance of policy that may be appropriate CAD strengthened to a 10-day high against the USD as traders grew more comfortable with Brexit, while soft domestic figures was insufficient to raise prospects of a Bank of Canada rate cut.

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

Technical: Breach of .7480 the midpoint of the broader .7660/.7300 range places renewed emphasis on a test of upper end of the range. Intraday support is sited at .7430, below here opens move back to .7300 range support.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: While 1.29 support now acts as resistance expect rotation into lower end of the broader 1.30/1.2680.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Next level to watch on the upside is 1361 en route to a broader 1390 with 1315 near term support now. Only below 1300 concerns near term bullish bias.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Only a close below 46 threatens medium term bullish bias, below .46 opens a test of 44 as next downside objective. As 46.70 supports expect a retest of 51.60’s highs.
Retail Sentiment: Neutral
Trading Take-away: Neutral