New York Forex Report: BOE Delivers Dovish Blow

Fed Chair Yellen appears to be setting the stage for a possible December rate hike, citing strong US fundamentals but cautioned that the decision will be dependent on upcoming data. Renewed expectation of a rate hike was further backed by solid employment growth in the private sector and rebound in exports. ADP employment print rose 182,000 in Oct, marginally lower than the revised 190,000 increase in Sept and trade deficits narrowed to a seven month low of $ 40.81 billion. USD extended its rebound printing three month highs, the USD Index climbed 0.82% to 97.95.

The main focus of the European morning was on the Bank Of England’s November meeting which passed as expected with rates unchanged, though the accompanying statement and inflation report took a rather dovish tone with the Bank  lowering its inflation and growth forecasts citing increased downside risks and concerns over global growth outlook.

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

Fundamental:Despite initial strength, EURUSD weakened over the European morning as EZ retail sales missed expectations printing -0.1% MoM and 2.9% YoY. Commenst from ECB’s Draghi reiterated the ECB’s willingness to act and the range of tools open to them confirming once more that monetary policy will be reviewed at the December meeting. .

Technical: 1.0860 symmetry target achieved, bears have the ball below 1.10 with bids at 1.08 the next downside objective, only a close above 1.10 eases immediate downside pressure.

Interbank Flows: Bids 1.08 stops below. Offers 1.1o Stops above.
Retail Sentiment: Bullish
Trading Take-away: Sidelines for now

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

Fundamental: The BOE November meeting saw the Bank delivering a very Dovish message to markets as they lowered their GDP outlook , now seeing 2.7% this year vs 2.8% last forecast in August, and 2.5% next year vs 2.7%. The reaction saw GBP sharply sold

Technical:  The sharp decline from recent the 1.55 high leaves rate targeting the late October low at 52.40 next. If rate holds there, expect range rotation, below there bears target the September low at 1.51 next.

Interbank Flows: Bids 1.5240 , further at 1.52 stops below
Retail Sentiment: Neutral to bullish
Trading Take-away: Sidelines for now

2015-11-05 12_27_02-NetDania - NetStation


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

Fundamental: Due to the hawkish speech from Yellen yesterday, USDJPY broke through its 120-121.6 range to reach a two-month high of 121.72. BOJ minutes release showed that members are still positive about the domestic economy but noted growing concerns over the risks from China and emerging markets.

Technical: Break of 121.30 sets bulls sights on range highs at 121.85 next an intraday failure at 120.50 would suggest return to range.

Interbank Flows: Bids 119.50/30 stops below. Offers 122 stops above
Retail Sentiment: Bearish
Trading Take-away: Longs from 120.50 targeting upside range break

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

Fundamental: EURJPY recouped most of yesterdays losses amidst Yen weakness over the European morning as equity markets found higher ground on further dovish comments from ECB’s Draghi.

Technical:  Bears now target equality corrective objective at 131.20, only a close above 133.50 eases immediate bearish pressure.

Interbank Flows: Bids 131.00 stops below. Offers 133.50 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines for now

ey2015-11-05 07_41_57-NetDania - NetStation

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

Fundamental: AUDUSD remained mostly flat over the European morning, consolidating at yesterday’s lows. Commodities are softer so far today keeping upside capped.

Technical: Sellers at .7230 are targeting a retest of last weeks .7070 lows en route to retest the year to date lows next. Only a break and close above .7230 eases immediate bearsih bias

Interbank Flows: Bids .7100 stops below. Offers .7230 stops above
Retail Sentiment: Neutral
Trading Take-away: Short against .7230 targeting .7030

au2015-11-05 08_12_37-NetDania - NetStation

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

Fundamental: CAD slipped in tandem with oil prices that turned lower sharply on news US stockpiles surged for a sixth week in a row. USDCAD jumped considerably overnight and reached the top of 1.3190s retesting last Friday’s highs.

Technical:1.3260 is the pivotal resistance, as this area contains upside potential for another leg of corrective downside. A close above 1.3280 eases bearish pressure and resets focus on the 2015 highs and stops above.

Interbank Flows: Bids 1.3030 stops below. Offers 1.32 stops above
Retail Sentiment: Bearish
Trading Take-away: If short from failed retest of 1.3260, move positions to risk free

uc2015-11-05 08_13_05-NetDania - NetStation

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