New York Forex Report: BOE Vote 9-0 To Keep Rates On Hold

New York Forex Report: USD weakened further today, extending losses on the back of comments by Fed’ Dudley yesterday who cautioned against tighter financial conditions in the US, and spurred a scaling back of market’s expectation of a hike in March. The main focus of the European session was the BOE February Meeting which saw rates kept on hold whilst long-time Hawk McCafferty resigned his hawkish vote to register a unainoums 9-0 decision. The BE lowered it’s growth forecast amid weak wage growth and low inflation but did revise up its medium term inflation forecast with inflation expected to rise above the 2% target in 2018.

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

Fundamental: EUR ripped higher over the European morning extending yesterday’s gains as USD continues to weaken on the back of Dovish comments by Fed’s Dudley and further data weakness.

Technical: While 1.10/1.0950 provide intraday support expect a test of 1.1220 symmetry corrective objective

Interbank Flows: Bids 1.11stops below. Offers 1.12 Stops above.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Fundamental: GBP erased initial session gains as the BOE voted to keep rates unchanged as expected, though voting unexpectedly fell back to 0-0 from 8-1 previous as long term Hawk McCafferty resigned his vote for a hike citing weak wage growth and low inflation

Technical: A close over 1.46 opens 1.4860 next, expect a broader corrective phase to continue to develop while 1.4370 remains intact as support.

Interbank Flows: Bids 1.4560 below. Offers 1.4650 stops above
Retail Sentiment: Bearish
Trading Take-away: Long

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

Fundamental: Apart from disappointing US Markit PMI and ISM non-manufacturing composite, the speech from Fed’s Dudley also suggested dovish view on dollar. USDJPY was down to an intraday low of 117.03 yesterday, wiping out all gain from previous Bank of Japan’s action. Wait-and-see is now the preferred approach as the non-farm data will be released tomorrow.

Technical: While 119.50 contains upside reactions expect a grind lower to retest 115.90

Interbank Flows: Bids 116.50 stops below. Offers 119.50 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Fundamental: A slew of Asian prints from Nikkei pointed to diverging growth in the manufacturing and services sectors. Services sector in Japan expansionary with Japan’s gauge surging to a five month high of 52.4 in Jan (Dec: 51.54). Growth in the services sector could offset the expected slowdown in the manufacturing sector. The EC today cut its 2016 growth estimate for the euro zone to 1.7% from 1.8% amid global growth concerns.

Technical: While 130.40 supports intraday downside reactions expects s retest of 132.30 offers and stops above, a close above 132 opens a test of 134 next.

Interbank Flows: Bids 130.50 stops below. Offers 132.50 stops above
Retail Sentiment: Bearish
Trading Take-away: Long

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

Fundamental: USD weakness and a recovery in Oil prices have fuelled further AUDUSD strength over early European trading todsy as risk sentiment recovers.

Technical: While .7130 caps intraday downside expect a test .7200. Only a closing breach of .71 eases immediate upside pressure.

Interbank Flows: Bids .7150 stops below. Offers .7200 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Fundamental: USDCAD completely retraced its rally this year, recorded fresh year-to-date lows of 1.3750s, owing to the weakness of USD across the board and higher oil prices. Crude oil prices soared on comments from Russia’s Foreign Minister, expressing its willingness to meet with OPEC and non-OPEC members for the discussion on an output reduction, reigniting hopes of a deal to trim production

Technical: AB=CD corrective swing target at 1.3750 achieved, while this area supports expect a retest of 1.40 from below.

Interbank Flows: Bids 1.3750 stops below. Offers 1.3950 stops above
Retail Sentiment: Neutral
Trading Take-away: Sidelines