New York Forex Report: Broad Buck Bid

New York Forex Report: Broad Buck Bid

New York Forex Report: The USD is strengthening broadlly, rallying in response to hawkish comments from voting regional Fed president Harker as he reaffirmed his support for the Fed’s three hike tightening pace for 2017 and stated that all meetings including March were ‘live’. The comments have delivered support to the broader USD following a period of material weakness driven by political headline risk, last week’s relatively neutral FOMC statement, and the mixed nonfarm payrolls release. A renewed focus on relative central bank policy may drive further near-term USD strength following Monday’s unequivocally dovish comments from ECB President Draghi. European political risk remains elevated and Article 50 discussions are set to continue. China’s FX reserves have fallen to fresh multi-year lows, clearing $3trn for the first time since early 2011. The broader market tone is mixed, with modest gains across European equity indices and U.S. equity futures. U.S. Treasury yields are showing signs of stabilisation and gold appears to be struggling at resistance around 1235.

FX Majors: EUR fell for the second consecutive day after the staunchly dovish ECB President Draghi yesterday put a renewed focus on central bank policy diversion with the Fed’s Harker suggesting three rate hikes are likely for 2017. The central bank policy divergence combines with ongoing political risks to result in increased pressure on the euro. The Netherlands, France and Germany are all scheduled to go to the polls this year as nationalist parties build on the momentum of Brexit and Trump’s surprise win. GBP UK housing market has shown signs of weakness due to Brexit concerns and price growth has recently accelerated at more gradual pace. House prices climbed by 5.70% YOY in the three months through January (previous: +6.50% YOY), a Halifax report showed. JPY Japan’s leading index increased to a 1.5-year high of 105.2 in December, tracking an increasingly upbeat assessment of the global economy and puts the country on track for quicker economic growth this quarter. In tandem, coincident index rose to 115.2, the highest level since March 2014, signalling that economic condition was more upbeat before the turn of the year.

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

Technical: Near term support sited at 1.0670 eroded overnight, a close back below 1.0580 resets near term bearish bias, opening a move to test symmetry swing support at 1.0515. Near term resistance sited at 1.0710

Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Equidistant swing objective at 1.2679 capping advance for now. Near term support sited at 1.2345 removed a close below 1.2330 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 sustained breach 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 113.30 only over 114.50 reasserts upside targets.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Symmetry swing support at 120.40 removed, the failure below 120.40 opens 118.70 as the next downside objective. Near term resistance sited at 120.50
Retail Sentiment: Bullish
Trading Take-away: Short

Commodities FX: GOLD drifted lower from a near three-month peak, pressured by a strong dollar as the euro fell on nervousness ahead of the French elections and weak German industry data. OIL prices also fell on Tuesday, as lower production by OPEC and other exporters was undermined by growing evidence of a revival in US shale production and sluggish demand. US crude oil in storage rose by 14.2mn barrels last week, according to the American Petroleum Institute. That was more than five times forecasts for a 2.5mn barrel increase. Gasoline stocks rose by 2.9mn barrels, compared with analysts’ expectations for a 1.1mn barrel gain. AUD RBA maintained cash rate at 1.50% as expected. Outlook on the global economy has improved and is expected to boost Australia’s national income as commodity prices increase. Adding to the positive outlook, the central bank said that “headline inflation rates have moved higher in most countries” and “there is no longer an expectation of further monetary policy easing in other major economies”, taking prospect of a rate cut off the table for now. CAD Trade data was better than expected with a trade surplus of $923M in December, beating expectations of $350M. The surplus is slightly lower than November’s $1B surplus, but the strength of higher energy prices helped exports increase 0.8% despite a decrease in volume terms of 1.4%.

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

Technical: The next upside objective is sited at .7750. Near term support is sited at symmetry swing level .7600 ahead of pivotal .7449
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1.3150 resistance eroded, over 1.32 opens a move back to test 1.3370.Price action remains erratic as price attempts to base above pivotal 1.30. Near term support is sited at 1.3050..

Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: The 1225 upside breach opens a move to 1240 as 1218 supports a failure below 1206 opens a retest of 1180
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: Neutral
Trading Take-away: Neutral

Posted in Forex Analysis, New York Forex Report, tagged with on