New York Forex Report: Buck Battered

New York Forex Report: Buck Battered

New York Forex Report: USD renewed pressure and momentum has seen new lows versus a number of its trading partners despite rate hike supportive comments from the Fed’s Mester (while Dudley was subtly less hawkish), the USD was also pummelled as UST yields weakened further (10y <2.05%) on the back of Irma (expected to make landfall on Sunday) and geopolitical concerns (note the continued exchange between Pyongyang and the White House). Notable new highs are AUD, EUR, CNH and JPY. So, in the near term, players are reluctant to fight the trend and acknowledge there is downside till next main USD support levels 90.50/70. Early Saturday, August CPI and PPI inflation data will be the first of a number of key releases for China in the coming week. The consensus expectation is that the annual rate of headline inflation will have risen on both measures. Risk sentiments are likely to be curbed as we head into the weekend. South Korea’s Prime Minister Lee Nak-yon has warned yesterday that North Korea may conduct another missile testing on Saturday where the DPRK celebrates its Foundation Day NORTH AMERICA US initial jobless claims rose substantially to 298,000 in the week ending 2 September from 236,000 the previous week. The figure was well above expectations of 240,000 and the highest reading since April 2015 while it was the largest weekly increase since 2012. The four-week moving average increased to 250,250 for the week from 236,750 previously. Continuing claims in the week ending 26 August came in at 1.94mn from 1.95mn and has remained below 2.00mn for over four months. EUROPE ECB also kept its rates and asset purchase target unchanged as expected at yesterday’s meeting but conveyed that it has started formal talks on tapering plans. President Draghi said the decisions are “many, complex, and involved risks and the bulk of them would likely be taken in October”. ECB has also revised up their 2017 growth forecast to 2.2% (previous 1.9%) but kept 2018 and 2019 growth forecasts unchanged at 1.8% and 1.7%. In addition, it has tweaked its inflation forecasts for 2018 and 2019 marginally lower to 1.2% and 1.5% respectively (previous: 1.3% and 1.6%) while keeping 2017 forecast unchanged at 1.5%. Moving on to data, 2Q GDP grew 0.6% QoQ in the Eurozone as initially estimated, quickening from an 0.5% QoQ increase in 1Q, thanks to more robust gains in both domestic demand which offset smaller contribution from net exports. ASIA Leading index in Japan moderated to 105.0 in July while coincident index also tapered off to 115.6, somewhat clouding prospects of sustained recovery momentum in the Japanese economy. This implied the Japanese economy is still far from solid footing and would continue to rely on accommodative monetary policy to sustain growth. In a release this morning, final print of 2Q GDP showed a more moderate than initially estimated growth of 0.6% QoQ due to downward revisions in private consumption (from 0.9% to 0.8%) and business spending (from 2.4% to 0.5%). Australian retail sales were flat in July, although the underlying trend remained generally positive following three months of gains. EURUSD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bullish

Technical: 1-3 Day View – 1.2070 achieved as 1.1980 acts as near term support 1.2165 becomes the next upside objective ahead of 1.2260 only below 1.1810 concerns the near term bullish bias

1-3 Week View – 1.20 achieved bulls look for a test of 1.2130 as the next upside objective. Weekly close below 1.16 neutralises bullish objectives opening a test of 1.14
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: 1-3 Day View – Initial test of 1.3160 is underway as 1.3050 supports price there is potential for a platform to test the 1.3260’s former cycle highs, only below 1.2910 opens a move back to 1.2850

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 – Below 109 suggests reversion to trend and refocuses players on downside objectives below 108 achieved opens 107.33 the initial focus as 108.20 caps near term corrections

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 magnett

Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: 1-3 Day View – Upside objectives at 133 neutralised, below 129.50 concerns bullish bias and opens the door to further test of bids back at 127.60 near term resistance sited at 130.60/80

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

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