New York Forex Report: Carney Cable Catalyst

New York Forex Report: Carney Cable Catalyst

New York Forex Report: Markets retain a risk-on bias, with US equities setting new all-time highs again, the S&P 500 trading through the psychological level of 2500, which has provided support for higher yielding currencies and kept the Yen in particular under pressure. The focus today is going to remain on Bank of England Governor Mark Carney, who will give a lecture at the IMF in Washington at 1600BST, followed by a conversation with IMF Managing Director Christine Lagarde. He will probably talk about monetary policy, but it is not clear whether he will add to last week’s hawkish tone in the Bank’s latest minutes. They stated that “a majority of MPC members judged that… some withdrawal of stimulus was likely to be appropriate over the coming months”. The US NAHB housing survey will attract limited attention today, with the focus squarely on the Fed policy announcement on Wednesday. The Fed is expected to leave interest rates unchanged at 1.25%, but will update its ‘dot plot’ of FOMC members’ interest rate projections. Notably, it is expected to start paring back its balance sheet.

NORTH AMERICA US industrial production fell 0.9% MoM in August, taking a turn from the 0.4% increase previously and bypassing the expected slowdown to 0.1%. The contraction was broad-based amid declines in subsectors. University of Michigan gauge on consumer sentiment fell to 95.3 in September estimate from 96.8, reflecting softer confidence. US retail sales dipped 0.2% MoM in August after rising 0.3% in July, weighed down contraction in sales of automobiles. Discounting the volatile auto figures, sales slowed to 0.2% from 0.5% previously. The New York Fed measure of manufacturing activity in the district dipped to 24.4 in Sept, down from 25.2, indicating slower growth in the sector.

EUROPE In the Eurozone, trade surplus narrowed to €18.6b in July, down from €21.7b previously, driven by decline of 1.1% MoM in exports and 0.7% increase in imports. Rightmove survey showed that house prices in the UK grew at the slowest pace since Feb 2012, rising just 1.1% YoY in Sept from 3.1% in August. In London, house prices fell for the first time in three months, sliding 3.2% from 1.6% in August.

ASIA Chatter about a snap elections have not materially shifted the markets as yet and the continued improvement in global risk appetite levels may continue to undermine the JPY. Note that Japan will celebrate Respect-for-the-Aged Day holiday today. Bank of Japan (BOJ) with a monetary policy decision on Thursday but this is expected to be a nonevent (no change to current policy stance) and there is no update to their economic projections too.

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

Technical: 1-3 Day View – As 1.1990 acts as resistance expect a test of 1.1845 only below 1.1810 concerns the broader bullish bias, a close over 1.20 resets focus on upside objectives.

1-3 Week View – 1.2130 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 – 1.3545 achieved as 1.3450 supports bulls target 1.3660 next, a breach of 13130 concerns the bullish bias opening 1.2910.

1-3 Week View – 1.3263 achieved as this acts as support 1.3836 is the next upside objective only a close back below 1.2770 would jeopardise the bullish advance
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 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 magnet

1-3 Day View – 132.50 achieved enroute to 133.60, as 131.80/60 supports only below 130 concerns the bullish bias opening a move back to 129 base
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – 132.50 achieved enroute to 133.60, as 131.80/60 supports only below 130 concerns the bullish bias opening a move back to 129 base

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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