New York Forex Report: Caution, Month & Quarter End Volatility This Afternoon

New York Forex Report: Caution, Month & Quarter End Volatility This Afternoon

New York Forex Report: The USD is trading generally higher and there is a clear risk-off undertone to the broader markets amid heightened focus on European bank stocks following Deutsche Bank’s plunge yesterday. The stock briefly dipped below EUR10 in European dealing today, after yesterday’s reports that some hedge fund clients had reduced exposure to the institution. Bank stress has spilled over into global stocks (lower) and bonds (mostly firmer in the G10FX space) G10FX are mostly lower against the USD but there is less concern apparent in the relative performances overnight where the CHF has under-performed while the NZD is outperforming modestly on the session – not your typical, risk-averse behaviour. Note that USD liquidity concerns do appear to be mounting in the wake of the DB focus which is boosting the cost of raising USDs and may be USD-supportive in the weeks ahead. It’s also month and Q3-end today so rebalancing flows (slightly USD positive) will dominate the morning session for North American trading.

FX Majors: EUR f better-than-expected German CPI figures. Expectations were set for event at 0.6 percent, with figures released at an actual 0.7 percent annually in September • Economic situation in Germany “does not need debt-financed stimulus program, and positive spillover effects towards other countries would be limited,” Bundesbank President Jens Weidmann said at a conference in Berlin. GBP Data pointed to strong UK household spending as borrowings rose £1.6 billion in August after surging £1.2 billion in July. On the other hand, mortgage approvals fell to the lowest in almost two years to 60.1k (previous: 60.9k) last month, indicating that impact from the Brexit fallout remained largely unknown in the longer run. JPY Japan’s household spending remained sluggish, underscoring the government’s challenge to revive falling price growth. Spending dropped 4.60% in August from a year ago (July: -0.50% YOY) while CPI fell 0.50% YOY in the same period (July: -0.40% YOY), suggesting that the government was far from achieving its goals of stimulating the stagnant economy and pushing up price growth. Providing some reprieve, industrial production rose 1.50% MOM in August, reversing the 0.40% MOM decline in July.

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

Technical: The failure to hold 1.1220 opens 1.1120, a break of this price pivot opens equidistant swing support at 1.1085. Near term resistance is sited at 1.1250.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: As 1.3030 rejects corrective advances bears target 1.2870 as the next downside objective. Near term support is sited at 1.2920. Only a close over 1.3130 eases bearish pressure
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: 101.20 prior resistance now near term support for a move to target pivotal 102.80, a close above this level would ease bearish pressure. Near term resistance is sited at 102.

.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Failure below 113 opens move back to 112 as the next downside objective, near term resistance is sited at 113.80 as this level survives on a closing basis bears target 110.80 next.
Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX: GOLD The emergence of systemic risk associated with Deutsche Bank is now only adding to the metal’s bid tone. OIL continued to firm yesterday, rising 2%, following a 5% lift the day before. Agreement across OPEC to curb production signals the end of a two-year pump-at-will approach; that’s moving from market forces to cartel based revenue maximisation. The canary in the coal mine remains agreement over how much each country will actually produce. AUD Mixed Friday data out of Australia with private sector credit disappointing, while new home sales were up. The Aussie data wash hasn’t really factored into price action, with the market seemingly more focused on broader macro themes, which include systemic risk associated with Deutsche Bank. CAD fell back from a nearly one-week high against the US dollar as the bell from a deal between major oil producers to limit output wore off and investors worried about the news of Deutsche Bank.

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

Technical: Symmetry swing resistance sited at .7685 stall advance. .7640 supports gives way as this level now acts as resistance .7550 is the next downside objective ahead of .7412 symmetry swing support.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: As 1.30 supports 1.3372 is the equidistant AB=CD corrective objective, only below 1.2960 threatens near term bullish bias.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1301 AB=CD equidistant swing support has provided anticipated base. Near term resistance now at 1357, near term support is sited at 1314, failure here opens move back to pivotal 1300.

Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Equidistant swing resistance sited at 47.36 continues to repel the advance 41.87 remains the downside objective, over 48.00 opens equidistant swing objective sited at 52.40
Retail Sentiment: Neutral
Trading Take-away: Neutral