New York Forex Report: Commodity FX Consolidating Gains

New York Forex Report: Commodity FX Consolidating Gains

New York Forex Report: June Eurozone PMI data were mixed overall; Markit PMI data for the manufacturing sector were more robust for France and Germany but service sector reports were weaker than expectations and the May data, leaving the Eurozone composite reading at 55.7 this month, from 56.8 in May and against expectations of a 56.6 print. The data trends broadly positive, however, and suggest still robust levels of activity overall. There were no UK data reports earlier but the GBP retains a modest bid tone, reflecting the gains in UK short rates over the past week (US 2Y bond yields at 0.233% represent the highest seen in this tenor since Nov). Tthe hawkish minority opinion on the BoE may persist, helping keep short rates underpinned as expectations simmer that the BoE might move before year end. The USD is broadly lower against its G10 peers in still relatively quiet trading. Broader market trends suggest a slight bid for risk assets, with the AUD and NZD out-performing and major commodity prices tracking firmer on the session.

USD Kansas City Fed manufacturing index rose to a three-month high of 11 in June (May: 8), suggesting that modest acceleration in factories expansion may contribute to overall GDP growth this quarter. On the other hand, data from labour market showed that the number of jobless claims ticked up more than expected by 4k to 241k last week. Signs of tightening labour market and anticipation of inflation reaching the Fed’s goal of 2.00% may pave the way for another rate hike before the turn of the year.

EUR Despite recent uncertainties in the political sphere, optimism in the euro area climbed to a sixteen-year high in June as economic recovery remains on solid footing. Consumer confidence index rose to -1.3 this month (May: -3.3), marking the highest reading since April 2001.

GBP Report from the Confederation of British Industry showed that factory order books surged to the highest in almost 30 years as exports demand improved. The CBI index climbed to 16 in June from 9 in May as the gauge for exports jumped to the highest in 22 years. Out-going Bank of England MPC member, Kristin Forbes, said in her final speech as an MPC member on Thursday (22 Jun) that the UK currency, GBP, has long-term impact on CPI and its depreciation since late 2015 points to need for rate rise

JPY Bank of Japan Deputy Governor Iwata said (22 Jun) that inflation is still lacking momentum, and distant from our price target. He noted that price outlook skewed toward downside and the BOJ must continue powerful monetary easing to push down real interest rates. He acknowledged that inflation has been slow despite corporate profits at record levels, job market near full employment. He dismissed calls in Japan for BOJ to abandon 2% inflation target as these calls do not take into account lessons policymakers learned dealing with crisis

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

Technical: 1-3 Day View – The near term downside objective sited at 1.1125 symmetry swing support has been achieved expect profit taking pause as 1.12 contains upside corrections expect a test of equidistant swing and channel support sited at 1.1040. Over 1.12 again delays downside attempts and retains then range environment.

1-3 Week View – While 1.0830 supports 114.30 becomes the primary upside objective. A weekly close over 1.1450 sets upside focus on 1.1876. Weekly close below 1.08 neutralises bullish objectives
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – Perceived corrective price action played out leaving 1.2639 vulnerable, this support has now been removed, as 1.2660 contains upside attempts 1.2450 becomes the downside magnet, only over 1.2760 arrests bearish pressure opening pivotal 1.2820

1-3 Week View – The weekly failure to close above 1.3045 ahead of the broader symmetry swing objective sited at 1.3238 suggest underlying weakness persists 1.2450 becomes pivotal for the medium term perspective
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: 1-3 Day View – A daily closing breach of 111.80 level would reset focus on upside objectives principally 113.78, near term support is now sited at 110.80, only below 110.30 would arrest the advance.

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
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – Bullish consolidation targets 129.44 as the medium term upside objective, near term upside objective of 126.84 as 123.90 supports, only below 122 concerns near term bullish bias, opening a move to test 121.36.

1-3 Week View – The weekly close above 118.50 arrested the immediate downside risk, resetting focus on pivotal 124.40 a weekly breach of this level opens 129.44 as the broader upside objective
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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