New York Forex Report: Commodity FX Eye China Inflation Data

New York Forex Report: Commodity FX Eye China Inflation Data

New York Forex Report: A very quiet calendar today, with the majority of markets trapped in post ranges. The Fed’s Bullard and Kashkari comments merely reiterated their worries about wage growth and inflation, while acknowledging that the underlying economy continues to be robust. Chinese data showed their trade surplus grew, with imports somewhat lower than expected, which has seen USDCNH drop sharply to new lows for the year and test support in the 6.70 region. We get China’s latest inflation data overnight. What will be interesting is how raw material prices react, as Copper, Aluminium and Iron Ore have been strong for a number of weeks now, but particularly so yesterday. From this measure alone AUDUSD looks a little out-of-line as we reach important support in the 0.7900-0.7850 region. USDCAD’s correction phase has also moved closer to resistance in the 1.2750-1.2850 region, where technical analysts look for a lower high, while Oil prices remain in a consolidation phase awaiting OPEC’s latest output deal compliance update.

USD consumer credit in the US increased less than expected in June, by $12.39b from $18.28b previously, suggesting consumers are pulling back their spending which if persists, could hamper growth in the second half of the year.

EUR Recent data from the Eurozone remains on the softer side, the latest being Sentix survey of investor confidence. Sentiment is the lowest in 3 months, dipping to 27.7 in August from 28.3 in July. The headline figure was pressured by investors’ lower expectations of future conditions, even though assessment of current situation improved.

GBP House prices in the UK rose less quickly in July, registering 2.1% YoY growth compared to 2.6% previously. The pace of growth tapered off for a third consecutive month as markets continue to cool from an overheating property market while support for prices also eased amid slowdown in wage growth.

JPY Japan’s leading and coincident indexes ticked higher in June preliminary reports, suggesting that future and current economic activity are on firmer footing. The leading index climbed from 104.6 to 106.3, highest since Mar 2014 and affirming improved indicators in new job offers, new machinery orders, consumer confidence and new housing construction (amongst others). The coincident index was also highest since Mar 2014, rising to 117.2 from 115.8 as values of retail and wholesale sales improved, along with pick-up in operating profits across all industries as well as shipments of SMEs.

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

Technical: 1-3 Day View – Pivotal 1.1730 holds on the first test as this level contains downside reactions bulls look for a retest of cycle highs en route to 1.20 only a daily close below 1.1660 concerns the near term bullish bias setting a top for a test of 1.1440

1-3 Week View – 1.1876 achieved focus shifts to 1.20 . Weekly close below 1.14 neutralises bullish objectives.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – 1.31 daily closing breach concerns the near term bullish bias opening a retest of 1.28, near term resistance is sited at 1.3110, only a close over 1.3160 reestablishes near term bullish tone

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: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – As 111.65 contains upside reactions 108.93 is the immediate downside objective. Near term support is sited at 110.30/50

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: Bullish
Trading Take-away: Short

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

Technical: 1-3 Day View – Expected move through 130.70/80 plays out focus shifts to 133.36 upside objective as 130.60/40 supports, below 129.40/20 suggests false break.

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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