New York Forex Report: Consolidation Ahead Of Thursday Risk Events

New York Forex Report: Consolidation Ahead OF Thursday Risk Events

New York Forex Report: Eurozone services and composite PMI data were mainly in line with flash estimates; slower service sector growth in France and Italy last month was offset by a pick-up in activity in Germany. The Eurozone service sector PMI rose to 56.3 in the month versus the 56.2 preliminary report. The composite index was unchanged from the flash estimate at 56.8. Spot has slipped back to the low 1.12s area in late morning European trade as European equity markets retreat. Sterling has emerged from another shocking terrorist attack over the weekend in relatively sound shape as investors appear to be becoming unfortunately hardened to this sort of news. Polling news has been mixed for the GBP, with one survey (YouGov) suggesting the risk of a hung parliament while another (ICM) suggests the Tories’ lead over Labour is stretching out to double digits again. Both the UK CIPS services and composite PMI readings were weaker than forecast in May (53.8 and 54.4 respectively) and both softened relative to April. JPY is down a modest 0.2% from Friday’s close, retreating from fresh multi-week highs reached in early Asian trading. The broader tone appears tentative, leaving JPY vulnerable to knee-jerk haven-driven gains and compounding the support from narrowing interest rate differentials.

USD The US added merely 138k jobs in May and net gains in the previous two months were revised lower by a cumulative 66k. Unemployment rate ticked lower to a 16-year low of 4.3% as a result of a 0.2ppt decline in participation rate, not quicker job gains. The only comfort came from sustained wage growth of 0.2% MoM. On a separate report, trade deficits widened by 5.20% to $ 47.62 billion in April amid shrinking exports (-0.30% MoM) coupled with rising imports (+0.80% MoM).

EUR Eurozone’s factory price growth quickened to +4.30% YoY in April (March: +3.90% YoY) as consumer inflation hovered around a four-year high.

GBP UK’s construction PMI surged to a seventeen-month high of 56.0 in May, offering some reprieve after weaker May manufacturing PMI number. Brexit negotiation continue to hamper sentiment as inflation surged to a three and a half year high and data were beginning to post early signs of growth slowdown. On a brighter note, downside risks remain largely contained at this juncture.

JPY Japan’s defence minister Inada on Saturday supported the US using “any option” to deal with North Korea, including military strikes, and said Japan wanted to build a deeper alliance with Washington that could play a regional security role.

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

Technical: 1-3 Day View – Breach of 1.12 refocuses bulls on equidistant swing objective of 1.1291 en-route to a test of broader symmetry swing objective at 114.30. Only below 1.11 concerns near term bullish bias opening a move back to test 1.1020.

1-3 Week View – While 1.0830 supports 114.30 becomes the primary upside objective. A weekly close over 1.14 sets upside focus on 1.1876. Weekly close below 1.08 neutralises bullish objectives
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – Symmetry swing objectives at 1.3060 & 1.3118 are targeted a close below 1.2750 concerns near term bullish bias and opens a move back to test the 1.26 pivot, the near term upside hurdle is sited at 1.2920

1-3 Week View – The weekly closing breach of 1.2880 opens 1.30 as the next upside objective ahead of the broader symmetry swing objective sited at 1.3238.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – 115 becomes the next upside objective only back below 110.20 would concern the near term bullish bias opening a retest of 1.0940, near term 112.30 is the next upside hurdle.

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

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

Technical: 1-3 Day View – Close over 124.40 opens 129.44, near term support is sited at 123.10, near term upside objective of 126.84 equidistant swing objective, only below 122 concerns near term bullish bias.

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: Neutral
Trading Take-away: Neutral

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