New York Forex Report: Crude Higher Loonie Heavy

New York Forex Report: Crude Higher Loonie Heavy

New York Forex Report: Ahead of the Fed, the USD is trading more defensively this morning, even as US yields continue to rise. Oil prices have broken above recent peaks to trade at $54/bbl, the highest since mid-2015 after Saudi Arabia indicated that it could reduce further its output and Non-OPEC producers agreed to cut production. USDCAD feeling the brunt of the Crude move higher. The JPY remains soft as US-Japan yield spreads widen. European stocks are softer while global bonds are mostly lower as well. Commodities are firmer, following crude oil. The FOMC outcome (meeting concludes Wednesday) is not exactly just around the corner but it’s close enough to keep all but the most active of market participants sidelined perhaps. It’s pretty much a done deal that the Fed will tighten 25bps at this stage; there have been plenty of clues from policy makers that a modest tightening is appropriate. Given the sharp rise in US rates since the US election, and the support that these gains have afforded the USD, the most important piece of the Fed puzzle will be what indications the Fed will give if any about the future course of monetary policy.

FX Majors: EUR printed an intraday low of 1.0528 amid the European Central Bank’s extending its bond-buying program longer than widely expected, even as it cut the size of the monthly purchases. Underlying its promise for extensive stimulus, the ECB predicted inflation at 1.7% in 2019, arguing that more-costly energy could spur consumer prices even without lifting the underlying trend. GBP slipped against the USD on Friday to 1.2574 registering its first week of falls in four, with traders hopes for a delayed Brexit dampened after British lawmakers said they would stick to Prime Minister Theresa May’s timetable. Britain’s trade deficit narrowed more than expected in October to 1.971 billion pounds from 5.812 billion pounds in September after big upward revisions following an error in how trade in gold was recorded. JPY settled above 105 handle at 115.36. Markets believe US rates should pick up as Trump administration promised measures on growth and taxation, which also support USD. Japan’s economy could face pressure from US President-elect Donald Trump’s plan to withdraw the United States from a multinational trade deal and on any protectionism during the New York billionaire’s term of office, according to a Reuters poll of analysts.

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

Technical: Sharp rejection from medium term resistance at 1.0850 this is a key upside hurdle which will need to be captured on a closing basis to stabilise the pair. The subsequent break back below 1.0650 opens retest of bids back towards 1.05 near term resistance is sited at 1.0650, as this area caps bears target 1.0424 symmetry swing objective.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: The close over 1.2670 suggests further upside momentum to target the key structural resistance sited at 1.28, near term support is sited at 1.26 a failure below 1.25 reopens symmetry swing objective at 1.24.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 115.59 upside objective representing the 61.8% retracement of the 2015/16 decline achieved, near term support is sited at the 115.60, as this area supports bulls target 116.33. A breach of 114.68 would suggest a broader correction to the advance opening a move back to test symmetry swing support at 109.60
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: As 120 supports scope for a test of offers above 123.50 as the next upside objective ahead of the pivotal symmetry swing resistance sited at 124.42. A break back below 119 opens 118.45 opens ahead of pivotal bullish trend support at 116.20
Retail Sentiment: Bearish
Trading Take-away: Long

Commodities FX: GOLD has suffered quite a blow over the past several days, with the yellow metal unable to ignore the intense rotation into the USD. OIL remains well bid as non OPEN oil producers join the cartels mandate for production cuts. AUD held steady and it closed slightly lower against the USD at 0.7451. Given worse-than-expected Australia GDP data and trade balance figures released last week, this week’s job report could be in focus for RBA rate cut speculation. Markets are expecting that Australia will gain 17.5k jobs. CAD strengthened to a fresh seven-week high against the USD last week on the back of higher prices for oil, which supported the Canadian dollar after output cut agreement by Organisation of Petroleum Exporting Countries (OPEC) members. The Canadian dollar touched its strongest level against the US dollar in almost two months after OPEC forged a pact with its rivals to curb production amid a global crude surplus.

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

Technical: .7092 AB=CD remains the downside objective. Near term resistance sited at .7440 has been eroded the correction should now challenge pivotal 7530/50 as this levels contains the upside reaction there is potential for resumption of downside pressure.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Price rotating lower testing and eroding pivotal 1.3250 the failure here concerns the bullish bias and opens a retest of symmetry support at 1.3098 ahead of longer term channel support sited at 1.3050. Over 1.34 stabilises the pair and suggest a return to focus on upside objectives
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: As equidistant swing objective sited at 1202 contains upside reactions bears target 1149 as the next downside objective. A close over 1220 suggest broader correction to the recent decline.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: The breach of 52.40 opens 55.19 equidistant swing target as the next upside objective. Near term support is sited at 52.00 a close below 47.00 would concern the bullish thesis.
Retail Sentiment: Bearish
Trading Take-away: Long