New York Forex Report: Dollar Depressed Ahead of FOMC

New York Forex Report: Dollar Depressed Ahead of FOMC

New York Forex Report: The “sell North America” theme prevails this morning as global investors factor in heightened uncertainty around the outcome of the US presidential election. The USD is tracking generally lower against its G10FX peers ahead of the FOMC outcome, with the CAD under-performing (alongside the AUD). The MXN (Trump Presidential Win Proxy), meanwhile, is down nearly 0.9% on the day. The JPY and NZD are out-performing on safe-haven and growth/yield considerations respectively (NZ unemployment fell to 4.9% in Q3, the lowest since 2009). Global stocks are soft and developed market bonds are bid, with US Treasury bonds under-performing on a relative basis. Firmer gold and (sharply) weaker crude complete a risk-averse portrait of global markets this morning. Expect some small position squaring ahead of FOMC this evening.

FX Majors: EUR managed to edge higher on Tuesday, hitting fresh 3-week highs above 1.1050 amid broad USD weakness on news that Trump leads Clinton by one point in a poll conducted by ABC News/Washington Post. The currency also boosted by positive data coming from China that fueled demand for high yielders. GBP UK’s manufacturing PMI edged down to 54.3 in October, sliding from 27 month high of 55.5 in September. Despite the softer reading, the sector was on solid footing thanks to depreciation of the Sterling which increased competitiveness of Britain goods in foreign markets. JPY BOJ kept its monetary policy unchanged yesterday as widely expected but conceded that it will take longer for Japan to reach its 2.00% inflation target than previously forecasted. In its quarterly outlook, price growth for the two years has been revised down while growth projection stayed pat. Inflation forecast for 2016 is reduced to -0.1% (previous: 0.10%), 2017 to 1.5% (previous: 1.7%) and 2018 to 1.7% (previous: 1.9%).

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

Technical: Near term resistance is sited at 1.1030/50 has been removed expect advance to find offers on initial test of 1.1120, expect former 1.1030 resistance to act as support, only over 1.1230 eases bearish bias.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Medium term resistance is sited at 1.2380. Only a close over 1.25 eases bearish pressure. Interim support is sited at 1.2260/80
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: 105 is attained bulls target 107.40 symmetry swing objective next, 103. is near term support below 102.80 eases bullish bias
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Upside attention on 116.20 as the primary upside objective with in in the broader 112-116 range. A tops side expansion through 116 opens 121 equidistant swing objective. Back below 114 opens 112 again.
Retail Sentiment: Bearish
Trading Take-away: Long

Commodities FX: GOLD rose to fresh one month highs of $1,291.98 per ounce before closing at $1288.20 on the reduced gap in the opinion polls between Trump and Clinton. OIL settled down 19 cents, or 0.41%, at $46.67 a barrel, for a third straight day of losses on renewed doubts about whether OPEC will follow through with proposed output cuts. AUD RBA also made no policy move, keeping cash rate unchanged at 1.50%. The central bank reiterated its preference for weaker Australian dollar to allow the economy’s adjustment from resource investment. Inflation is expected to pick up gradually over the next two years. On the data front, building approvals fell 8.70% MOM in September (August: -1.80% MOM), extending its declines for a second straight month. CAD GDP rose 0.2% MoM in August, following a 0.4% increase in July and with the main contribution coming from mining and oil extraction.

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

Technical: AUD continues to rotates in a contracting range with .7730 capping upside and .7500 containing downside reactions, a breach of the lower end of the range opens .7412 symmetry support. Through .7750 opens .7830 on the upside.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1.3360 equidistant AB=CD upside objective achieved as 1.3230 supports bulls target a move to 1.35, only below 1.2960 threatens this objective and suggests a test of pivotal 1.2820.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Anticipate test of 1229 symmetry swing support failure here lets bears target 1200 as the next downside objective, near term resistance is sited 1290 ahead of pivotal 1300.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Equidistant swing objective sited at 52.40 is the primary upside objective. The failure at 49.50 has opened symmetry swing support at 46.03 a breach here opens 42.73 as the next downside objective
Retail Sentiment: Bullish
Trading Take-away: Short