New York Forex Report: Dollar Eyes Data PPI Ahead of CPI

New York Forex Report: Dollar Eyes Data PPI Ahead of CPI

New York Forex Report: Geopolitical risk remains the primary concern for global investors today; Asian and European equity markets are lower again while US Treasury bonds are out performing modestly against flat to slightly softer fixed income markets overall. The USD is broadly better supported but the JPY remains the top-performing G10 currency overall on the session. The NZD has plunged following the RBNZ’s on hold policy decision last night; central bank officials focused on the “need” for a lower exchange rate and reminded markets that intervention was always an option in their post-meeting comments. The US economic calendar picks up a little, with weekly claims and PPI data but most focus remains on tomorrow’s US CPI report. NY Fed President Dudley (voter, leans dovish) speaks this afternoon.

USD Releases from the US were limited to weekly mortgage applications which rebounded to increase 3.0% WoW driven by increases from both new purchases and refinancing. The Atlanta Fed forecasts that the US economy is on track to grow 3.5% on an annualised pace in 3Q while Fed Evans commented that it is quite reasonable to start balance sheet reduction in September. In line with our view, he however cautioned that low inflation could delay the Fed’s plan for further interest rate increases.

EUR Italy reported a 1.1% rise in industrial production for June, well ahead of market estimates (+0.2%). The Banque de France’s industrial sentiment index rose unexpectedly in July, meanwhile, reaching 105, the highest in six years.

GBP UK retail sales rose 0.9% in the July year, the British Retail Consortium’s study of like for like sales showed, in line with expectations but a little slower than Jun (+1.2%)

JPY machine orders contracted more than expected by 5.2% YoY in June. On the contrary, machine tool orders continued to expand albeit at a more moderate pace of 26.3% YoY in July versus a prior print of 31.1%. Housing loans meanwhile held steady with a 3.3% increase in 2Q.

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

Technical: 1-3 Day View – Pivotal 1.17 survives for now, as this level contains downside reactions bulls look for a retest of cycle highs en route to 1.20, intraday upside hurdle sited at 1.1830, 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

GBPUSD
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 1.3080, 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: Bullish
Trading Take-away: Short

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

Technical: 1-3 Day View – As 110.60 contains upside reactions 108.93 is the immediate downside objective. Near term support is sited at 109.50

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

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

Technical: 1-3 Day View – 133.36 broader upside objective, the break below 129.20 achieved the anticipated 128.50 a close below here sets a top for retest of 125.80, near term resistance sited at 1.30

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: Neutral
Trading Take-away: Neutral

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