New York Forex Report: Dollar Mixed As FOMC Factored

New York Forex Report: Dollar Mixed As FOMC Factored

New York Forex Report: The USD is trading in mixed fashion on the day as the Dec rebound shows signs of faltering. Seasonal trends typically run against the USD broadly through year end (though the CAD often under-performs, it seems) supporting a view to the broader trend lower in the Dollar resuming in the New Year. Focus on the Fed policy meeting—and an almost certain rate hike—this week has alleviated pressure on the USD in the past week or so but a 25bps hike Wednesday ) should be well factored in at this point. There is little data of note from the US today (just JOLTS report) and the USD may struggle through the latter part of the week unless the Fed’s statement is obviously hawkish (which seems less than likely, given the looming leadership transition). It’s a big week for central banks more broadly, however, and Thursday’s ECB, BoE and SNB policy meetings will be in focus

NORTH AMERICA US nonfarm payrolls indicate continued robustness in jobs growth while other data suggest that outlook remains firm. There were 221k jobs added in Nov, more than the expected 195k though down from 247k in Oct. The Oct figure was also downwardly revised from 261k. Unemployment and participation rates did not budge in Nov, staying at 4.1% and 62.7% respectively. Inflation outlook improved albeit slightly as average hourly earnings grew quicker in Nov by 2.5%, up from 2.3% previously. However, consumer sentiment softened as indicated by University of Michigan’s survey; the corresponding index dipped to 96.8 in Dec estimate, down from 98.5

EUROPE UK churned out several data upsides last Friday, suggesting that growth prospect remains steady despite Brexit uncertainties. Industrial production accelerated in Oct, rising 3.6% YoY from 2.5% in Sept and beating estimates of 3.5% gain. Output at factories also picked up pace, gaining 3.9% in Oct from 2.7%. Output in the construction sector however, disappointed with a 0.2% dip in Oct after growing 1.1% previously. Economic growth remains steady; NIESR estimated that GDP expanded 0.5% QoQ in the 3 months ended Nov. Meanwhile, the visible trade deficit widened to £10.78bn in Oct, up from a shortfall of £10.45bn in Nov

ASIA After a better than expected 3Q GDP, Eco Watchers surveys reiterated a positive outlook in Japan. Respondents opine that current conditions have improved, lifted the corresponding index from 52.2 to 55.1 in Nov, highest since Jan 2014. The outlook index dipped to 53.8, a nonetheless strong level from 54.9, the highest since Dec 2013.

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

Technical: 1-3 Day View – Sustained push sub 1.1770 suggests further weakness to test critical 1.17 a reversal here encourages another run at 1.20, failure opens 1.16

1-3 Week View – 1.2130 the next upside objective. Weekly close below 1.16 neutralises bullish objectives opening a test of 1.14
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – 1.3460 achieved, through here opens prior cycle highs at 1.3650 near term support sited at 1.3340 only below 1.3230 concerns bullish bias

1-3 Week View – 1.3263 achieved as this acts as support 1.3836 is the next upside objective only a close back below 1.30 would jeopardise the bullish advance.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – Near term resistance moves to 113.30/60, a breach of this level opens 114.70, below 11.73 opens 110.85 retest.

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: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – Retest of 134 range resistance persists a closing breach opens 136 as the primary upside objective. Only failure below 130.66 concerns bullish bias and opens pivotal 127.50.

1-3 Week View – 136.10 is the principle upside objective as this area caps the current advance expect a retest of 131.50 to set a base for the next leg higher, a closing breach of 131 concerns the bullish basis.
Retail Sentiment: Bearish
Trading Take-away: Long

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