New York Forex Report: Dollar To Test 2018 Lows

New York Forex Report: Dollar To Test 2018 Lows

New York Forex Report: The USD is extending Wednesday’s decline and the DXY is entering Thursday’s New York session at the lower end of its multi-week range, threatening the Davos/Mnuchin ‘weak dollar’ lows as market participants re-enter consensus trades following recent weeks of positioning-driven turbulence. Sentiment remains dominant and this week’s return in risk appetite has paved the way for a shift in focus back toward longer term fundamentals and structural headwinds for the USD. G10 currencies are somewhat mixed in terms of today’s performance, with notable gains in CHF and GBP and modest strength in EUR and JPY. AUD and CAD are close to flat, along with gold. The broader tone is suggestive of continued risk appetite with strength across both Asian and European equity indices. U.S. equity futures are up and developed country bond yields are climbing. Commodities are soft, with modest declines in both oil and copper. A reminder that China’s Lunar New Year holidays started today, and are set to continue through February 21st. Thursday’s New York session includes a heavy U.S. release calendar including the Empire and Philly activity indices, jobless claims, PPI, industrial production and the NAHB housing market index. BoC Gov. Schembri speaks on ‘Canada’s approach to price stability’ and the U.S. Treasury releases its monthly TIC data for December. There are no Fed speakers for Thursday and there appear to be no scheduled speaking engagements ahead of Feb 21.

NORTH AMERICA Core CPI rose 0.3% MoM (largest rise since Jan17), but was steady at 1.8% YoY in Jan. Meanwhile, retail sales fell 0.3% in Jan, marking the biggest decrease since Feb17 and MBA mortgage request volumes fell 4.1% as home loan rate surged to a 4-year high. Business inventories rose 0.4% in Dec, the same pace as Nov

EUROPE Eurozone’s economic signals remain bright – preliminary 4Q17 GDP growth rose 0.6% QoQ (2.7% yoy), bringing full-year 2017 growth to 2.5% YoY (fastest pace since 2007) and Dec industrial production also jumped faster than expected by 0.4% MoM (5.2% YoY). Over in the UK, a BOE survey point to firms offering average wage rises of 3.1% (highest since 2008 and up from 2.6% in 2017), even as market players have largely priced in a May rate hike

ASIA Japan core machine orders undershoots; suggesting the pick-up in investment into end-1997 may lose momentum in early 2018. Risks, if any will depend on the sustained strength of the yen which will put a dampener on additional capital investments by manufacturers.

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

Technical: 1-3 Day View – The breach of resistance at 1.2395 resets focus on upside objectives primarily 1.2537 and then 1.2635 as 1.2390 now acts as near term support.

1-3 Week View – As 1.2130 now acts as support expect a test of 1.2635 as the next upside objective. Weekly close below 1.19 neutralises bullish objectives opening a test of 1.14.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – The breach of 1.40 stabilises the pair and suggest a return to focusing on upside objectives, near term resistance is sited at 1.3970, however, caution as 1.4060 could cap this move.

1-3 Week View – As 1.3836 supports 1.45 becomes the next upside objective, only a close back below 1.34 would jeopardise the bullish advance.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – Anticipated breach 108.44 saw 107.20 test overnight as 108.44 acts as resistance 103.22 is the next downside objective, only over 110 stabilises pair and opens 111

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

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

Technical: 1-3 Day View – Breach of 132.90 opens 131.60/40 next near term resistance sited at 133.30/60

1-3 Week View – 136.10 is the principle upside objective , rotation within the broader range persists breach of 132.20 sets a retest of 131.50, a closing breach of 131 concerns the bullish consolidation bias
Retail Sentiment: Neutral
Trading Take-away: Neutral

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