New York Forex Report: Doves Draghi Keeps Euro Down

Markets were quiet over the European morning in the absence of any key data releases. Overnight saw further data weakness from China with New Yuan Loans undershooting expectations, increasing speculation over further Chinese easing to come. Comments from ECB’s Draghi today once again hinted at further policy adjustment at the ECB’s December meeting as the ECB chief noted a weakening of inflation dynamics. Equities softer again so far today with commodities and Oil sliding also whilst the US Dollar trades firmer.  No key data over the US session today, attention will be on initial and continuing jobless claims and Fed’s Evans as he speaks in Chicago on economy and policy.

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

Fundamental: EURUSD remains range-bound at lows over the European morning.The euro zone’s economy is growing only modestly after the ECB’s scheme of quantitative easing (QE) and the central bank is urgently considering what more it can do to improve the economy. Traders will closely eye ECB President Draghi’s speech and Q&A session today on ECB policy. German CPI came in unchanged at 0.3%.

Technical: While 1.0830/50 caps intraday upside corrections, bears target a test of 1.0560 next ahead of an assault on year to date lows. Only a close above 1.09 eases immediate downside pressure.

Interbank Flows: Bids 1.07 stops below. Offers 1.0830 Stops above.
Retail Sentiment: Bullish
Trading Take-away: Sell against 1.0830/50 resistance targeting 1.0560

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

Fundamental: GBP was softer over the European morning, retracing gains made yesterday on the back of a continuing decline in UK unemployment. No domestic data today leaves Sterling subject to USD flows.

Technical:  While 1.5250 contains upside reactions expect a test of of bids at 1.50 as the next bearish objective. Only a close above 1.53 eases immediate bearish bias

Interbank Flows: Bids 1.50 stops below. Offers 1.5250 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines for now

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

Fundamental: JPY continue a corrective grind higher following the sharp losses seen after last week’s bumper US October jobs report. The Bank of Japan needs to take no action to further ease now as the effects of low oil prices on inflation rates will dissipate eventually, BoJ’s board member Yutaka Harada commented.

Technical: While 122.50/30 supports downside reactions, market structure remains bullish to test 2015 highs next

Interbank Flows: Bids 122.50 stops below. Offers 124 stops above
Retail Sentiment: Bearish
Trading Take-away: Buy 122.30/50 stops below 121.50 target 125.50

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

Fundamental: ECB’s Hansson said no need for ECB to cut rates at the moment and Constancio warned that ECB has not made any decision before the next meeting on December 3rd. Pair remains anchored towards lower end of recent range.

Technical:  Bears now target equality corrective objective at 131.20, only a close above 133.50 eases immediate bearish pressure.

Interbank Flows: Bids 131.00 stops below. Offers 133.50 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines for now

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

Fundamental: AUD lifted the most in five weeks after figures showed that the unemployment rate unexpectedly fell in October. AUDUSD gained for a second day as the Bureau of Statistics said employers added 58,600 new positions in October, while the jobless rate down to 5.9 percent, from 6.2 percent in September.

Technical: While .7170 caps corrective upside reactions expect a retest and breach of Friday’s lows as bearish momentum builds for a retest of year to date lows. A close above .7200 eases bearish pressure

Interbank Flows: Bids .7000 stops below. Offers .7170 stops above
Retail Sentiment: Bullish
Trading Take-away: Squared shorts into .7030 target, sidelines for now

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

Fundamental: Softer oil price and a resurgent US Dollar leave the Canadian Dollar weaker heading into the American cross-over. The monthly OPEC report showed that Saudi Arabia, the world’s largest oil producer, had increased supply by 50k barrels in October, leading Oil lower on the day.

Technical: Offers just above 1.33 stall the upside ratchet, bulls have the ball while 1.3220 supports intraday downside. However a close below 1.3220 today would suggest a false upside break and a bull trap sustained weakness below 1.3220 confirms.

Interbank Flows: Bids 1.3250 stops below. Offers 1.3350 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines for now

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