New York Forex Report: ECB Eyed

New York Forex Report: ECB Eyed

New York Forex Report: German industrial production rose 2.8% in Jan, a little better than the market consensus (+2.7%). France reported a wider Jan current account balance (-EUR7bn, versus Dec’s -1.1bn). An opinion poll showed support for the centre-right candidate Fillon up marginally in first round voting intentions, while centrist Macron and Front National’s Le Pen’s support was stable. Short-term rate differentials remain a major weight on the EUR; minor relief may come from more constructive messaging from the ECB President Draghi with regard to the economic conditions after Thursday’s rate decision (settings expected unch) but with many uncertainties ahead still, policy is set to remain highly accommodative for some time to come. UK Chancellor Hammond is delivering his budget statement but the fiscal and economic update is unlikely to shift soft GBP sentiment significantly, or at all. Focus on domestic politics remains intense; PM May remains intent on executing the formal departure from the EU this month. A local press report suggests that a “senior cabinet minister” is advocating that PM May calls an election “sooner rather than later”. The next UK general election is not due until 2020.

FX Majors: EUR Eurozone’s economy grew at unchanged pace of 0.40% QOQ in the final quarter of 2016. Quicker pick up in exports and investment growth was offset by smaller growth in inventories. By industry, quicker growth in construction, trade/ transport and agriculture offset the slowdown in other industries including energy. GBP Shortages of properties and low interest rate had kept momentum of UK’s housing market from cooling too much since Britain voted to leave the European Union but recent economic data was showing signs of an economic slowdown amid Brexit concerns and rise in cost pressure. Report from Halifax indicates that home prices climbed at a softer pace of 5.10% YoY in the three months through February (previous: + 5.70% YoY) and further downside pressure on GDP growth could further hamper demand in the housing market. JPY Japan’s final reading of 4Q GDP came in at unchanged pace of 0.30% QoQ. Last quarter growth was largely driven by domestic demand and fixed capital formation. On the other hand, government spending pulled back in 4Q. On a separate report, current account surplus narrowed to 65.5 billion yen in January (December: 1112.2 billion yen), dragged by the decline in net trade despite the surge in investment income.

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

Technical: A closing breach of 1.05 opens a move to 1.0450 next, only over 1.0650 arrests near term bearish bias and resets attention on upside objectives
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: 1.22 downside objective achieved, as 1.2330 continues to cap corrections 1.1990 becomes the next downside objective, only over 1.25 stems selling pressure
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Near term resistance sited at 113.80 removed and now becomes near term support, a close over 114.50 reasserts upside targets primarily at 115.50. Failure below 113.40 opens 112.80 as the next downside objective
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Near term resistance sited at 120.50 removed and now becomes near term support, only a close over 121.50 stems near term selling pressure and resets focus on upside objective. Failure below 120.20 opens 119.30
Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX: GOLD extended its losing streak on Tuesday, dropping 0.76% to finish $1,215.86 per ounce with holdings in the biggest gold ETF, SPDR Gold Shares dropping to the lowest in almost a month. OIL fell 6 cents (-0.11%) to settle at $53.14 a barrel, pressured by a report by American Petroleum Institute on Tuesday that stated U.S supplies probably rose 11.6 million barrels last week in a data release due later today, a sharp contrast with a 1.39 million increase by analysts surveyed by Bloomberg. AUD RBA held cash rate unchanged at 1.50% at yesterday’s meeting and the accompanying policy statement suggests that another rate cut is not under consideration for now. Signaling the end of policy easing, inflation is expected to pick up over the course of 2017 to be above 2.00%. “Forward-looking indicators pointed to continued expansion in employment over the period ahead” and coupled with positive global outlook could pave way for quicker GDP growth this year. CAD third-consecutive monthly trade surplus in January. Canada’s trade surplus rose to a better than expected C$807 million in January from December’s downwardly revised C$447 million, thanks in large part to a 0.5%MoM rise in exports and 1.0% MoM drop in imports.

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

Technical: Breach of primary support pivot at .7600 suggest potential for broader correction to play out especially as .7610 caps near term upside, .7500 becomes the next downside objective
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: As 1.33 supports bulls target the symmetry swing objective sited at 1.3480. Only a close below 1.32 concerns the near term bullish bias.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: As 1225 acts as support bulls target symmetry swing resistance sited at 1299, only a close below 1215 concerns near term bullish bias opening a retest of 1200

Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Rejection from equality objective area at 55.30, a close below symmetry support at 50.68 confirms a medium term high and opens a retest of pivotal 49.00. Near term resistance is sited at 54.50.
Retail Sentiment: Bearish
Trading Take-away: Long

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