New York Forex Report: ECB Get Things Started

New York Forex Report: ECB Get Things Started

New York Forex Report: The overall mood in markets ahead of what had been expected to be a full day of event risk appears quite constructive at the moment. Global stocks are positive and major commodity prices are firmer. Developed market bonds are weaker, with yields rising 1-2bps for the most part for 10Y tenors. The USD itself is mixed to somewhat firmer overall and has made modest headway against the EUR ahead of the ECB policy meeting press conference, the JPY ahead of the Comey testimony and the GBP ahead of the UK election.

USD Data from the US were mostly second tiered. One report showed that consumer borrowing in the US dropped to $ 8.197 billion in April (March: $19.536 billion). Borrowing was at the lowest level since August 2011 amid sluggish increase in non-revolving credit (mainly student loan). In a separate report, MBA mortgage application rose 7.10% last week after a 3.40% drop in the previous week.

EUR choppy trading, on reports suggesting the ECB would today reveal a downwardly revised inflation forecast. It was later reported that the revisions would be minor, and that the ECB would nudge its GDP growth forecasts higher. No changes in policy are expected at this upcoming meeting. But considering how several Governing Council members have said it will be a point to reassess the appropriate path for monetary policy, this meeting is considered the most interesting one since December last year. The ECB is also scheduled to release its updated projections

GBP UK’s house prices increased 3.30% YOY in the three years to May (April: +3.80% YOY). Weak real wage growth and increasing concerns on Brexit negotiation had dampened demand in the housing market, resulting in the softest increase in price growth in four years. While polls have narrowed considerably over the past few weeks, market participants appear relatively confidence in the view that the ruling Conservative Party will maintain enough of a majority to continue to govern on its own.

JPY Japan expanded at an even softer pace than previously anticipated last quarter. The economy grew only 0.30% QoQ in 1Q, way lower than the 1.00% QoQ growth forecasted earlier. Softer growth was due to softer growth in domestic demand and fixed asset investment.

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

Technical: 1-3 Day View – Breach of 1.12 refocuses bulls on equidistant swing objective of 1.1291 en-route to a test of broader symmetry swing objective at 114.30. Only below 1.11 concerns near term bullish bias opening a move back to test 1.1020.

1-3 Week View – While 1.0830 supports 114.30 becomes the primary upside objective. A weekly close over 1.1450 sets upside focus on 1.1876. Weekly close below 1.08 neutralises bullish objectives
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 – Symmetry swing objectives at 1.3060 & 1.3118 are targeted a close below 1.2750 concerns near term bullish bias and opens a move back to test the 1.26 pivot, the near term upside hurdle is sited at 1.3013

1-3 Week View – The weekly closing breach of 1.2880 opens 1.30 as the next upside objective ahead of the broader symmetry swing objective sited at 1.3238.
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 – 110.20 breach negates near term upside prospects opening a retest of 1.0940, near term as 110.30 contains upside reactions 108 will be a key downside objective.

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

Technical: 1-3 Day View – 129.44 is the medium term upside objective, near term upside objective of 126.84 equidistant swing objective, only below 122 concerns near term bullish bias.

1-3 Week View – The weekly close above 118.50 arrested the immediate downside risk, resetting focus on pivotal 124.40 a weekly breach of this level opens 129.44 as the broader upside objective
Retail Sentiment: Neutral
Trading Take-away: Neutral

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