New York Forex Report: ECB On Hold, Mario Draghi Up Next

New York Forex Report: ECB On Hold, Mario Draghi Up Next

New York Forex Report: ECB follow other Central Banks this week and maintain policy status quo whilst expressing a willingness to extend bond purchases beyond March 2017 id the data demands. EUR has been bid throughout the European session with the USD on the back foot across the board against all FX majors. Attention now shifts to ECB chiefs Mario Draghi’s press conference as the participants await details regarding bond purchases and the instruments that could be acquired along with the level of bonds and the capital key requirements for purchases.

FX Majors: EUR ECB is the next in line to meet for monetary policy discussion. Markets anticipate no change to interest rates decision due today, with refinancing and deposit rate staying pat at 0.0% and -0.4% respectively and asset purchase unchanged at €80 billion per month. However, some quarters anticipate an extension to the duration of the bond purchase program from March 2017 to September 2017 to revive stagnant price growth. ECB will also publish its fresh forecast of growth and inflation outlook, both likely to be revised downward in the wake of the Brexit. GBP UK’s industrial production grew a meagre 0.1% MOM July (June: flat growth), underpinned by the slowest production in the manufacturing sector in a year but was alleviated by the jump in oil and gas output. Factories production fell 0.9% from June to July, extending the 0.2% MOM decline in June. Output rose 2.1% from a year ago, with manufacturing gaining 0.8%. Separately, house prices grew 6.9% YOY in the three months through August, its slowest pace since 2013. That followed price increase of 8.40% YOY in the three months through July. JPY Japan’s coincident and leading index ticked up for two straight months in July, signaling that businesses were more optimistic about the economy. Coincident index climbed to 112.8 (June: 112.1) whilst leading index rose to 100.0 in July (June: 99.2). On a separate report, final reading of 2Q GDP showed that the Japan expanded 0.2% QOOQ last quarter, quicker than a previous estimate of no growth largely due to upward revision in private demand.

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

Technical: A close over 1.1250 brings last weeks highs back into play at 1.1366 with a further equidistant symmetry swing objective sited at 1.1530 while 1.1123 supports. Only below 1.11 concerns near term bullish bias

Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: As 1.3270 supports 1.3470 is the next upside objective. Only failure below 1.3185 concerns near term bullish bias.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Breach of 102.80 support opens a move back to test base at 100.90, expect 102.80 to act as resistance near term.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Failure below 114.50 has opened retest of pivotal support at 114 as this area supports potential for another leg higher. Failure below 114 opens move back to 112.
Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX: GOLD dipped on Wednesday, losing momentum due to profit taking after it soared by the most in over two months in the previous session on economic data that weakened the case for an imminent Fed rate hike. Oil prices edged almost 1.5% higher in a volatile session as market participants weigh the prospect of higher supplies against the possibility that the world’s top producers could agree on a production freeze. AUD RBA held interest rates unchanged at 1.5% as expected in yesterday’s meeting following two cuts in four months to spur sluggish inflation. The accompanying statement suggests that the central bank has more rooms for easing should economic conditions deteriorate or if further appreciation of the Australian dollar hinders exports and growth. Market shrugged off other economic data. Current account deficits rose from AUD 14.9 billion in the first quarter to AUD The Australian economy expanded 0.5% QOQ in 2Q which was half the pace of growth in the previous quarter. Steeper decline in capital investment (-0.7% vs -0.2%) coupled with slower pace of goods/services exports growth (+0.3% vs +0.7%) were dragging the headline number and strengthened the case for RBA’s preference of a weaker exchange rate to alleviate downside risks. While the economy grew 3.3% on an annual basis, the quickest pace since June 2012, risks remain tilted on the downside as indicated by disappointing indicators from the manufacturing, services and construction industries in August. CAD The Bank of Canada (BoC) maintained its target for the overnight rate at 0.5%, as was widely expected. In the accompanying statement, the Bank noted that whilst global growth in 1H16 was slower than projected in its July Monetary Policy Report, the Bank continues to expect it to strengthen gradually over the remainder of this year with global financial conditions having become even more accommodative since July.

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

Technical: Support at symmetry swing .7501 capped downside correction and set a base opening a move back to .7750 as the next upside objective. Only a close below .7500 would concern the near term bullish bias.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Testing bids at 1.2830, near term resistance is sited at 1.29, bears target symmetry swing objective at 1.2719
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: 1301 AB=CD equidistant swing support has provided anticipated base. Near term resistance now at 1357 with 1333 near term support. Only below 1300 concerns near term bullish bias.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Equidistant swing resistance sited at 47.36 as this level rejects the corrective advance 41.38 becomes the downside objective over 47.50 targets retest of 48.90 potential double top.

Retail Sentiment: Bullish
Trading Take-away: Short