New York Forex Report: ECB Taper Talk Keeps EUR Bid

New York Forex Report: ECB Taper Talk Keeps EUR Bid

New York Forex Report: Eurozone Service PMI data and retails sales figures releases came in above market expectations today and hence added to the EUR bid tone that has been seen since yesterdays ECB taper story was published by Bloomberg referencing ECB sources, whilst the ECB has yet to publically confirm the story.The robust PMI data from Europe carried over to the UK registering its third month of uptick since the Brexit vote, while the Financial Times printed a story showing the UK has slipped behind France in global economic standings. GBP has had some light reprieve during European trade but the tone remains heavy and the pair is likely to consolidate losses ahead of Friday’s NFP release. The Fed outlook continues to firm, and overnight comments from dovish (voting 2017) Chicago Fed President Evans hint to confidence in tightening at least once before the end of the year. Markets are still pricing only a roughly 60% chance of a 25bpt hike, leaving the USD vulnerable to further strength as expectations firm.

FX Majors: EUR pared most of its losses against the USD overnight after Bloomberg News reported the European Central Bank will likely gradually reduce bond purchases as it ends quantitative easing. An informal consensus has built among policy makers in the past month that asset buying will have to be tapered once a decision is taken to end the program, according to euro-zone central-bank officials, who asked not to be identified because their deliberations are confidential. GBP UK’s construction PMI rose to 52.3 in September (August: 49.2), indicating an upturn in the building industry after three straight months of contractions since June. That was the highest reading in six months, and in conjunction with the pick- up in services and manufacturing leave rooms for BOE to hold its current monetary policy stance. Separately, producers’ prices in the euro area dropped 2.10% in August from a year ago (July: -2.80% YOY) as deflation prevailed. JPY In September, Japanese households had more favorable assessment of the economy. Despite data pointing to modest growth this quarter, households expected improvement in employment and overall livelihood, sending the sub-components to multi-year high.

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

Technical: Expect a test of 1.1120, a break of this price pivot opens equidistant swing support at 1.1085. Near term resistance is sited at 1.1220. Over 1.1280 opens 1.1365 next and eases bearish bias.

Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: As 1.2770 rejects corrective advances bears target 1.25 as the downside objective. Only a close over 1.30 eases bearish pressure.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: A close over 102.80 would ease bearish pressure, and refocuses attention on the upside equidistant swing objective at 104.86 near term support is sited 101.80/102
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: The close over 114.50 opens a move to test offers over 116.11 symmetry swing objective. Near term support is sited at 114.
Retail Sentiment: Bearish
Trading Take-away: Long

Commodities FX: GOLD endured a rollercoaster ride as it plummeted by more than US$40 during the Tuesday session again on the stronger US dollar and firmer US Fed rate hike expectations for end-2016. The gold price decreased by US$42.70 to US$1,266.30 on Tuesday (4 Oct), the sharpest one-day drop in nearly 3 years. OIL markets edged lower on Tuesday (4 Oct) as investors continued to be skeptic about the OPEC agreement to a production cut made in Algeria in September and also on the back of the resurgent US dollar. The US Nymex WTI futures fell by US$0.11 to US$48.69 AUD retail sales grew 0.40% from July to August after flat growth from June to July. That was the quickest increase in seven months, driven by increased patronage in cafes, restaurants and takeaway food services. Performance of services index remained below 50, the point separating expansion from contraction, but a pick- up in sales and new orders pushed the reading higher (September: 48.9 vs August: 45.0). CAD weakened against the USD as the greenback made broad-based gains, while investors eyeing a Federal Reserve interest rate hike by the end of the year. While tighter Canadian housing rules announced could lower barriers to a near-term Bank of Canada rate cut, most investors expect domestic rates to be stuck on hold.

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

Technical: Symmetry swing resistance sited at .7685 stalls advance as this area contains .7550 is the next downside objective ahead of .7412 symmetry swing support. Over .7700 opens .7730.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: As 1.30 supports 1.3372 is the equidistant AB=CD corrective objective, only below 1.2960 threatens near term bullish bias. Near term symmetry swing support is sited at 1.3030.

Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Testing symmetry swing support at 1270 a failure to hold this level on a closing basis would portend further weakness targeting 1200 as the next downside objective, near term resistance is sited at 1300.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Equidistant swing objective sited at 52.40 is the primary upside objective as 47.00 supports the advance , only below 45.00 would suggest false upside break a continuation of a more complex corrective pattern

Retail Sentiment: Bearish
Trading Take-away: Long