New York Forex Report: ECB’s Draghi Speaking Later Today

Continuing on from yesterday’s quiet session, currency markets have been quite contained over the European morning with little in the way of key data releases to drive price action. ECB President Mario Draghi will be speaking this evening at 1800 GMT and traders will be paying close attention following comments made over the weekend during an interview which heard the ECB chief sounding less Dovish than the ECB’s recent monetary policy meeting stating that December stimulus was still an open question.

Heading into the American cross-over equities remain broadly flat, in line with commodities whilst Oil trades higher on the session with the US Dollar sharply higher today, extending gains made on the back of yesterday’s positive ISM Manufacturing number.

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

Fundamental: EURUSD has traded lower over the European morning driven mainly by the resurgent US Dollar. Traders coming to their desks for the New York open will be eyeing US Factory orders at 1500 GMT and later ECB President Mario Draghi speaking in Frankfurt at 1800 GMT.

Technical: Today while 1.0950 continues to caps intraday downside reactions anticipate a broader corrective pattern targeting 1.1130. Failure at 1.0950 sets up a retest of last weeks lows en route to 1.0860

Interbank Flows: Bids 1.0950 stops below. Offers 1.11 Stops above.
Retail Sentiment: Neutral to bullish
Trading Take-away: Long against 1.0950 targeting 1.1130

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

Fundamental: Despite UK construction PMI data printing in line with expectations, following yesterdays Manufacturing PMI beat, Sterling was lower over the European morning victim to strong USD demand.

Technical:  The upside rotation back through 1.5330 resets bullish expectations for a test of the 1.56 symmetry objective. Another failure at 1.53 targets stops sub 1.52 next.

Interbank Flows: Bids 1.53 stops below. Offers 1.55 stops above
Retail Sentiment: Neutral to bearish
Trading Take-away: Long from 1.5330 targeting 1.56

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

Fundamental: JPY desks offline due to national holidays. Japan October Nikkei Manufacturing PMI came in at 52.4, just shy of the prior reading of 52.5. Markets are patiently waiting for important data such as Consumer Confidence Index and Monetary Base which will be released on Wednesday.

Technical: Bulls target a sustained break of 121 to target range highs at 121.85 an intraday failure at 120.00 would suggest return to range.

Interbank Flows: Bids 119.50/30 stops below. Offers 121.50 stops above
Retail Sentiment: Neutral
Trading Take-away: Buy pullbacks against 120.50 targeting upside range break

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

Fundamental: Amidst light trading due to the Japanese holiday, EURJPY was lower over the European morning. October monetary base, composite/service PMI, consumer confidence (Wed); BOJ minutes (Thu); BOJ Kuroda speaks; Sep leading and coincident index (Fri) on tap this week.

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

Fundamental: The RBA left the policy rate unchanged at 2.0%, versus market pricing for 30% probability of a 25bp rate cut. However, there was a dovish change to the language around inflation, noting “the inflation outlook may afford scope for further easing of policy”. The combination of unchanged rates but a slightly dovish statement has seen the Aussie trading lower over the European morning, retracing from the post RBA highs put in overnight.

Technical: Buyers emerge at retest of pivotal .7030/50 next, a close above .7230 eases bearish pressure a refocuses bulls to test offers towards .7350. While .7230 caps the upside expect rotation lower targeting year to date lows next

Interbank Flows: Bids .7050 stops below. Offers .7230 stops above
Retail Sentiment: Bullish
Trading Take-away: Shorts against .7230 targeting .7030

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

Fundamental: USDCAD trading pretty much flat as we head into the American session as better Oil prices this morning were offset by the broad USD strength. Lack of key domestic data will leave CAD driven by this dynamic as we head through the NY session.

Technical:1.3260 provides decent resistance as anticipated as this area contains upside potential for another leg of corrective downside. A close above 1.3280 eases bearish pressure and resets focus on the 2015 highs and stops above.

Interbank Flows: Bids 1.3030 stops below. Offers 1.32 stops above
Retail Sentiment: Bearish
Trading Take-away: If short from failed retest of 1.3260, move positions to risk free

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