New York Forex Report: EUR Reversal On Referendum Results

New York Forex Report: EUR Reversal On Referendum Results

New York Forex Report: With the Italian ‘NO’ vote for constitutional reform and the subsequent resignation of Prime Miniuster Renzi, the EUR plunged but has since recovered strongly to trade above 1.07; European stocks are positive and developed market bonds are mostly lower although with Italy is a clear underperformer on the day. The AUD is slightly softer ahead of tonight’s RBA decision. The NZD is the main G10FX under-performer on news PM Key was stepping down. There’s usually a bit of a lull in the markets after NFP data; not so much this week. There are policy setting meetings in Australia (tonight), Canada (Wednesday) and Europe (Thursday) when the ECB is expected to provide more clues on extending its QE programme beyond March 2017. BoE Govenor Carney is also speaking later today.

FX Majors: EUR Eurozone PPI fell at a much lesser than expected pace of 0.40% YOY in October, as a result of smaller decreases in the costs of energy and intermediate goods, reaffirming very gradual pick-up in price pressure. MOM, PPI jumped 0.8% MOM driven up by a 2.6% MOM increase in energy prices while increases in other components remained very flat. GBP PMI construction unexpectedly climbed up to 52.8 in November, marking its 4th straight month of acceleration and its best level in eight months, on revival of some projects being put on hold earlier by the Brexit vote. The outlook of the construction and housing sectors however remained challenging as some companies are expressing concerns over rising costs and narrowing margins. JPY Policy divergence between the US and the G10 is likely to accelerate in 2017 with the divergence particularly notable with the Bank of Japan which is expected to maintain its current 10-year yield targeting of around zero. JPY has lost more than 13% since 8 November with the President-elect Donald Trump likely to pursue expansive fiscal policy accompanied with massive public investment in order to boost the US economy.

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

Technical: Bearish attention remains towards 2015 lows at 1.0463 ahead of the larger weekly AB=CD objective at 1.0423. Near term resistance sited at 1.0650/80 a break here targets a retest of 1.0740 , medium term 1.0850 is a key upside hurdle which will need to be captured on a closing basis to stabilise the pair.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: The close over 1.2670 suggests further upside momentum to target the key structural resistance sited at 1.28, near term support is sited at 1.26 a failure below 1.25 reopens symmetry swing objective at 1.2270.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 115.59 is the next upside objective representing the 61.8% retracement of the 2015/16 decline, near term support is sited at the symmetry swing level of 112.27 A breach of 111.07 would suggest a broader correction to the advance opening a move back to test symmetry swing support at 109.60
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 121.82 achieved as 119 supports scope for a test of offers above 123.50 as the next upside objective. A break back below 119 opens 118.45 opens ahead of pivotal bullish trend support at 116.20
Retail Sentiment: Bearish
Trading Take-away: Long

Commodities FX: GOLD climbed for the first time in four sessions as it shrugged off data showing rising US job numbers, with analysts saying that an expected rise in interest rates had already been priced in. OIL was higher on Friday, with Brent crude on track for its biggest weekly rally since 2009, following OPEC’s decision to cut crude output in order to rein in a global glut. The market’s focus now shifts to the implementation and impact of OPEC’s first production agreement since 2008, which will be joined by non-OPEC producers. AUD was underpinned by the lift in iron ore futures following the stronger than expected Chinese November manufacturing Purchasing Managers Index printing at its highest level since April 2012. In Australia, the retail sales rose 0.5% in October, beating the forecast of 0.3%, however, the data had little impact on the Aussie. CAD unemployment rate dropped for the first time in five months in November since people dropped out of the labour force and companies added part-time jobs. The unemployment rate declined to 6.8% after holding at 7% in the prior three months while employment increased by 10,700.

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

Technical: .7092 AB=CD remains the downside objective. Near term resistance sited at .7440 has been eroded the correction should now challenge pivotal 7530 as this levels contains the upside reaction there is potential for resumption of downside pressure.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Price rotating lower set to test pivotal 1.3250 a failure here concerns the bullish bias and opens a retest of channel support sited at 1.3050. A hold of key 1.3250 sets base for 1.3650 attempt
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Technical: As equidistant swing objective sited at 1202 contains upside reactions bears target 1149 as the next downside objective. A close over 1220 suggest broader correction to the recent decline.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: The breach of 49.20 provided the anticipated quick test of offers above 50.00 and critically the equidistant swing objective sited at 51.79 as this level halts advance there remains an opportunity for a move to the downside targeting symmetry swing objective at 39.78.
Retail Sentiment: Bearish
Trading Take-away: Long