New York Forex Report: Euro On The Edge

New York Forex Report: Euro OnThe Edge

New York Forex Report: USD is generally firmer on the session, though the AUD, GBP and Cad are modest out-performers on the day. European and Asian stocks are mixed, as are US futures. US bond yields are 2bps or so firmer on the session, while core Eurozone and Japanese debt is out-performing, extending the USD a modest yield advantage versus the EUR and JPY. It’s a very light calendar for the North American session, US wholesale inventories and U. Michigan consumer sentiment. After yesterday’s swings and looking ahead to next week’s FOMC meeting, market participants who are not actively managing risk may choose to stay sidelined for the moment. US consumer sentiment is expected to firm (94.5 this month versus 93.8 in November) which will be mildly constructive for the USD at least. One aspect of the report which typically does not attract too much attention but may be worth keeping a look out for is the survey of inflation expectations. The one year ahead measure has been slowly tracking lower in the past few years and stood at 2.4% last month; it may be too soon for the election to have an impact on this indicator but a firming in expectations might catch the eye of the Fed

FX Majors: EUR Draghi’s press conference highlighted that 1.7% CPI forecast for 2019 is “not really” close to the bank’s target, and that “uncertainty prevails” in the region even though deflationary risk has retreated. We opine that the ECB remains cautious in spite of reduced threat of deflation, and will stay accommodative for as long as need to push inflation to its target, which is very likely above 1.7% as mentioned. GBP erased all of its early gains to 1.2704 handle scored in early London session and dropped below 1.2600 handle overnight amid ECB-led volatility in the market. German Vice Chancellor Sigmar Gabriel said Brexit is taking “far too long” and maintaining the UK’s ties to the European Union won’t be easy. Gabriel signalled concern that extended uncertainty implied by UK Prime Minister Theresa May’s timeline for starting Britain’s exit from the EU by the end of March might cause economic damage JPY Japan will compile a third extra budget for this fiscal year featuring spending on disaster reconstruction and the government will aim to approve both the extra budget and an annual budget draft for the next fiscal year from April at a cabinet meeting on 22 December, according to Finance Minister Taro Aso.

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

Technical: Sharp rejection from medium term resistance at 1.0850 this is a key upside hurdle which will need to be captured on a closing basis to stabilise the pair. The subsequent break back below 1.0650 opens retest of bids back towards 1.05 near term resistance is sited at 1.07.
Retail Sentiment: Bullish
Trading Take-away: Short

GBPUSD
Outlook: Short Term (1-3 Days): Neutral – 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 1.24.
Retail Sentiment: Bullish
Trading Take-away: Sidelines

USDJPY
Outlook: Short Term (1-3 Days): Bullish – 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 ahead of the pivotal symmetry swing resistance sited at 124.42. A break back below 119 opens 118.45 opens ahead of pivotal bullish trend support at 116.20
Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX: GOLD which was slightly firmed before the ECB, retreated into the red on Thursday after the dollar rebounded on the back of a decision by the European Central Bank to extend monthly asset purchases until December 2017. OIL rebounded from the week’s lows to close above $50/bbl on Thursday as market participants focused on an upcoming weekend meeting between OPEC and non-OPEC producers that may result in an agreement to cut crude output further. AUD Australia’s home loans fell 0.8% MOM in Oct, sliding from 1.6% growth in September as impediments to investment lending pick up pace to cool extended climb in home prices. CAD strengthened to a seven-week high against the USD, as higher oil prices offset broader gains for the US dollar after the European Central Bank’s monetary policy decisions. Traders believe that US economic stimulus will boost Canada’s exports, which offset the threat of protectionism suggested by Donald Trump.

AUDUSD
Outlook: Short Term (1-3 Days): Neutral – 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 7530/50 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): Bearish – Medium Term (1-3 Weeks): Bullish

Technical: Price rotating lower testing and eroding pivotal 1.3250 the failure here concerns the bullish bias and opens a retest of symmetry support at 1.3098 ahead of longer term channel support sited at 1.3050. Over 1.34 stabilises the pair and suggest a return to focus on upside objectives
Retail Sentiment: Bullish
Trading Take-away: Short

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. Over 52.40 opens 55.000 as the next upside objective
Retail Sentiment: Bearish
Trading Take-away: Long