New York Forex Report: Euro PMI’s Resilient, Euro Not So Much

New York Forex Report: Euro PMI’s Resilient, Euro Not So Much

New York Forex Report: The January Euro area PMIs showed overall activity remaining resilient. The headline services index was unchanged from December, while manufacturing rose to 55.2 from 54.9, its highest level since April 2011. For February French services PMI surges to 56.7 in February from 54.1, German services PMI 54.4 in February from 53.4 in January. However, risk for is EUR is asymmetric with 2-year German yields plummeted to new lows yesterday. The upside surprise in the data has been overshadowed by a turnaround in US yields currently providing broader support for the USD with the EUR on track to retest last weeks lows. GBP remains under pressures after UK public sector net borrowing data showed a surplus of GBP9.4bn in January, the largest for the month since at least 2001, data show (numbers to 2000 have been restated to reflect accounting changes). The data will strengthen the government’s hand ahead of the March budget somewhat. BoE Governor Carney and colleagues are testifying to the Treasury Select Committee today. As things stand, no policy change seems likely in the near term. In the US the February manufacturing and services PMIs will provide updates on the US economic outlook. They have not in the past, however, proved to be a good leading indicator of the more closely watched ISM surveys, which are next week.

FX Majors: EUR Eurozone’s gauge of consumer confidence dropped to a three month low of -6.2 in February (January: -4.9) but remained well above the long term average. Households were less optimistic about the economy despite a strong labour market as the increase in oil prices have somewhat tampered sentiments this month. GBP Rightmove report showed that UK’s house prices grew 2.30% YoY to an average of £306k in February. Price growth was the slowest since April 2013 as London posted its biggest annual decline in six years, stifled by Brexit talks and property tax hike. On the contrary, another report by the Confederation of British Industry indicated that manufacturing orders rose to the highest in two years. Trend total orders index surged to 8 in February (January: 5), helped by a weaker Sterling which increased competitiveness of British products abroad. JPY Japan’s trade deficits slipped to 1.09 trillion yen in January (December: revised to 640.4 billion yen). Trade gap widened to a two year high last month due to the 18.80% drop in exports which offset the smaller 7.80% drop in imports. Nikkei manufacturing PMI surged to the highest level since March 2014, climbing to 53.5 in February (January: 52.7).

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

Technical: 1.0670 near term resistance, only over 1.0710 stabilises selling pressure. While upside hurdles remain in place expect a retest of 1.0521 base, intraday 1.0610 is the first upside hurdle
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Equidistant swing objective at 1.2679 capping corrective advance. Near term support sited at 1.2345 survives on a closing basis with range resistance sited at 1.2580
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Only a 112 sustained breach will open 110.70 symmetry swing support underpinned by 109.90 50% retracement of the move from August 2016 lows. Near term resistance sited at 113.80, a close over 114.50 reasserts upside targets primarily at 115.50
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Symmetry swing support at 120.40 removed, the failure below 120.40 opens 118.70 as the next downside objective. Near term resistance sited at 121.50 a close over 122.10 resets attention on upside targets.
Retail Sentiment: Bullish
Trading Take-away: Short

Commodities FX: GOLD price rose on Monday amidst a quiet trading session for the US dollar while the political uncertainties & elections risks in Europe drove some demand for safe haven. OIL gained as traders continued to weigh the exuberance of the OPEC production cuts versus the rising US crude oil production & increasing crude inventory. AUD No surprises from Tuesday’s RBA Minutes in which the central bank said that a rising Aussie would complicate the transition process on the one hand but was also seen as a positive for the global economy on the other hand. Perhaps the one standout from the Minutes was the fact that the RBA highlighted downside pressure on inflation could be more persistent than assumed. CAD Wholesale December trade increasing 0.7%, as expected. Looking ahead this week, retail sales, employment payrolls and hours, and CPI data will likely drive the loonie later in the week

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

Technical: The next upside objective is sited at .7750 as price continues to consolidate at elevated levels. Near term support is sited at symmetry swing level .7600 ahead of pivotal .7449
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1.3150 resistance eroded, over 1.32 opens a move back to test 1.3370.Price action remains erratic as price attempts to base above pivotal 1.30. Near term support is sited at 1.3050, failure here opens a retest of 1.2967
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: The 1225 upside breach confirmed the anticipated move to 1245 as 1218 supports expect a retest of last weeks highs, a failure below 1206 opens a retest of 1180.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Rejection from equality objective area at 55.30, a close below symmetry support at 50.68 confirms a medium term high and opens a retest of pivotal 49.00. Near term resistance is sited at 54.50.
Retail Sentiment: Bearish
Trading Take-away: Long

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