New York Forex Report: All Eyes On The ECB

New York Forex Report: All Eyes On The ECB

New York Forex Report: Most of the US states expanded modestly since mid-April according to Fed Beige Book, but tight labour markets were widely noted, suggesting that jobs growth continued to fuel the economy this quarter. Manufacturing prints showed diverging trend with report from ISM indicating that the sector expanded at a quicker pace in May (index: 51.3 vs April: 50.8) while a separate Markit manufacturing PMI came in lower at 50.7 in May (April: 50.8). The later marked the lowest reading since 2013. The USD Index reversed course and fell 0.45% to 95.46 at close, as an attempt to pare losses logged from Asian and European sessions proved futile.

FX Majors: EUR bid ahead of European Central Bank (ECB) meeting. ECB is expected to keep its monetary policy unchanged at today’s meeting while ECB may raise its inflation and growth forecasts. “We want a strong euro, meaning that the euro zone is sticking together, that we can show that we can solve the problems,” German Deputy Economy Minister Matthias Machnig stated yesterday. GBP A survey showed that UK house prices decelerated for two straight months suggesting that impact of higher tax on investment properties is beginning to kick in. In May, house prices rose 4.7% YoY after climbing 4.9% YoY in April. Monthly mortgage approvals fell to 66.3k in April (March: 70.3k) the least in almost a year. Consumer credit remained elevated despite falling £ 0.5 billion from March to April to £ 1.3 billion. On a three month annualized basis, credit growth exceeded 10% JPY Japan’s manufacturing PMI hit a record low of 47.7 in May (April: 48.2) and post continuous drag to economic growth in Q2. Yen pairs underwent a large drop on Wednesday driven by risk aversion and disappointment over lack of a clear policy guidance by Japan following a decision to defer a consumption tax hike. Japanese Prime Minister Shinzo Abe declared to delay his plans for fiscal reforms due to growing signs of weakness in the economy

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

Technical: Bears target symmetry support at 1.1065, 1.1240 remains pivotal for near term bearish bias. A breach of 1.1250 opens a move to 1.1350 as the next upside objective
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: While 1.4580/1.46 contains upside reactions expect a retest of 1.4330 bids in a pre Brexit referendum range of 1.4770/1.4330
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Anticipated trend resistance at 111.30 attracts sellers as this area contains expect a rotation back towards 108.40. Intraday resistance is sited at 109.60.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Bears target weekly symmetry objective at 120.60. Intraday resistance at 123.10 only a close above 124.70 eases immediate downside pressure.
Retail Sentiment: Bullish
Trading Take-away: Short

Commodities FX: GOLD ended lower after the surprise ISM manufacturing increase increased the likelihood of a Fed rate hike in the next few months. The gold price closed lower by US$2.90 to US$1211.90 on Wednesday. Oil closed at $49.7/barrel, around the $ 50/barrel mark yesterday after a brief slip following a surprised build up in US crude weekly inventories and Iran oil minister called for OPEC to adopt a radical idea of individual member production quota rather than the group as a whole. AUD The Australian economy unexpectedly expanded 1.1% QoQ in Q1, quicker than the revised 0.7% QoQ in Q4. The upbeat print was helped by the surge in exports of goods and services (Q1: +1.0% vs Q4: 0.1%) which offset deeper decline in fixed capital investment (Q1: -0.4% vs Q1: -0.3%) Australia’s annual growth of 3.1% far exceeded most developed nations including the United States, which last week reported annualised growth of 0.8%. CAD strengthened against a broadly weaker USD, ending three consecutive sessions of declines as oil pared its losses.

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

Technical: While symmetry swing resistance at .7310 contains the upside reaction bears target .7050 as the next downside objective. Only a close over .7400 eases immediate downside pressure.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: While 1.2940 symmetry swing supports bulls target offers at 1.3210 as the next upside extension target. Only a close below 1.2760 eases immediate bullish pressure
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: The medium term bullish bias is under assault While 1230 acts as intraday resistance expect a test of pivotal1190
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Second rejection above 50.00 concerns bulls near term although as 46.70 continues to support expect a test of the larger AB=CD swing objective at 51.07, only a close below 43.00 threatens bullish bias
Retail Sentiment: Bearish
Trading Take-away: Sidelines